Quote:
Originally Posted by flamesfever
Where are they going to get the money? Would you recommend borrowing to invest in the market?
|
Of course, I'm taking about people who have some cash on hand. For those who don't have cash on hand, they might consider borrowing to invest. This will shock some of you, but think of this. Sure, the market could have more downside, but no one knows that. I'm not sure I'd suggest investing a lot of borrowed money right now, but here is a plan to consider. Let's use a sum of $25,000 for an example. Decide that $25k is your target and decide on a plan to deploy it over period of, say, six months. Make the first deposit of $4167 immediately (better to have been yesterday, but what the heck) and arrange for an automatic deposit of that amount on the 15th of October and the 15th of every month going forward until the money is all invested. That reduces your risk.
Where will the investments be in a year? Haven't a clue. However, I'm guessing that the median age around here is maybe low to mid 30s. If so, you folks will be in the market for maybe up to 60 years. That's plenty of time.
Before someone shoots me down, I'm in my 50s and I've leveraged an amount that's well into six figures.
There are certain criteria that you should be able to meet before considering this, such as job security and the ability to make the interest payments. Done wrongly, leverage can be a wealth destroyer. Done properly, it can be a tremendous wealth creator.
This strategy is best done with non-reg investments, so that your interest should be tax deductible.
Oh, I should say this: If you scoff at this idea, how do you think true wealth is made? Look around you at the folks who are wealthy. Very few of them achieved it without leveraging.