Setting up a trading account

I’m wanting to sort out a trading account. Please help!!
We have a home loan with an offset account attached. Our mortgage interest payments are offset against the funds in the offset acct. If I use funds from the Offset acct to trade we will end up paying more in interest repayments (less money in the Offset acct).
• Should I use money from my Offset acct to trade with or take out a loan for trading? Offset acct interest rate: 9.47% / Margin Lending 10.39% (see next question)
• Will I be able to claim back the dollars lost in paying more interest that would have gone to lowering the interest (or does it not work this way)? Will I be able to claim the interest paid out for the margin loan?
• What are my options in terms of making it more of tax effective?

Thanks. Looking forward to some comments/feedback!

bonkerrs said:

I’m wanting to sort out a trading account. Please help!!
We have a home loan with an offset account attached. Our mortgage interest payments are offset against the funds in the offset acct. If I use funds from the Offset acct to trade we will end up paying more in interest repayments (less money in the Offset acct).
• Should I use money from my Offset acct to trade with or take out a loan for trading? Offset acct interest rate: 9.47% / Margin Lending 10.39% (see next question)
• Will I be able to claim back the dollars lost in paying more interest that would have gone to lowering the interest (or does it not work this way)? Will I be able to claim the interest paid out for the margin loan?
• What are my options in terms of making it more of tax effective?

Thanks. Looking forward to some comments/feedback!

Click to expand...

I'm no accountant, but i think both would be tax deductions on the interest paid as you are using borrowed money to generate income. I would assume you would be slightly better off using the funds in the offset account as it is a lower interest rate.
Definitely a question for your accountant.

Before using your off-set account for trading, you would be best to make sure NO other drawings are ever taken from it for any other purpose.

You should probably enquire your accountant.

tony

dunno about the tax thing and i'm not a financial advisor, but you don't want to tie your trading activities into your mortgage. banks are cold and have some contract made failsafe way to fk you out of everything if you make a mistake. i would be pretty safe to say that everyone on this forum has taken a beating on the market at some stage, and some prominent posters have also had some massive losses on their path to success.

seriously, if you don't know what you are doing, stay out of the market and make sure as hell it doesn't have ANYTHING AT ALL EVER WHATSOEVER to do with your house.

that aside, trading is an awesome way to make money but you have to approach it like a job and study it and learn it and be in a position to take that massive financial beating (or two) that will give you the right mindset. there are so many different methods and strategies if you just blunder in, especially with the market as it is now (volatile as hell), you'll lose your money, put your house on the line and stress your life out. this will obviously suck.

imho best bet is to papertrade stocks or currencies or commodities or whatever floats your boat while you save money to put into an trading account. then you have minimised your risk before you even start, and by then you'll know that managing risk is rule #1 (and the one hardest learnt)

Thanks for the replies.

At this stage I'll see an accountant before commencing any trading.

I will approach it (trading) slowly, by this I mean I will do paper trading for awhile, I guess this gives me time to save a little so to not use money in the offset acct.

Personally I would not borrow money to start trading, particularly if you are a beginner as the stock market is far to volatile at the moment.

Seeing an accountant is a positive move and they will discuss the various options that will suit you best.

Paper trading is a good practice as well

But learn all you can for there are no guarantees that you will be successful.

One of the most important things you will need to learn is managing RISK.

I wish you well in your trading endeavors.