Borrowing to invest is also called getting leverage, or leveraging. You can leverage by:- Going to a bank and taking out a loan. You may use the equity in your home to back up or secure the loan. If you do this, what will happen if your investment loses money? You may have to sell your home to pay back the loan.
- Borrowing money through a brokerage firm. This is called buying on margin. If you do this, what will happen if things don’t work out? You will have to put more of your own money into your account to cover your losses. Make sure you have a back-up plan for how you would handle this problem.
- Short selling. Here you borrow shares of a stock from your brokerage firm, and sell them at their current price. If the share price falls, you buy back the shares on the open market at the lower price. Then you give back the borrowed shares.
- What will you do if the shares go up, not down, in value? You will lose money. You will have to pay more to buy the shares back and return them to your brokerage firm.
Popular Posts
-
The climate in Tbilisi ranges from humid and subtropical to mild and continental, although the evenings can be chilly throughout the year. I...
-
Dr. Michael Stifelman provides an overview of robotic surgery for prostate cancer in this video interview. Robotic Surgery for Prostat...
-
The hermetic kingdom of Bhutan, which has a population of just 700,000, is regarded with reverence by discerning travellers in search of spi...
-
Treatment of a kidney stone that is causing obstruction depends upon the size and location of the stone, as well as your pain and ability ...
-
An LP takes about 30 minutes. The doctor carefully inserts a thin needle below the spinal cord — between the bones of the lower spine (verte... -
The original plan of the town was laid out by the Lusignans, but when the Venetians took over in 1489 they completely renovated the enclosi...
-
Prague Castle Gardens Gardens were founded in 1534. Nice view of Prague Castle, quiet place for refresh. There are these gardens: The Royal ...
-
Table loan This is the most common type of home loan. You can choose a term up to 30 years with most lenders. Most of your early repayments ...
-
No law or professional standard requires that radiologists determine in advance whether a patient of childbearing-age is pregnant [1]. Howe...
-
Most lenders today offer a fixed-period or “hybrid” ARM,—which is an adjustable-rate mortgage that features an initial fixed interest rate p...
No comments:
Post a Comment