Hi, I have this query - “Can I avail Margin facility to buy and hold equity for more than a day like 3 months or so? If yes, can I pledge those same equity shares as securities to the same broker or any other broker to avail some funding? How much is it going to cost me?” Please let me know.
There’s a concept of margin trading funding where you can pay a part of the total equity amount and the other part is funded by the broker at an interest.
Most traditional brokers offer this facility. Some discount brokers like Upstox also started it but I’m not sure if they’re still offering it.
Yes. That’s an interest of about 18%. I don’t think it makes sense. It’s very unlikely that someone is about to outperform the market by borrowing money at 18%, pay the transaction charges and then also pay income taxes on the profits made.
It’s always a bad idea to borrow on interest and invest. But one more point I would like to add here is someone can show this interest as an expense and deduct it from the Income Tax calculation.
Finvasia also provides collateral margin facility in which you have to maintain a 50:50 cash-to-collateral ratio. The pledging charges are Rs. 20.