Buying Stocks on Margin Definition

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Buying stocks on margin requires is when an investor is granted a credit account to buy equity without putting the money up front. Qualify for a margin account, and make safe, secure investments with information from an investment manager in this free video on investing.

Part of the Video Series: Stocks & Mutual Fund Investments
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Video Transcript

How to buy stocks on margin. If you qualify for a margin account with your brokerage house and not everybody does, you will have basically a credit account where you can go and buy and equity without having the money. You will have a given amount of time to bring that money back in to the brokerage house. Also too even if you make a quick gain on the equity that you purchase you won't be able to sell it right away because there is a free writing law so you can't just buy and sell and avoid the margin account that you need to pay off. So if you buy on margin, a) you need to qualify for a margin with your brokerage house, b) look for a safe secure equity because you are liable for those charges with the fees and the costs of the equity itself and just make sure that that margin account will be paid off in a timely fashion and again just be aware that the margin account and use of a margin account can be very risky. If you buy an equity you don't make any money on the equity, it goes down in value, it could go to 0. You still have to pay for the equity that you purchase so your initial purchase price and fees are all still due. So it's a fairly risky move but it can be done and again just make sure that it is something that you can qualify for through your brokerage house.


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