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Here, we briefly outline the benefits and risks of an investment strategy known as 'leveraging'.
Is leveraged investing right for you?
An effective investment strategy you can use to boost your investments is 'leveraging' which means borrowing money to invest, with the expectation that your investment returns will be greater than the cost of borrowing.
Investors choose leveraging to build a larger investment portfolio sooner. Borrowing to invest can add substantially more assets to your mutual fund portfolio over time.
Why be fully invested?
One of the benefits of leveraged investing is that you can be fully invested closer to the beginning of your investment time horizon. This may be preferable to you rather than waiting and accumulating savings over time.
Equity markets experience their greatest gains during relatively few days of the year. These days are impossible to predict. By being fully invested, you will have as much as possible invested during these high growth periods.
Make Taxes Work for You
Another reason leveraged investing gives you the potential for good value is because interest on money borrowed for non-registered investment purposes may be tax-deductible, which means the actual cost of borrowing may be lower than your loan interest rate.
What's more, by reinvesting any tax refund, you can further increase the growth of your mutual fund portfolio.
Review Legal and Regulatory Information.
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