Get interest on $100K by spending only $2K using FOREX rollovers?
"I'm smart enough to know that the answer to your questions is 'no'.  There is no arbitrage scenario where you can trade currencies and be guaranteed a return. If there were, the thousands of PhD's and quants at hedge funds like DEShaw and Bridgewater would have already figured it out. You're basically trying to come up with a scenario that is risk free yet yields you better than market interest rates.  Impossible. I'm not smart enough to know why, but my guess is that your statement ""I only need $2k margin"" is incorrect.  You only need $2k as capital, but you are 'borrowing' on margin the other 98k and you'll need to pay interest on that borrowed amount, every day.  You also run the risk of your investment turning sour and the trading firm requiring a higher margin." No free lunch You cannot receive risk-free interest on more money than you actually put down. The construct you are proposing is called 'Carry Trade', and will yield you the interest-difference in exchange for assuming currency risk. Negative expectation In the long run one would expect the higher-yielding currency to devalue faster, at a rate that exactly negates the difference in interest. Net profit is therefore zero in the long run. Now factor in the premium that a (forex) broker charges, and now you may expect losses the size of which depends on the leverage chosen. If there was any way that this could reliably produce a profit even without friction (i.e. roll-over, transaction costs, spread), quants would have already arbitraged it away. Intransparancy Additionaly, in my experience true long-term roll-over costs in relation to interest are a lot harder to compute than, for example, the cost of a stock transaction. This makes the whole deal very intransparant. As to the idea of artificially constructing a USD/USD pair: I regret to tell you that such a construct is not possible. For further info, see this question on Carry Trade: Why does Currency Carry Trade work? I work at a FOREX broker, and can tell you that what you want to do is NOT possible. If someone is telling you it is, they're lying. You could (in theory) make money from the SWAP (the interest you speak of is called SWAP) if you go both short and long on the same currency, but there are various reasons why this never works. Furthermore, I don't know of any brokers that are paying positive SWAP (the interest you speak of is called SWAP) on any currency right now. Now, is there any clever way to combine FOREX transactions so that you receive the US interest on $100K instead of the $2K you deposited as margin?  Yes, absolutely. But think about it -- why would the interest rates be different? Imagine you're making two loans, one for 10,000 USD and one for 10,000 CHF, and you're going to charge a different interest rate on the two loans. Why would you do that? There is really only one reason -- you would charge more interest for the currency that you think is less likely to hold its value such that the expected value of the money you are repaid is the same. In other words, currencies pay a higher interest when their value is expected to go down and currencies pay a lower interest when their value is expected to go up. So yes, you could do this. But the profits you make in interest would have to equal the expected loss you would take in the devaluation of the currency. People will only offer you these interest rates if they think the loss will exceed the profit. Unless you know better than them, you will take a loss.
You have two problems, money exchange commissions and currency risk. Commissions are always exorbitant. First you must find the cheapest way to get your money converted to the foreign currency and into your brokerage account. The absolute cheapest way may involve some research and financial institution maneuvering. Also I'd forget about anything other than USD for the foreseeable future. Any other foreign currency will probably have higher commissions and a weaker market. Once you have that down, you must avoid needlessly exchanging currencies. Keep a balance in the foreign currency, keep all dividends and capital gains there, and only take local money out of your brokerage account right before using it.  That means of course that you need to keep enough local currency to pay taxes on any gains, etc. As for currency risk, there are two solutions. One solution is to buy your risk away using forex. You sell an amount of USD/AED lots that is mostly equivalent to your current investments and then just make sure you don't get margin calls. I'm not sure just how cheap your rates would be in the UAE, but, on average, your investments should still have positive returns. The other solution is to just stop seeing exchange rate fluctuations as losses. If you had USD 100k and now you have USD 115k how are you losing money? Exchange rates can go the other way just fine, you know, and holding USD is a good way to hedge against your country going south. "Leverage here is referring to ""financial leverage"". This is the practice of ""levering"" [ie increasing, like the use of a lever to increase the amount of weight you can lift] the value of your investment by taking on debt.  