The stock market - Toronto Stock Exchange and the US markets - plunge has some investors facing serious financial pressure that may cost them their home. Those who leveraged their home or borrowed against their property to invest and those who borrowed from their investment brokerage or bought on margin to buy stocks may be under extreme pressures to replace their stock market losses.

Many Canadian financial institutions and brokerage houses made buying on margin seem very attractive and, with the strong showing of technology stocks in this Internet-converted world, just plain good business. Investors could buy stocks without having to put up all the cash and they stood to make good profit with only the brokerage's fixed interest rate loan to repay when the stock was sold.

If an investor had strategies in place against the day stock prices took a tumble, the current downturn may not force unexpected or panic liquidation of other assets or the sale of their real estate. Those who leveraged their home or bought on margin without a second thought to an outcome other than making a pile of money, will be fighting feelings of panic that could further jeopardize their financial security.

Brokerages set an equity or cash requirement on investor margin accounts. If the equity drops below this level, the brokerage can issue a margin call asking the investor to top up the cash level in the account. If an investor cannot or will not do this, they must sell the stock to pay back the loan with only a few days notice.

Those who borrowed against their home to invest in the fashion promoted by Toronto investment guru Garth Turner may be saddled with mortgages long after most of their money has disappeared. Mr. Turner, whose books, speeches and television shows encouraged homeowners to get their home equity into the stock market so they would not fall behind financially in retirement, was quoted in Jonathan Chevreau's National Post column as saying: "It's a lot more serious, and rapid, than I thought the bursting of the tech bubble would be. This is going to bloody a lot of people. For the first time in their investing lives, many people will realize how fast they can lose serious money."

Investors who need cash to shore up their margin accounts should talk to their financial advisor to get some sound suggestions. Contacting a mortgage broker will reveal what possibilities lie in mortgaging home, cottage or other real estate holdings. A property may be mortgaged for more than its value provided the borrower can provide evidence of a strong ability to repay the debt. Check your phone book for a debt counselling service to help balance debt and avoid bankruptcy.

Published: April 18, 2000

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Futurist and Strategist PJ Wade is "The Catalyst" -- intent on "Challenging The Best Become Even Better." PJ earned this title by translating the dynamic impact of Boomers and their multi-generation families into relevant insights that start people thinking and taking action—in business and in life. Author of 7 books and more than 1600 published articles, PJ encourages individuals to become their own futurist. PJ writes and speaks about the insight, knowledge and solid decision-making skills that professionals and their clients need to live and work in this vortex of change. For instance, since PJ knows that home is headquarters for the new decades-long "unretirement," she wrote the popular book "Reverse Mortgages: Best Friend, Worst Enemy... Your Choice! (CatapultPublishing.com), which is filled with suggestions and insight on protecting and using home equity. Her new business book, "What's Your Point?," which identifies 7 common mistakes professionals unknowingly repeat to their detriment, will be published in 2009. As The Catalyst, PJ provides strategic communication, client appreciation and advanced education services to the financial, tourism, lifestyle and service sectors -- and the clients they serve. A frequently-quoted financial and business commentator, PJ is a thought-provoking strategic speaker who offers practical, real-life suggestions on leaving "the box" behind and embracing Forward Thinking -- a talent she regularly demonstrates in this column. For more on blogs, books and topics, visit TheCatalyst.com.