137 votes

How is early-and-often home buying as "get rich" advice feasible?

How do you buy 1 house a year? You save up the money you make from the rent for a down payment on the next house. Then you save up the money from those two houses and buy two more the next year (or ...
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  • 114k
55 votes

Why cannot LLCs be used to negate increased risks when doing leveraged investments?

Answer: Due diligence by the lender. It occasionally happens, and sometimes the lending officer is in on a scam, but banks do not tend to loan money where there is a large chance that they will not ...
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  • 74.9k
35 votes
Accepted

Is CFD trading a good idea?

No, it's not a good idea. You started by saying you'd like to invest, but then mentioned something that's not an investment, it's a speculation. Both Forex and CFDs are not really investments. They ...
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34 votes

Can I see how a company is using its debt?

Money is 'fungible'. That means that any single dollar in circulation is identical to every other. If I pick up a lucky quarter on the street, and put it into my right pocket, then when I buy a candy ...
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32 votes
Accepted

Why don't index ETFs use leverage to offset their fees and eliminate tracking errors?

Leverage can be good to increase gains, but it amplifies movements of a stock. Also downward movements. Paired with the increased gains is also an increased risk, and that changes the investment ...
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  • 2,407
27 votes

Why cannot LLCs be used to negate increased risks when doing leveraged investments?

Alright, so the bank would still, then, agree to lend 10K against the 10K in equity, right? That still significantly increases profits (24% vs 15%) and would afford the same loophole. As a general ...
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  • 20.8k
24 votes

How is early-and-often home buying as "get rich" advice feasible?

20 years, or near that age. Buy 1 house a year. As you probably know this is near impossible to do. Have around 20 years and be able to get loan for buying house. You are on right track that you ...
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21 votes

Pros/cons of borrowing money using a mortgage loan and investing it in a low-fee index fund?

Risk is the problem, as others have pointed out. Your fixed mortgage interest rate is for a set period of time only. Let's say your 3% might be good for five years, because that's typical of fixed-...
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  • 31.4k
21 votes

Is CFD trading a good idea?

Now the question: is advisable for a beginner to speculate in CfDs? No. If not, is there a better way to invest with a small amount of money? In the US, and I'm sure this carries to the UK, most ...
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  • 48.5k
18 votes
Accepted

Is there any instance where less leverage will get you a better return on a rental property?

There are two obvious cases in which your return is lower with a heavily leveraged investment. When the interest payments on the loan outweigh the return. If a $100,000 investment of your own cash ...
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  • 30.3k
18 votes

How is early-and-often home buying as "get rich" advice feasible?

Whenever I learn about some scheme for making money, I always ask myself: Why aren't they doing this themselves? Why are they teaching this? It's likely they're teaching it, and spoiling it, instead ...
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17 votes

How is early-and-often home buying as "get rich" advice feasible?

It's possible. But a lot of layers of swiss cheese have to align at once (or rather, be aligned by a person with mad skillz). First, you must make reasonably good money - i.e. a highly skilled ...
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17 votes
Accepted

Need help understanding the use of leverage in the stock market

First, you're probably not going to get 5:1 leverage in the stock market. In the US, if you're holding the position overnight, you're limited to 2:1 leverage by Reg T. If you are a pattern day ...
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  • 20.4k
16 votes

Why cannot LLCs be used to negate increased risks when doing leveraged investments?

Where your scheme fails is the bankruptcy. It wouldn't work. You'd be personally liable: the shield wouldn't hold You get the loan. When you default on the payments, and certainly the moment ...
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12 votes

Why cannot LLCs be used to negate increased risks when doing leveraged investments?

I think you simply need to understand credit risk. A newly formed Corporation with zero operational history and a $10,000 bank account is, from a default risk perspective, a suicidal toddler with $10,...
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  • 48.5k
10 votes

Is there any instance where less leverage will get you a better return on a rental property?

Leverage means you can make more investments with the same amount of money. In the case of rental properties, it means you can own more properties and generate more rents. You exchange a higher cost ...
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  • 34.7k
10 votes

Is CFD trading a good idea?

If you have little investing experience, you shouldn't involve yourself in leveraged investments or short-term speculation at all. You will probably just lose money. If not, is there a better way ...
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  • 23.8k
9 votes

How is early-and-often home buying as "get rich" advice feasible?

a video on youtube which has thousands of views Wow, thousands of views! On a site with 1 billion users! He must really know what he's talking about! There is rarely a way to make tons of money with ...
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  • 3,601
9 votes
Accepted

Where can I invest into S&P500 without leverage

Member mhoran's comment was an answer. why not just invest with any of the dozens of mutual fund companies that have an S&P 500 index fund or ETF? The ETFs are more commonly not leveraged. ...
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7 votes

Figuring flood insurance into financing cost

We recently had a sump pump fail during a rainy weekend. Never had more than an inch or so of water on the floor. Total cost to remove the water, dry out the basement, and repair the damage to the ...
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7 votes

Financial leverage - why am I only responsible for my securities?

A CFD broker will let you open a trade on margin as long as your account balance is more than the margin required on all your open trades. If the required margin increases within a certain percentage ...
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  • 20.8k
7 votes

Why cannot LLCs be used to negate increased risks when doing leveraged investments?

Why cannot LLCs be used to negate increased risks when doing leveraged investments? If the investment performs poorly and in fact loses 50% in value, I end up with 50 - 95.4 = -45.4K in debt, after ...
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  • 5,067
6 votes

Investing in a leveraged index ETF for retirement. Risky?

I just compared UPRO and SPY from the time this question was originally posted on October 19th, 2011 through today (September 7th, 2016). See the chart here. The return for SPY was 78.7% and the ...
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5 votes

Pros/cons of borrowing money using a mortgage loan and investing it in a low-fee index fund?

Well for a start funds don't pay interest. If you pick an income-paying fund (as opposed to one that automatically reinvests any income for you) you will receive periodic income based on the ...
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  • 2,892
5 votes

Pros/cons of borrowing money using a mortgage loan and investing it in a low-fee index fund?

Risk. That's it. No guarantees on the fund performance, while the mortgage has a guaranteed return of -3%. I'm doing this very thing. Money is cheap, I think it's wise to take advantage of it, ...
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  • 244
5 votes

Is CFD a viable option for long-term trading?

Yes it is viable but uncommon. As with everything to do with investment, you have to know what you are doing and must have a plan. I have been successful with long term trading of CFDs for several ...
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  • 151
5 votes

Investing in a leveraged index ETF for retirement. Risky?

It is actually a good idea, if you plan on investing for 25+ years. If you look at (hypothetical, zero-error tracking) historical data, you will see that you almost always do MUCH better investing in ...
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5 votes

Figuring flood insurance into financing cost

Self-insure a $250K+ house that's deemed to be in a flood zone? Wake up, have coffee. If you don't change your mind, have another cup.
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5 votes

"Leverage" vs "buy a modest house"

It's really a matter of your tolerance for risk. It sounds like your local market is very strong, but I'm twice as old as you, and I've seen decades long strong markets fall apart and leave friends ...
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