After thinking through this a little more, here is my updated plan-
1. I want to stay fully invested(100% equities) to maximize my return since I don't need this money hopefully for 30+ years.
2. I do want to make use of these big corrections though, i.e put more money in whenever market tanks. I won't have that option because of #1.
So alternatively, when I write my IPS I am thinking of saying something like -
"Use x% of margin in IB if market falls x% where x = 10, 20, 30, 40 or 50". i.e I won't start buying on margin until there is at-least a 10% correction and will keep buying all the way down to 50%.
3. I did end up using good amount of margin at IB already but plan to pay it all by the end of year(sooner possibly). So in future I will only be using margins as per #2.
Cost of margin as I said before is almost free because of the dividends. Doesn't look like interest rates will rise anytime soon either.
Re:margin call, IB's Portfolio margin requires only 15% equity. They might increase it during turbulent time and I would have to pivot based on that. Current plan is assuming it stays at 15% and interest rates stay low. Per my calculations in current scenario even if S&P goes to 1500, I shouldn't get a margin call.
[/Update]
Background
35 years old. Prior investing experience was mesh up of trials and failures with options/crypto/private equity etc! Realized what stupidity I was up to all these years after reading through posts here. You guys are amazing and have so much clarity in your answers! Looking some for myself.
Situation
I had been following bogleheads since October, wanting to learn investing and then make use of my savings and recent RSU vests with hopefully better results.
I felt I had got it and finally had the courage to go all in. Reading through previous posts for dca vs lump sum, decided to go lump sum with a purchase of $600k [vtsax:vtiax:vbtlax 60:30:10] on wonderful afternoon of 02/19
On 03/11, I now have unrealized losses of $120k(and if futures are any indication, another $25k tomorrow) - all in sweet and short span of 3 weeks!
Not planning to sell a single stock though, hopefully for many years to come.
Problem
I do feel frustrated for missing out on an easy $100-150k gain if I had dcaed or just waited for couple of weeks. Specially after not being in market from 2013-2019.
(I know if won't matter in 30+ years when I retire but getting a head start of 20-25% gain in first month of investing would have been awesome!)
To minimize my regret of missing out, I am doing something dangerous which this forum has usually advised against, i.e using leverage to buy at these sale prices. I am moving half of my assets from VG->IB and then use them as collateral to buy more of VTSAX/VTIAX. I qualified for a Portfolio Margin account as well and interest rates are very low, like 2.2%. I feel like I do hit the goldilock conditions required to make it work.
My rational to give leverage a try is-
1) I am expecting reasonable cash flows for next 3 years. Should have extra ~$250k to invest in market every year at-least for next 3 years.
So, let's say if I move $250k of my money to IB and borrow another $250k, I should be able to pay it back pretty quickly.
2) These 20-25% discounts on S&P 500 don't come very often(I only see 2011 & 2018 in this bull market). So buying at these prices I can make up for not being in the market all these years. I didn't know much about investing and played with stupid stuff like options/crypto etc past 5 years.
3) I am on a work visa, so worst case if I do loose my job and don't have the funds to keep fueling these accounts, it won't matter as I will have to go back to my home country in 30 days anyways.
4) Cost of this leverage as per my understanding will be negligible, dividends from shares bought on loan should cover the interest part.
I do get this sinking feeling of I am doing something wrong, which has usually been right but still can't stop my greed to try it out.
Disaster in making?
