Using leverage responsably for long term personal investing

Based on a recent thread about levered ETFs - Is there a way to use leverage in a responsible manner to optimize long term returns? Not looking for short term trading strategies, mostly looking to see if there longer term approach to use leverage to optimize a multi-asset personal portofolio. For added context I have a WM account with UBS/MS that holds equity ETFs and is rebalanced a couple times a year. Im fairly young, dont plan to use the funds for a while, and have high risk tolerance.

Wouldnt ask an FA because they face asymmetric returns when recommending riskier strategies to clients.

WSO Elite Modeling Package

  • 6 courses to mastery: Excel, Financial Statement, LBO, M&A, Valuation and DCF
  • Elite instructors from top BB investment banks and private equity megafunds
  • Includes Company DB + Video Library Access (1 year)

Comments (2)

Jun 10, 2021 - 1:39pm

You can't really get gains long-term using a leveraged ETF. Because the losses are also magnified. And losses hurt an ETF more than the gains will gain. However, you can use short day/swing trading to profit.…

Read this article before you put any money behind a leveraged ETF

The easiest way for a retail investor to use leverage long-term is to put a downpayment on 4-5 houses and then rent them out to cover the mortgage. Great anti-inflation vehicle because you can always increase rent. In 30 years you will own 4-5 houses for the price of the down payment and maintenance fees. At this point you are either cash flow positive, or you cold sell the houses as 3x-4x what you paid. Of course, it is easier said than done, but it is a tried and true way for normal people to make a few million by the time they hit 55-60. 

Start Discussion

Total Avg Compensation

June 2021 Investment Banking

  • Director/MD (9) $911
  • Vice President (35) $364
  • Associates (202) $234
  • 2nd Year Analyst (115) $151
  • Intern/Summer Associate (97) $145
  • 3rd+ Year Analyst (27) $145
  • 1st Year Analyst (420) $131
  • Intern/Summer Analyst (338) $82