Want to increase the potential profit on your investment portfolio?
What would happen if you could use disproportionate strength to increase your portfolio’s profits? Then you would be using a strategy called “leverage” or “margin.”
In today’s show, Doug, and his son Efraim, talk about the pros and cons of investing using a leveraged strategy. When an investor decides to invest on margin, he is actually borrowing money from his broker in order to have a larger sum of money to invest. That way, if the stock goes up, he makes a larger percentage, and ultimately walks away with a larger sum of money.
If all goes well, an investor can make a lot of money. But, if the market goes down, one can find himself losing more money faster...
Listen to understand why a “long-term investor” needs to understand what a “margin call” is and why this may not be the best strategy for long-term investments. Don’t wake up one day to find out that your brokerage firm sold out your portfolio.
Efraim is a business student, former IDF officer, and an entrepreneur, head of “A Day with an Officer.” Contact him at: efraim@goldstein.co.il
