ELI5: margin

What is margin?

Margin is the space around something, like the blank edges on a piece of paper [1]. In money and investing, margin means borrowing money from your bank or broker to buy things, kind of like asking your parents for a loan to buy toys [2][4].

Why do people use margin?

Investors use margin to buy more stocks than they could afford with their own money, hoping to make bigger profits [2][6]. In doctors' work, margin refers to the edge of healthy tissue around a tumor that needs to be removed [3][5].

What happens if you use margin?

When you borrow money to invest, you have to pay it back with interest, which costs you extra money [4]. In medical situations, if doctors don't remove enough healthy tissue around a tumor (called a positive margin), the cancer can come back [5].

How do you calculate margin?

Margin is usually shown as a percentage that tells you how much profit you're making on a sale [2]. Banks and investment companies track your margin closely and can ask you to put in more money if your investments lose value [4].