Margin loans in the UK

The UK has the most sophisticated financial services industry in Europe. And in some respects, one of the most sophisticated in the world. But in one area it clearly lags the USA – the stock market. Whether it comes to the size of the stock market, the % of society who own stocks/shares, or the number of stockbrokers – we in the UK are a long way behind our transatlantic cousins.

In the UK, even the concept of ‘margin loans’ would leave financially savvy stockmarket pundits scratching their head. Perhaps a couple of them – monevator comments readers I’m sure – would cross-reference to the excellent movie ‘Margin Call‘, starring Kevin Spacey, Demi Moore and Jeremy Irons, but that movie’s lack of success in the UK tells you what you need to know about the wider understanding of ‘margin lending’ in the UK.

As regular readers of this blog know, I am a member of that rare and unusual species – a UK user of margin loans. This page is to serve as some form of introduction to the concept for UK/European readers, as well as summarising some of my experiences and linking to further reading.

What is a margin loan?

Loans generally come in two shapes/sizes – secured loans, and unsecured loans. Secured loans – where the lender has some form of collateral – are cheaper, reflecting the lower risk that the lender is exposed to.

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April 2021 – a silver medal month

April news saw a lot of stuff’n’nonsense about decorating the PM’s flat. This is silly-season stuff, even though it isn’t silly season. In the meantime, covid-19 vaccination progress in the UK has been excellent; my London borough now has fewer than 40 cases, and nationwide numbers are dropping by 30-40% a week. Shops are open again. Socialising/pubs/restaurants are open but outdoors only, which sounds useful but the weather has been simply too cold – especially in the evenings – to make the most of the opportunity.

In the markets, April started well. And continued doing well. And ended exceedingly well. Unless you were unfortunate enough to buy shares in Deliveroo, of course.

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ISA $millionaire

What an amazing twelve months it has been.  And what an amazing month March 2020 was.

March 2020 saw global equities down 25% on peak, just a few weeks earlier.  VWRL dropped to £57, a level it hadn’t been at since 2016.  That left my ISAs feeling very down in the dumps.

Since March 2020, VWRL has climbed to £83, almost 14% above its previous cycle’s peak. My ISAs are looking very plump indeed.

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