There are a number of simple but effective methods that can help you manage risk and avoid margin calls. They include:

Borrow less than the maximum
An investor who borrows less than their portfolio's maximum lending value is far less likely to experience a margin call.

Use investment income
Fund distribution can be used to reduce your loan balance or increase your portfolio value, lowering your gearing ratio.

Pay your interest regularly
Capitalising interest will increase your gearing level, since it increases your loan balance. That's why it can make sense to pay interest as you go.

Ensure you have sufficient cash flow
Work out your interest payments and other costs in advance. Remember that interest rates may rise or you may be required to meet a margin call within short timeframes.

Diversify
Diversification helps to smooth out volatility, making a margin call less likely. When you spread your portfolio across different companies and sectors, a fall in the value of one investment may be offset by a rise in the value of another. Furthermore, you can take advantage of Commsec Portfolio LVR when you hold 5 or more accepted securities.

Monitor your investments
Regularly monitor the market and your margin loan, and be prepared to adjust your strategy when the market outlook is less positive. Your account information is available anytime online.

For more information on Margin Calls, please call CommSec Margin Lending on 13 17 09 or +61 2 9115 1402 if calling from overseas (Monday to Friday, 8am to 6pm, Sydney time) and an Account Manager will be able to further assist.