I was reading WCI's article "In Defense of Bonds".
http://www.mdmag.com/physicians-money-digest/personal-finance/in-defense-of-bonds
There he states:
"Young investors are also short-sighted in choosing a 100% equity portfolio. If they are truly risk tolerant and want to maximize their investing returns, why stop at 100%? Because it is a nice round number? It is not difficult to design a portfolio with 110%, 150%, or even more exposure to equities using leverage and/or options."
I am truly risk tolerant and want to maximize my expected returns. Currently I invest in lieu of paying back student loans. Don't have a mortgage yet but I'll probably invest instead of paying that off quickly as well. If I lose it all who cares. Is it possible to get more expected value with margin/leverage? I always thought that the interest rates they charge more than outweighs the expected returns of an index fund in a taxable account.
Is this false? Or was that a bad argument in the article? I'm sure some consider this foolish but how does the math shake out?
http://www.mdmag.com/physicians-money-digest/personal-finance/in-defense-of-bonds
There he states:
"Young investors are also short-sighted in choosing a 100% equity portfolio. If they are truly risk tolerant and want to maximize their investing returns, why stop at 100%? Because it is a nice round number? It is not difficult to design a portfolio with 110%, 150%, or even more exposure to equities using leverage and/or options."
I am truly risk tolerant and want to maximize my expected returns. Currently I invest in lieu of paying back student loans. Don't have a mortgage yet but I'll probably invest instead of paying that off quickly as well. If I lose it all who cares. Is it possible to get more expected value with margin/leverage? I always thought that the interest rates they charge more than outweighs the expected returns of an index fund in a taxable account.
Is this false? Or was that a bad argument in the article? I'm sure some consider this foolish but how does the math shake out?
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