Leveraged investing, often referred to as leveraged investing, has become a popular strategy among investors looking for ways to maximize their returns. This approach involves using outside capital to expand investment opportunities and potential returns. However, it presents not only an attractive option, but also risks that must be thoroughly understood and considered.

What is leverage?

Leverage in investing reflects a principle from physics where a small force applied to a longer lever allows for greater efficiency and a greater result. In the context of finance, this means that an investor uses borrowed money to invest, increasing the amount of assets they can control and therefore the potential returns. Typical forms of leverage are borrowing to buy real estate, margin trading in the stock markets, or the use of leveraged ETFs that allow you to control a greater volume of securities than would be possible with your own funds.

Advantages of leverage

One of the main benefits of leverage…