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IFB289: Problems and Pitfalls of Investing with Debt
The Investing for Beginners Podcast - Your Path to Financial Freedom
The Dangers of Margin Calls
Investing with debt does not work because you have to pay interest on the debt, he says. "You're not going to get a good gain to offset that in any given month or year" The market can go down 20%, then fall another 10% before it goes back up - but at what point do you run out of money and put more money into your position? You've got to keep throwing money into it in these margin calls as they need more collateral to cover your borrowing.
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