Margin Management

---
name: margin-management
description: Monitor the margin-living strategy from the live DB snapshot. Refreshes the local database first, then reads margin balance, interest costs, dividend coverage ratio, and portfolio-to-margin thresholds. Triggers safety alerts for large draws and gives time-based scaling recommendations. Use when updating margin, balances, coverage ratio, or margin strategy analysis.
---

# Margin Management

## Purpose

Monitor and manage margin-living strategy by tracking margin balances, interest costs, dividend coverage ratios, and portfolio-to-margin safety thresholds. Provides data-driven scaling recommendations based on strategy milestones.

## Step 0: Refresh (sync-first, mandatory)

This skill reads margin facts from the local DB, and the DB is refreshed FIRST so it can never be stale. Follow the shared **[Sync-First + DB-Read](../_shared/SyncFirstDbRead.md)** pattern. Minimum for this skill (positions + balances into the `balances` table):

```bash
uv run python -m src.integrations.snaptrade.sync_db   # or: refresh_all
```

Completion criterion: _the `balances` table carries this run's `synced_at` before any margin number is read._

## When to Use

Use this skill when:
- Syncing live margin balances from SnapTrade
- Updating margin balance or interest rate
- Calculating coverage ratio (dividends ÷ interest)
- User mentions: "margin dashboard", "margin balance", "coverage ratio", "margin strategy"
- Assessing margin scaling decisions
- Checking safety thresholds

## Personal Strategy Inputs

Static private assumptions come from `.env` (see `.env.example`). Current portfolio facts come from the **local DB `balances` snapshot** (refreshed sync-first in Step 0), then `src/analysis/margin_metrics.py` derives ratios/costs at runtime. Do not hardcode personal numbers in this skill. Fallbacks: `--source snaptrade` reads the API live, `--source csv` reads the legacy Fidelity balances CSV.

### Required `.env` values

- `FG_STRATEGY_START_DATE`
- `FG_MARGIN_INTEREST_RATE`, `FG_MARGIN_INTEREST_RATE_DECIMAL`
- `FG_MARGIN_JUMP_ALERT_THRESHOLD`
- `FG_CURRENT_MONTHLY_DRAW`, `FG_MONTH6_DRAW_TARGET`, `FG_MONTH12_DRAW_TARGET`, `FG_MONTH18_DRAW_TARGET`
- `FG_BUSINESS_INCOME_MONTHLY`, `FG_BUSINESS_INJECTION_RED`, `FG_BUSINESS_INJECTION_CRITICAL`
- Live facts are not `.env` values: portfolio value, margin balance, interest cost, dividend income, coverage ratio, and portfolio-to-margin ratio must be read/calculated at runtime.

## Core Workflow

### 1. Read Margin Balances (local DB snapshot)

After Step 0's refresh, run `uv run python -m src.analysis.margin_metrics --pretty`. It loads `.env`, reads the latest `balances` row from `family_office.db` (the `db` source is the default), and emits current JSON metrics. Fallbacks if needed: `--source snaptrade` (live API) or `--source csv` (latest `Balances_for_Account_*.csv`).

**Source**: the `balances` table, written by the Step 0 sync from the enabled+routed SnapTrade account in `config/snaptrade-accounts.yaml` (`enabled: true`, `role` set). Requires `SNAPTRADE_*` keys in `.env` for the refresh.

**Key JSON fields the tool emits**:
- `portfolio_value` → net account equity (`account_equity`) → Portfolio Value
- `margin_balance` → derived margin debt (gross market value minus net equity) → Margin Balance
- `monthly_interest_cost` → Balance × Rate ÷ 12 (the primary interest figure)
- `margin_interest_accrued_this_month` → **null on the DB and SnapTrade paths** (the broker does not expose accrued interest; it is only present via `--source csv`)

**Calculations**:
- **Margin Balance**: Derived margin debt = {live.margin_balance} (tracks Fidelity "Net debit" within ~0.1%)
- **Interest Rate**: Default ${FG_MARGIN_INTEREST_RATE} (Fidelity $1k-$24.9k tier) unless specified
- **Monthly Interest Cost**: Balance × Rate ÷ 12 = {live.margin_balance} × ${FG_MARGIN_INTEREST_RATE_DECIMAL} ÷ 12 = {derived.monthly_interest_cost}

### 2. Safety Check: Margin Jump Alert

**Rule**: If new margin balance > previous balance + ${FG_MARGIN_JUMP_ALERT_THRESHOLD}, **STOP**

**Reason**: Large draws should be intentional per margin-living strategy

**Example**:
```
Previous: {live.margin_balance}
Current: {example.margin_current} (+{derived.margin_increase}) → 🚨 ALERT - Confirm intentional draw
```

**Action**:
- Alert user immediately
- Show diff: "Margin increased by {derived.margin_increase} - Confirm this was intentional"
- Wait for user confirmation before proceeding

### 3. Report the current snapshot

There is nowhere to write an entry: `balances` is a current-state table keyed on
`account_id`, so each sync overwrites the prior row and no ledger accumulates.
Report the snapshot in the response instead.

- _Date_: current date (use `date +"%Y-%m-%d"`)
- _Margin Balance_: `margin_debt` from the `balances` row
- _Interest Rate_: ${FG_MARGIN_INTEREST_RATE}
- _Monthly Interest Cost_: Balance × Rate ÷ 12
- _Elapsed_: months since ${FG_STRATEGY_START_DATE}, which selects the scaling tier below

### 4. Derived metrics

#### Monthly Interest Cost

```
margin_debt × ${FG_MARGIN_INTEREST_RATE} ÷ 12
```

#### Annual Interest Cost

```
monthly_interest_cost × 12
```

#### Dividend Income

Sum `type = 'DIVIDEND'` rows in `transactions` for the trailing month. See the
`dividend-tracking` skill; do not recompute its aggregation differently here.

#### Coverage Ratio

```
monthly_dividend_income ÷ monthly_interest_cost
```

Guard the zero case: when `margin_debt` is 0 there is no interest to cover, so
report coverage as not-applicable rather than dividing.

### 5. Calculate Strategy Metrics

#### Portfolio-to-Margin Ratio
```
= Total account value ÷ Margin Balance
Example: {live.portfolio_value} ÷ {live.margin_balance} = {derived.portfolio_margin_ratio} 🟢🟢🟢
```

**Safety Thresholds**:
- 🟢 **Green**: Ratio > 4.0:1 (target - healthy margin usage)
- 🟡 **Yellow**: Ratio 3.5-4.0:1 (warning - pause scaling)
- 🔴 **Red**: Ratio < 3.0:1 (alert - stop draws, inject business income)
- ⚫ **Critical**: Ratio < 2.5:1 (emergency - inject ${FG_BUSINESS_INJECTION_CRITICAL}, consider selling)

#### Current Draw vs Fixed Expenses
```
Current monthly draw: ${FG_CURRENT_MONTHLY_DRAW} (fixed expenses only)
Target: Start with ${FG_CURRENT_MONTHLY_DRAW}, scale to ${FG_MONTH6_DRAW_TARGET}, ${FG_MONTH12_DRAW_TARGET}, ${FG_MONTH18_DRAW_TARGET} based on data
```

### 6. Scaling Alerts (Time-Based)

**Strategy Start Date**: ${FG_STRATEGY_START_DATE}

**Calculate months elapsed**:
```python
import os
from datetime import datetime

start = datetime.fromisoformat(os.getenv("FG_STRATEGY_START_DATE"))
current = datetime.now()
months_elapsed = (current - start).days // 30
```

#### Month 6 Alert
```
📊 MONTH 6 MILESTONE CHECK:
✅ Dividends: {live.monthly_dividend_income}/month (need ${FG_MONTH6_DIVIDEND_MINIMUM})
✅ Portfolio-to-Margin Ratio: {derived.portfolio_margin_ratio} (need 4:1+)
✅ Dividend Growth: On track

🎯 RECOMMENDATION: Scale margin draw to ${FG_MONTH6_DRAW_TARGET}/month (add mortgage)
- Current: ${FG_CURRENT_MONTHLY_DRAW} (fixed expenses only)
- New: ${FG_MONTH6_DRAW_TARGET} (fixed + mortgage)
- Safety margin: Excellent
```

