In many cases you will use the cash you received using leverage and buy further investments. However, this cash can be used for anything you want. The interest rates on these loans can beat standard bank loans. You can even opt to never pay the loan back, which is essentially the ["buy, borrow, die"](https://smartasset.com/investing/buy-borrow-die-how-the-rich-avoid-taxes) strategy. When you die, whoever inherits your equities will get their cost-basis reset to the current value, thereby not incurring any capital gains if they sell.
+
In many cases you will use the cash you received using leverage and buy further investments. However, this cash can be used for anything you want. The interest rates on these loans can beat standard bank loans. You can even opt to never pay the loan back, which is essentially the ["buy, borrow, die"](https://smartasset.com/investing/buy-borrow-die-how-the-rich-avoid-taxes) strategy. When you die, whoever inherits your equities will get their cost-basis reset to the value at inheritance, which means no capital gains if they sell.
Taking a cash loan from your stocks is essentially a leveraged trade. You have pulled money out, while keeping your stocks, and therefore have increased your leverage. As an example, let's say you have $320k in stocks. Without any loan, your leverage ratio as defined above is: