Individual Investors Get Burned by Collapse of Complex Securities

Re:Individual Investors Get Burned by Collapse of Complex Se... by yCombLinks on Monday June 01, 2020 @05:12PM (#23383888)

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

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Re:Individual Investors Get Burned by Collapse of Complex Se... by boromi on Monday June 01, 2020 @06:14PM (#23384632)

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?

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Re:Individual Investors Get Burned by Collapse of Complex Se... by kradroy on Tuesday June 02, 2020 @01:42AM (#23387878)

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.

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