#### Month 12 Alert
```
📊 MONTH 12 BREAK-EVEN CHECK:
Expected Dividends: ${FG_MONTH12_DIVIDEND_TARGET}/month (goal: break-even with margin interest)
✅ IF achieved: Consider scaling to ${FG_MONTH12_DRAW_TARGET}/month (add some variable expenses)
⚠️ IF not: Hold at ${FG_MONTH6_DRAW_TARGET}, assess strategy
```

#### Month 18 Alert
```
📊 MONTH 18 MATURE STRATEGY CHECK:
Expected Dividends: ${FG_MONTH18_DIVIDEND_TARGET}/month
Expected Margin: Declining (dividends paying down debt)
✅ IF achieved: Consider scaling to ${FG_MONTH18_DRAW_TARGET}/month (most variable expenses)
⚠️ IF not: Hold current level, reassess timeline
```

### 7. Alert Thresholds

**Generate alerts based on conditions**:

#### Green (Healthy)
```
✅ Ratio > 4:1 AND dividends covering interest
Status: On track, continue per strategy
```

#### Yellow (Caution)
```
⚠️ Ratio 3.5-4:1 OR dividend coverage declining
Action: Pause scaling, monitor weekly
```

#### Red (Alert)
```
🚨 Ratio < 3:1 OR dividend cuts detected
Action: STOP draws, inject ${FG_BUSINESS_INJECTION_RED} business income
```

#### Critical (Emergency)
```
⛔ Ratio < 2.5:1 OR margin call risk
Action: STOP draws, inject ${FG_BUSINESS_INJECTION_CRITICAL} business income, consider selling hedge (SQQQ)
```

## Critical Rules

### This skill is read-only

`family_office.db` is written by the sync CLIs alone. Never hand-edit rows to
make a metric look right; fix the sync that wrote the bad row instead.

### Margin Strategy Philosophy

**Core Principle**: Confidence-based scaling, not time-based mandates

**Decision Framework**:
1. **Data-driven**: Decisions backed by actual dividend income, not projections
2. **Safety-first**: Never scale if ratio drops below 3.5:1
3. **Business income as insurance**: Available ${FG_BUSINESS_INCOME_MONTHLY}/month, not primary strategy
4. **Monte Carlo backstop**: ${FG_BUSINESS_BACKSTOP_PROBABILITY} of scenarios used business income at some point

## Business Income Backstop

**Available**: ${FG_BUSINESS_INCOME_MONTHLY}/month from business operations

**Usage Scenarios**:
1. ⛔ **Margin call (ratio < 3:1)**: MUST USE business income immediately
2. ⚠️ **Market correction (20-30% drop)**: OPTIONAL - assess need
3. 🎯 **Acceleration (reach FI faster)**: OPTIONAL - strategic choice

**Current Philosophy**: Insurance policy only, not active strategy component

## Example Calculations

### Scenario 1: Month 1 (Current State)
```
Portfolio Value: {live.portfolio_value}
Margin Balance: {live.margin_balance}
Ratio: {derived.portfolio_margin_ratio} 🟢🟢🟢

Monthly Interest: {derived.monthly_interest_cost}
Dividend Income: {live.monthly_dividend_income}
Coverage: {derived.coverage_ratio} 🟢

Status: Excellent - building foundation
```

### Scenario 2: Month 6 (Projected)
```
Portfolio Value: {projection.month6_portfolio_value} (projected with W2 contributions)
Margin Balance: {projection.month6_margin_balance} (scaled to ${FG_MONTH6_DRAW_TARGET}/month draw)
Ratio: {projection.month6_portfolio_margin_ratio} 🟢

Monthly Interest: {projection.month6_monthly_interest_cost}
Dividend Income: ${FG_CURRENT_MONTHLY_DRAW} (projected)
Coverage: {projection.month6_coverage_ratio} 🟢

Status: Healthy - on track for break-even
```

