What is a margin loan and how does it work in relation to Westpac BlueChip20?
The margin loan allows you to effectively increase your investment capability, allowing you to invest more than you could just using your own funds. A margin loan is borrowing to invest, using your shares as security for the loan. The margin lender determines the amount they will lend on any approved security; this is called a Loan to Valuation Ratio (LVR). The shares purchased with the Westpac BlueChip20 portfolio provide security for the loan, similar to a mortgage over residential property. More than half of Australia’s adult population now invests in the share market, a figure which is high in global terms, and increasingly margin lending is a common way through which Australian investors increase their participation in the share market.