For example: if you have 100k in cash, you can buy a 100k rental property. Assume the property makes 10k a year, net of expenses [10%]. Now assume the bank will also give you a 100k mortgage, at 3%. You could take the mortgage, plus your cash, and buy a 200k rental property. This would earn you 20k from the rental property, less 3k a year in interest costs [the 3%]. Your total income would be 17k, and since you only used 100k of your own money, your rate of return would now be 17% instead of 10%. This is financial leveraging. Note that this increases your risk, because if your investment fails not only have you lost your own money, you now need to pay back the bank. ""Beta riders"" appears to be negative commentary on investors who use Beta to calculate the value of a particular stock, without regard to other quantitative factors. Therefore ""leveraged beta riders"" are those who take on additional risk [by taking on debt to invest], and invest in a manner that the author would perhaps considered ""blindly"" following Beta. However, I have never seen this term before, and it appears tainted by the author's views on Quants. A ""quant process driven discipline"" appears to be positive commentary on investors who use detailed quantitative analysis to develop rules which they rigorously follow to invest. I have never seen this exact phrasing before, and like the above, it appears tainted by the author's views on Quants. I am not providing any opinion on whether ""beta riding"" or ""quant processes"" are good or bad things; this is just my attempt to interpret the quote as you presented it. Note that I did not go to the article to get context, so perhaps something else in the article could skew the language to mean something other than what I have presented." "For the vast majority, ""buying"" a house via a mortgage is not an investment.  I use quotes around buying because from a technical perspective you don't own anything until you've paid it off; this is often an important point that people forget. It's highly unlikely you'll make more on it than the amount you put into it (interest, repairs, etc).  Even with relatively low interest rates. The people who successfully invest in homes are those that use actual cash (not borrowed) to buy a home at well below market value.  They then clean it up and make enough repairs to make it marketable and sell it shortly there after.  Sometimes these people get hosed if the housing market tumbles to the point that the home is now worth less than the amount they put into it.  This is especially problematic if they used bank loans to get the process going.  They were actually the hardest hit when the housing bubble popped several years ago.  Well, them and the people who bought on interest only loans or had balloon payments. Whereas the people who use a mortgage are essentially treating it like a bank account with a negative interest rate.  For example, $180k loan on a 30 yr fixed at 4% will mean a total payout of around $310k, excluding normal repairs like roofs, carpet, etc.  Due to how mortgage's work, most of the interest is collected during the first half of the loan period.  So selling it within 2 to 5 years is usually problematic unless the local housing market has really skyrocketed. Housing markets move up and down all the time due to a hundred different things completely out of your control.  It might be a regional depression, weather events, failed large businesses, failed city/local governments, etc.  It could go up because businesses moved in, a new highway is built, state/local taxes decline, etc. My point is, homes are not long term investments.  They can be short term ones, but only in limited circumstances and there is a high degree of risk involved.  So don't let that be a driving point of your decision. Instead you need to focus on other factors.  Such as: what is really going on with the house you are currently in?  Why would they lose it?  Can you help out, and, should you help out?  If things are precarious, it might make more sense to sell that home now and everyone move into separate locations, possibly different rentals or apartments.  If they are foreclosed on then they will be in a world of financial hurt for a long time. If we ignore your parents situation, then one piece of advice I would give you is this: Rent the cheapest apartment you can find that is still a ""safe"" place to live in.  Put every dollar you can into some type of savings/investment that will actually grow.  Stay there for 5+ years, then go pay cash for a nice home.  Making $75k a year while single means that you don't need much to live on.  In other words, live extremely cheap now so you can enjoy a fantastic living experience later that is free from financial fear.  You should be able to put $30k+ per year aside going this route. edit: A bit of support data for those that somehow think buying a home on a mortgage is somehow a good investment:   Robert Shiller, who won a Nobel prize in economics and who predicted the bursting of the housing bubble, has shown that a house is not a good investment.  Why?  First, home prices (adjusted for inflation) have been virtually unchanged for the past 100 years.  (link 1, link 2)  Second, after you add in the costs of maintenance alone then those costs plus what you've paid for the home will exceed what you get out of it.  Adding in the cost of a mortgage could easily double or even triple the price you paid which makes things even worse.  