Adding leverage increases your risk, but increased risk is one way to possibly gain better returns. There are many ways to gain leverage, from using loans, to options, to futures.
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A fundamental question is how much leverage you want to use. Brokerages make it all too easy to over-leverage. I usually use a leverage ratio between 1.5 - 2. For example, if I have $100k cash, I may use that to invest a notional value of $150k in a diversified portfolio. A typical hedge fund might use a leverage ratio up to 5, so this is not exceedingly risky.
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A fundamental question is how much leverage you want to use. Brokerages make it all too easy to over-leverage. I usually use a leverage ratio between 1.5 - 2. For example, if I have $100k cash, I may use that to invest a
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value of $150k in a diversified portfolio. A typical hedge fund might use a leverage ratio up to 5, so this is not exceedingly risky.
People use leverage all of the time for home loans, and it is not unheard of to use a 80% loan to value ratio for a mortgage, or a leverage ratio of 5. For a $500k home, you might put up $100k cash and take a $400k loan. You would likely do this at a reasonable interest rate, and your hope is the value of the home goes up faster than your interest charges. Your home value could fall, leaving you with a mortgage that is underwater, i.e. you owe more than the home is actually worth. You could also lose your home in a disaster. All of this can apply to investing as well.
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Buying BND *might* be equivalent to shorting (selling) /10Y futures. Shorting /10Y means betting that current rates come down, which means bonds at older rates will go up in value. From a portfolio standpoint, bonds are usually included to reduce volatility. They also give some income, so I'm not yet sure if the short futures position can be considered equivalent. It is something to test long term.
See [Understanding Treasury Futures](https://www.cmegroup.com/education/files/understanding-treasury-futures.pdf) from the CME.
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### Cash loans with leverage
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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.
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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:
Both notional exposure and portfolio equity is equal, so your leverage ratio is 1. Let's say you now pull out $100k in cash, taking a margin loan. Your leverage ratio becomes: