Online Brokers & Margin Lending

Hi Guys, new to the forum. I found this site after a quick Google and thought this should be the perfect place to hopefully get some answers.

I'm currently contemplating opening an online account with either E-trade, Commsec or Westpac Broking. However as part of this I am also looking at Margin Lending.

As I have all of my property lending with Westpac, I thought I would go with Westpac for Margin Lending to keep it simple. However, after looking at the Online Broking sites above I have a preference for either E-Trade or Commsec due to the tools available and the much larger choice of Managed Funds over Westpac Broking.

What would be the best choices here:
1. Open an E-Trade/Commsec account and somehow use Westpac for Margin Lending. Too difficult?
2. Open an E-Trade/Commsec account and use their own ANZ/CommBank Margin Lending, separate from all of my other banking.
3. Open a Westpac Broking account to use with Westpac Margin Lending. This would limit my access to many managed funds though.

I intend to hold approx 80% in different managed funds, the other 20% in direct shares.

Another issue to keep in mind and possibly a separate thread in itself. Is there any way within these online broking accounts I can direct the income/dividends back to my regular bank account without being "judged" to have taken capital investment by the tax office? I seem to recall from my old "Your Prosperity" account that once the income was in the trading cash account, there was a problem for the ATO determing what was income and what was capital.

I apologize for the length of the question but any help would be greatly appreciated!

Hi Dan,

If choice 3 is limiting you, it's probably not the best choice.
1 and 2, you'd have to choose which margin lender you use, the stockbroker you use won't care, they settle trades via DvP (Delivery versus Payment).

Not sure where that Your Prosperity article was going, at the end of a financial year all your banks and finance companies will send you statements saying this is how much interest we've paid you and this is how much capital gains we've paid you, it's very straight forward and shouldn't be an issue to the ATO. If there is a return of capital your in a better situation as it's usually not classed as income.

Cheers,

Dan

PS Before making a tax decision speak to a registered accountant or tax agent.

Thanks Dan, I will need to run this past my accountant I think before I open an account and buy up stock. I would hate to back myself into a taxation corner.

So you are saying using a Westpac Margin Loan for an E-Trade account would be just as easy as using E-Trade's own ANZ Margin Loan?

Hi Dan,

As I don't use either ANZ/Etrade or Westpac/Online broking or margin lending, I can't comment on how easy each of the stockbroking and/or margin lenders websites are to use.

From a settlements point of view, there is no difference (well, apart from the Participant ID which you don't care about).

Cheers,

Dan

Hi Dan,
did you figure this out? I want to use my Bell Direct online account to trade and get a margin loan but I'm not sure how they will interact given there is a (gearup, My Portfolio) margin loan platform and they expect you to be talking to a broker who is a person...

Hi Dmagnus,

My first 5 years of work was in Australia's largest share registry plus 3 Sydney stockbroking firms (two large Aussie Investment Banks and a smaller overseas operation). I moved into financial planning after finding that stockbroking was very transaction driven specifically on stocks and not particularly satisfying, whereas financial planning deals with a clients whole situation (insurances, shares, managed funds, estate planning, superannuation and eventually retirement planning) which is very satisfying by being able to help clients achieve their financial goals.

The forms can be very confusing, your margin lender customer service area should be able to help you set up your account.

You'll find that the actual account name will be in the nominee name of your margin lender, eg, St George Margin Lending is Value Nominees <account number a/c> with the margin lenders address details. With the address details your stockbroker will mail the contract notes to your margin lender for settlement.

Both the stockbroker and margin lender will put the contract details into their computer system and send a 101 CHESS message out to each other. As long as these messages are equal opposites (matching PIDs, stock code, stock quantity, price, contract date and settlement date) the settlement messages will schedule for settlement on the settlement date.

Cheers,

Dan

Have you looked a Macquarie Prime? Stock broking, margin lending and a high interest account all in one?

Unfortunately I contacted Bell Direct and they were unable to cater for this and I have to join Commsec... the joining is supposed to take 3 days or so but, its been a week and a half now... its unfortunate that I have to leave Bell esp as the Commsec interface is really ugly..

I had thought about MQ Prime but that doesnt really help me, I just wanted to stay with Bell and use another lender... anyways MQ Prime only runs on Windows XP.. thats pretty dumb.