Maintenance costs include things like a new roof, carpet/flooring, water heater, appliances, etc. Yes, a home might cost you $100k and you might sell it for $200k after 15 years.  However during that time you'll likely replace the roof ($10k to $20k), replace appliances ($2k to $5k), water heater ($1k), carpet/flooring ($5k to $20k), paint ($3k to $6k), and mortgage related costs (~$60k - assuming 30 yr fixed @4%).  So your ""costs"" are between $180k and $200k just on those items.  There are many more that could easily escalate the costs further.  Like a fence ($5k+), air conditioner ($5k+), windows, etc. The above is assuming the home actually appreciates in value faster than inflation: which they historically haven't over the long term.   So you have to consider all of the costs ultimately paid to purchase and maintain the home vs the costs of renting during the same time period.   Point is: do your research and be realistic about it.  Buying a home is a huge financial risk." With new cars it's usually the other way around: finance at a low APR or get cash back when you buy it outright. With used cars you usually don't know how much they have invested in the car, so it's more difficult to know how low they're willing to go. Regardless, I do think it's odd that they would knock 2K off the price if you finance with them, but not if you pay cash. The only reason they would do that is if they intend to make at least 2K in interest over the life of the loan, but they have no way of guaranteeing you won't refi. Therefore, I suspect they are bluffing and would probably close the deal if you wrote them a check (or put the cash on the table) for 2K less. However, if they won't budge and will only knock off 2K if you finance, you could finance and pay it off in full a week later. Just make sure they don't have any hidden origination fees or pay-off-early fees. The reason it's not automatic is that Questrade doesn't want to force you to convert in margin accounts at the time of buying the stock. What if you bought a US stock today and the exchange rate happened to be very unfavorable (due to whatever), wouldn't you rather wait a few days to exchange the funds rather than lose on conversion right away? In my opinion, Questrade is doing you a favor by letting you convert at your own convenience. I'm sorry I guess what i meant to say was, what's the downside here? Why isn't everyone doing this, what am i missing? Someone clarified that i'm completely exposed to FX risk if I bring it back.   What if I am IN australia, how would I do this, short USD's? "In my experience working at a currency exchange money service business in the US: Flat fees are the ""because we can"" fee on average. These can be waived on certain dollar values at some banks or MSBs, and sometimes can even be haggled.  If you Google EURUSD, as an example, you also get something like $1.19 at 4pm, 9/18/2017. If you look at the actual conversion that you got, you may find your bank hit you with $1.30 or something close to convert from USD to Euro (in other words, you payed 10% more USD per Euro). And, if you sell your Euro directly back, you might find you only make $1.07. This spread is the real ""fee"" and covers a number of things including risk or liquidity. You'll see that currencies with more volatility or less liquidity have a much wider spread. Some businesses even go as far as to artificially widen the spread for speculators (see IQD, VND, INR, etc.). Typically if you see a 3% surcharge on international ATM or POS transactions, that's the carrier such as Visa or Mastercard taking their cut for processing. Interestingly enough, you also typically get the carrier-set exchange rate overseas when using your card. In other words, your bank has a cash EURUSD of $1.30 but the conversion you get at the ATM is Visa's rate, hence the Visa fee (but it's typically a nicer spread, or it's sometimes the international spot rate depending on the circumstances, due to the overhead of electronic transactions). You also have to consider the ATM charging you a separate fee for it's own operation. In essence, the fees exist to pad every player involved except you. Some cards do you a solid by advertising $0 foreign exchange fees. Unfortunately these cards only insulate you from the processing/flat fees and you may still fall prey to the fee ""hidden"" in the spread. In the grander scheme of things, currency exchange is a retail operation. They try to make money on every step that requires them to expend a resource. If you pay 10% on a money transaction, this differs actually very little from the mark-up you pay on your groceries, which varies from 3-5% on dry food, to 20% on alcohol such as wine." No, it's not a good idea. You started by saying you'd like to invest, but then mentioned something that's not an investment, it's a speculation. Both Forex and CFDs are not really investments. They are a zero sum game where over time, it's a pool of your money, the other trader's money, and the broker, redistributed over time.  If you truly wish to invest, you'll read up on the process, understand your own long term goals, and put aside X% (say 5-15) of your monthly income. You should look into investments that are long term, and will fund your retirement 30-40 years hence.