### Scenario 3: Month 15 (Break-Even)
```
Portfolio Value: {projection.month15_portfolio_value}
Margin Balance: {projection.month15_margin_balance} (scaled to ${FG_MONTH12_DRAW_TARGET}/month draw)
Ratio: {projection.month15_portfolio_margin_ratio} 🟢

Monthly Interest: {projection.month15_monthly_interest_cost}
Dividend Income: {projection.month15_monthly_dividend_income}
Coverage: {projection.month15_coverage_ratio} 🟢

Status: Break-even achieved, dividends > interest
```

## Data Source

Margin balance, buying power, and maintenance requirement come from the `balances` table in `family_office.db`, refreshed sync-first (Step 0). The Margin Dashboard sheet was retired 2026-07-31.

The `balances` columns are `account_id`, `currency`, `settled_cash`,
`buying_power`, `account_equity`, `gross_market_value`, `margin_debt`, and
`synced_at`. There is no `maintenance_excess` column; maintenance headroom is
derived, not stored.

```bash
sqlite3 family_office.db \
  "SELECT synced_at, account_id, settled_cash, buying_power, account_equity, margin_debt
   FROM balances ORDER BY synced_at DESC;"
```

`balances` is keyed on `account_id`, so it holds one current row per account and
no history. Read `synced_at` to confirm the row belongs to this run's refresh
before deriving anything from it.

Cash-management accounts sync through SimpleFIN into `bank_transactions`, deliberately outside the brokerage `balances` table, so they never distort the portfolio-to-margin ratio.

## Reference Files

For complete strategy details, see:
- _Margin Strategy_: `strategies/active/margin-living-master-strategy.md`
- _Portfolio Strategy_: `strategies/active/portfolio-master-strategy.md`
- _User Profile_: `user-profile.yaml`
- _Account routing_: `config/snaptrade-accounts.yaml`

## Pre-Flight Checklist

Before reporting margin metrics:
- [ ] SnapTrade account is enabled+routed in `config/snaptrade-accounts.yaml` and `SNAPTRADE_*` keys are in `.env`
- [ ] `DATABASE_URL` is set in `.env`
- [ ] The `balances` row carries this run's `synced_at`
- [ ] Current date retrieved via `date` command

---

_Educational purposes only. Not investment advice. Margin borrowing carries risk of loss exceeding your deposit, and a margin call can force liquidation at unfavourable prices. Consult licensed financial and tax professionals before acting._

## Example Scenario

**Trigger**: User asks to sync/refresh margin from SnapTrade

**Agent workflow**:
1. ✅ Pull live SnapTrade balances - Portfolio: {live.portfolio_value}, Margin: {live.margin_balance}
2. ✅ Safety check - Previous: $0, Current: {live.margin_balance} (+{live.margin_balance} < ${FG_MARGIN_JUMP_ALERT_THRESHOLD} threshold) - PASS
3. ✅ Calculate metrics:
   - Monthly interest: {derived.monthly_interest_cost}
   - Portfolio-to-margin ratio: {derived.portfolio_margin_ratio}
   - Coverage ratio: {derived.coverage_ratio} (dividends ÷ interest)
4. ✅ Add entry to Margin Dashboard:
   - Date: {today}
   - Balance: {live.margin_balance}
   - Rate: ${FG_MARGIN_INTEREST_RATE}
   - Cost: {derived.monthly_interest_cost}
   - Notes: "Month 1 - Building foundation, on track"
5. ✅ Update summary section:
   - Current balance: {live.margin_balance}
   - Monthly cost: {derived.monthly_interest_cost}
   - Annual cost: {derived.annual_interest_cost}
   - Dividend income: {live.monthly_dividend_income}
   - Coverage: {derived.coverage_ratio}
6. ✅ Generate status: "🟢 Excellent health - Ratio {derived.portfolio_margin_ratio}, Coverage {derived.coverage_ratio}"
7. ✅ LOG: "Updated Margin Dashboard - Month 1, {live.margin_balance} balance, {derived.portfolio_margin_ratio} ratio"

---

**Skill Type**: Domain (workflow guidance)
**Enforcement**: BLOCK (financial risk critical)
**Priority**: Critical
**Line Count**: < 400 (following 500-line rule) ✅