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Dividends on Leveraged Investments

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Financial Planning -> Stocks, Bonds etc. -> Borrowing to Invest -> What to Do With the Dividends

What to Do With the Dividends When you Have Borrowed to Invest

You've borrowed to invest, and now you're collecting dividends on your investments.  What should you do with the dividends?

When you receive dividends on the investments that you have purchased with borrowed money (leveraged), it is best to transfer them to another account.  This way, the amount of your debt will remain equal to the cost basis of your investments, making record keeping much easier.  If you want to reinvest the dividends, this also keeps your leveraged investments separate from your non-leveraged investments.

Previous:

bullet Methods of borrowing
bullet Setting up the brokerage account
bullet Buying the stocks and ETFs

Next:  Selling the stocks and ETFs

 

Tax Tip:  Transferring your dividends out of your leveraged investment account will make your record keeping simpler.

 

Revised: September 19, 2017

 

 

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