Thursday 23 December 2021

Decided to close my IG trading account

I haven't needed to do any trades on my '12% solution' portfolio for the past few months, which saved on trading costs. However, I got an email reminded from IG that there is a quarterly 'fee' charged on accounts that have any open positions (ie not just holding a cash balance) but haven't done at least three trades in the quarter. I thought the fee was $25 per quarter, but the latest email stated the fee is $50 per quarter (it might have increased recently?), so just have the portfolio sitting there will cost me around $200 pa. AS the portfolio is only worth about $15K, this equates to a holding cost of around 1.3% pa. I also funded the portfolio using my St George home equity loan, which charges around 4.98% interest. So the overall cost is around 6.3%. Theoretically it is still profitable (but risky) to maintain this position, as the '12% solution' portfolio is expected to produce returns of around 12% pa, but in absolute terms the annual pre-tax profit after interest and account keeping costs will only be around $900 pa, or around $600 ($10 per week) after tax. I decided to close out my positions today/tonight and when the funds clear next week (T+3) I pay off part of my St George loan and close my IG account. If nothing else it will simplify my monthly NW and annual tax return calculations slightly.

I'll probably also close a couple of online savings accounts as it doesn't make much sense to have money sitting in savings accounts earning less than the cost of my portfolio loan. I'd also like to shut down my peer-to-peer lending account with Pleni, but I have some 5-year term investments that don't mature for another 3-4 years, and  there would be a 'break cost' to try to liquidate these immediately.

Subscribe to Enough Wealth. Copyright 2006-2021

No comments: