If there’s one thing I don’t recommend, it’s buying stock on margin. Due to the volatility of stocks and high margin interest rates, borrowing money to buy stocks is a bad idea.

Conversely, I’m not opposed to buying a home on margin, namely through a mortgage, if buying follows a homebuying guideline like the 30/30/3 rule. Homes provide utility in the form of shelter, are generally held for around 12 years, can generate income, and are much less volatile. Mortgage rates tend to also be much lower than margin rates.

But the reality is, buying any risk asset on margin is risky, as it amplifies both losses and wins. If you borrow too much, you could wipe yourself out if you are forced to sell.

Let me use myself as a case study on buying stock on margin—why I did it, the potential repercussions, and the key questions you should

Keep reading this article on Financial Samurai.

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