Read in Bloomberg that ppl use share financing to leverage stocks? What is shares financing?

Hello,

It basically means your loan is backed by your stocks (as collateral). And you use money to buy more shares.

Share financing refers to pledging your shares as collateral and taking a loan on that.

Share financing is subjected to a annual financing fee which can be found under the share financing section.

Share financing provide liquidity of funds as you will only need to fork out partial amount to buy shares and should be use carefully only if you fully understand the process. Leverage trading is not for everyone but can be a good tool to use. Example with risk involve, you might be able to gain a return of 5 % and by using share financing of 3.5% charge, you will be able to free up the amount by only forking up partial margin requirement instead of the whole amount and earn the extra 1.5% on another investment. However always remember things can go south and you might end up losing both investment.

Always plan carefully and RISK COMES FROM NOT KNOWING WHAT YOU ARE DOING. Always manage risk. Managing risk is the key to a sustainable investing journey.