Why do people leverage?
First, let’s look at the basic premise behind a leverage. As I mentioned above, leverage can magnify gains versus monthly contributions. You could intuitively figure this out if you looked at a long-term graph showing the various stock market’s performance over the last 50 years. It basically goes “up and to the right” if you are standing far enough away from it! But if you start walking closer to the chart you will see numerous short-term gyrations that can make you sea-sick! Unfortunately I don’t have a chart that I can post here to show you, but I CAN direct you to AndexCharts.com which sells updated charts like this to advisors and investors alike – it really helps puts things into perspective. I have no personal gain for saying this, but I recommend buying a copy of this chart and correlating all the market events, wars, inflation rates, etc. with the market performance at those times – most “crises” in the short term were just “blips” in the grand scheme of decades of data. CLICK