leverage on ETF bonds second semester 2023

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popo13
Posts: 1
Joined: Wed Mar 08, 2023 10:26 pm

leverage on ETF bonds second semester 2023

Post by popo13 »

Hello all,

At the moment i'm almost full cash, around 100k$ avaible, 27 years old, and i'm exploring the possible investment options for 2023.
I'm not so confident about stocks, and like many of you i saw the values of bonds crashing severely.

My thesis was/is to wait a few months more and DCA buy on ETF long term bonds (+15 years), with leverage trough margin at x4 ratio. Then hold and expected a slight decrease in FED rate in the coming years (1-2% range, not more), and sell (at a profit :moneybag )

among the other things to know, i can borrow on margin at around 4% right now, usd or eur. i'm used to margin and to risk (full stocks on margin in the past years).

I appreciate all your inputs in advance, thank you.
homebuyer6426
Posts: 1830
Joined: Tue Feb 07, 2017 8:08 am

Re: leverage on ETF bonds second semester 2023

Post by homebuyer6426 »

Margin is not recommended. You can lose more money than you have, and quickly.

You do not have any special knowledge about the actions of the fed.

Bonds are for people who want a more stable, but lower, income than stocks for a portion of their portfolio. From your post, this is not your desire.

You are young and so my recommendation is to ignore your reservations and put most or all of your savings in a low-cost Total Stock Market fund. This is exactly what I did at your age and ten years later the value of this investment has doubled.

At your age more than any other, buy-and-hold investment decisions have the biggest compounding effect. You get the most out of your principal in your 20s. Don't squander it on gambles.
45% Total Stock Market | 52% Consumer Staples | 3% Short Term Reserves
daviddem
Posts: 274
Joined: Wed Jul 06, 2016 12:53 pm

Re: leverage on ETF bonds second semester 2023

Post by daviddem »

homebuyer6426 wrote: Thu Mar 09, 2023 9:59 am Margin is not recommended. You can lose more money than you have, and quickly.

You do not have any special knowledge about the actions of the fed.

Bonds are for people who want a more stable, but lower, income than stocks for a portion of their portfolio. From your post, this is not your desire.

You are young and so my recommendation is to ignore your reservations and put most or all of your savings in a low-cost Total Stock Market fund. This is exactly what I did at your age and ten years later the value of this investment has doubled.

At your age more than any other, buy-and-hold investment decisions have the biggest compounding effect. You get the most out of your principal in your 20s. Don't squander it on gambles.
Exactly this. Total Stock Market including developed economies and emerging markets, weighted by market cap. Throw all your money in there and never look at it again until you are 10 years from retirement. Two example of such ETFs:

iShares MSCI ACWI UCITS ETF (Acc)
Vanguard FTSE All-World UCITS ETF (USD) Accumulating
Stork
Posts: 175
Joined: Wed Feb 17, 2021 9:44 am
Location: Portugal (EU)

Re: leverage on ETF bonds second semester 2023

Post by Stork »

daviddem wrote: Thu Mar 16, 2023 3:13 am
homebuyer6426 wrote: Thu Mar 09, 2023 9:59 am Margin is not recommended. You can lose more money than you have, and quickly.

You do not have any special knowledge about the actions of the fed.

Bonds are for people who want a more stable, but lower, income than stocks for a portion of their portfolio. From your post, this is not your desire.

You are young and so my recommendation is to ignore your reservations and put most or all of your savings in a low-cost Total Stock Market fund. This is exactly what I did at your age and ten years later the value of this investment has doubled.

At your age more than any other, buy-and-hold investment decisions have the biggest compounding effect. You get the most out of your principal in your 20s. Don't squander it on gambles.
Exactly this. Total Stock Market including developed economies and emerging markets, weighted by market cap. Throw all your money in there and never look at it again until you are 10 years from retirement. Two example of such ETFs:

iShares MSCI ACWI UCITS ETF (Acc)
Vanguard FTSE All-World UCITS ETF (USD) Accumulating
Also, if you buy now you are at least certain you did not buy at the peak :happy
hithere
Posts: 198
Joined: Sat Mar 31, 2018 5:30 am

Re: leverage on ETF bonds second semester 2023

Post by hithere »

I'm not so sure the Fed will decrease the interest rates soon. This inflation is stubborn and it's a top priority for the Fed to get it back to normal. Essentially, you will be gambling by doing this, so not much different than going to the casino - some of the games there should provide similar return-to-player ratio and volatility. If this is the approach you like to take with investing, you can do that.

What I do is hold broad equity ETFs and leverage a little, like 1.05 or 1.1x, for the long term. Alternatively, one can leverage more than that with a bank loan, which nearly eliminates one big unknown (margin calls). If that still isn't enough for you, then your best bet would be to think of ways to increase your income rather than taking more risk than that. If your risk is high enough, it's only a matter of time until a bad sequence of returns or events wipes you out completely.
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