Tuesday, March 24, 2020

Safe, Strategically Leveraged Strategies?


One of the hot trends in the recent years specifically targeted at HNWI who made their wealth outside of finance is to get leverage from their private banking to make leveraged investments into dividend stocks, REITs and even corporate bonds ($250,000 lot size).

Private banking really appeals to the ego of their clients, that they are so smart and wise to be so rich, so OBVIOUSLY they know that they can get even more gains taking on more risks.

I have also been hearing of people taking out personal loans to "buy the blood".

I am not here to tell you what is right or wrong, but I will say that such strategies are risky and if you do not know what you are doing, the risks of massive financial ruin is absolutely real.

Ironically, it is us plebians who do not have access to private banking facilities or want to take on extra credit that might come out of the other side unscathed, mainly because we are not even allowed access / would not even be able to imagine such risky strategies.

At the end of the day, it is your risk, your rewards. Your choice, your actions, your consequences.

Just know that mathematically speaking, leverage is a double edged sword and it slices both up AND DOWN.

If you do not know what you are doing, I strongly suggest to PAUSE, educate yourself, then make your decision.

I'm not saying not to do it. But I am saying that you should walk in with both eyes open and ready to face the dangers of what you are undertaking.

I cry over no leveraged dead men.

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