Investing with leverage can amplify potential gains but also escalates risks, particularly for young investors seeking high returns through speculative assets like Bitcoin or trending stocks. The article discusses the troubling nature of leveraging, especially when it comes to chasing high-performing investments, as it can lead to margin calls and financial instability during market downturns. Even investments in perceived low-risk securities become hazardous when borrowed funds are involved. The piece references Warren Buffett's cautionary wisdom regarding the dangers of leverage in investing, emphasizing the fine balance between risk and reward.
Investing with leverage takes the risks to the next level. It may seem wise to jolt your wealth-creation journey, but it can lead to dangerous outcomes.
Even for those who opt to invest borrowed funds on safer securities, leverage tends not to be a good idea, making sound investments risky.
Warren Buffett warned investors about the pitfalls of levering up: "If you don't have leverage, you don't get in trouble."
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