Sorry I never invested in individual stocks. I simply leave RSU untouched, and maybe buy some SPY. I heard someone uses margin as leverage, with risk. So as long as you do not use too much margin, say 50%, which is good enough to defend a significant market correction of 50%. And the past 10 years, there has not been one. With good use of this leverage, you probably can x2 your asset each year. With $100k as the starting point, x2 for 10 years in a row is basically x1000, and it will be $100m, let alone you have cash flow always. So $1B should not be a problem. But why engineers with 10 YOE and 20 YOE are still coding? #personalfinance #investments
Because the margin is borrowing money on interest. You need to pay and this comes into equation
It's probably 2%, not negligible, but too small compared to the gain.
Because stocks drop 50% randomly from a pandemic and you’re poor again.
Yeah, the music stops when it stops, but it never did in the past 10 years.
Losing 20% means losing 40% of your money when You are 2x leveraged with Margin.
Margin is great fun if the stocks moving in the right direction. Once they change direction you lose money extremely fast due to the leverage.
For stock, it's linear right? The leverage is on both reward and risk.
Correct.
Op you need to learn a concept called “margin call”.
Your logic is wrong my man( I thought all developers are good in math ;-) margin and leverage works great on opposite direction lower risk, small increase on valuation. Why you think 90% of all multimillionaires (5m+) are such from RE, you get cheap money from fed to banks, then on 2.5%(2.9% investments) you use leverage and technically 5% increase is 25%, or 20% -> 100%, together with 10% dividend in rents, not to say in some markets if you bought land 1-2 years ago for 100k now is close to 1.5-2m( Taylor, Coupland - around Austin new Tesla, Samsung, Apple mega campuses), returns close to TSLA…..
Don’t forget property tax.
In real estate, there is no margin call. The house price fluctuation is okay. In the stock market, there is margin call in which the brokerage will force sell your shares at the low price and you will be broke again. Margin trading is like committing a financial suicide.
Or you could buy a hamster.
Because not all people have balls to put hard earned money on line. Many don’t monitor everyday
What is this math that "you probably can x2 each year" ?
Lol, because of the first law of thermodynamics
Because people want to cash out eventually, and thats when the music stops.