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The leverage means they go up faster, but they also go down faster. In regular investing you feel good when you get a modest return, and bad when you experienc
by krrrh 5y ago
The leverage means they go up faster, but they also go down faster.
In regular investing you feel good when you get a modest return, and bad when you experience a modest loss. With leveraged funds you feel like a genius when the market goes up and like a complete moron when you get wiped out.
- ZephyrBlu 5y agoI understand how leverage works, just not in the context of an index fund or ETF. From your description it sounds like the leverage is baked into it, so it's kind of like "safe" leverage in that you can't lose more than you have.
- krrrh 5y agoThis link explains it pretty well. There are other advantages from regular forms of margin too. https://www.investopedia.com/terms/l/leveraged-etf.asp https://www.investopedia.com/terms/l/leveraged-etf.asp