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Can you explain what this means? What does borrow against your stock mean

• yCombLinks 6y ago
  At most brokerages, etrade for example, you can take out a loan with what you own as collateral. https://us.etrade.com/bank/line-of-credit https://us.etrade.com/bank/line-of-credit
  • boromi 6y ago
    Got it, but I still don't understand what "And if you want some leverage, borrow against your stock with a credit line." means. How does this increase leverage?
    • kradroy 6y ago
      By borrowing against your securities you have more cash to invest. You've put a multiplier on the amount you can invest. That's leverage. However, you have to pay back the loan with fees and interest. This increases risk because you could end up owing money rather than just having none if the securities crash.