Dec 3 2014, 03:26 PM
QUOTE(the99percent1 @ Dec 3 2014, 01:55 PM)
I know necro thread, but here is my thinking.. Young people want to invest, but don't have capital to diversify enough. Stocks is all about diversification and holding long time investments..
This is where leverage capital can help you! 25k becomes 87.5k capital to invest.. this will help you diversify and minimize your risk. Add the fact you are young (early 20s to 40s), over your working life, you can easily bare this risk..
Better to invest 87.5k in your 20s than 200k when you are 50!..
That's my thinking of how leverage can help young people who lack serious capital for investments.
My strategy is to invest 200 percent of my savings (yes 200%) of my savings into stocks and start scaling back when i'm 40 (ie, 200% at 25, 200% at 32, 150% at 37, 100% at 40, 50% by 55).
By doing so, I minimize my risk by diversification AND maximize my stock gains by using time on my side..
But then you might need insurance as well. You're assuming, as a young person, that your earning capacity won't be diminished. If for instance in the future you are involved in a car crash, or something happens that makes you lose your sight, or hearing, or an arm or a leg or whatever, how are you going to continue contributing to the company? This is where leverage capital can help you! 25k becomes 87.5k capital to invest.. this will help you diversify and minimize your risk. Add the fact you are young (early 20s to 40s), over your working life, you can easily bare this risk..
Better to invest 87.5k in your 20s than 200k when you are 50!..
That's my thinking of how leverage can help young people who lack serious capital for investments.
My strategy is to invest 200 percent of my savings (yes 200%) of my savings into stocks and start scaling back when i'm 40 (ie, 200% at 25, 200% at 32, 150% at 37, 100% at 40, 50% by 55).
By doing so, I minimize my risk by diversification AND maximize my stock gains by using time on my side..
Your risk is that something could happen to you between now and age 40 that would limit your earning potential, and thus your ability to repay the loan. To mitigate this, you will have to take out insurance. This ensures that if anything happens, your debts are still paid and you are still a going concern. This is more for reassuring the bank than anything else, they will want to know that you are still a good risk if anything happens to you
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