Another Day, Another Question
Welcome back! Today I’m going to respond to the top question that I’ve received about lifecycle leverage: what if I wipe out?
That is, what if using leverage makes my portfolio go to $0?
This is a totally valid question, and top of mind as we experience a potential stock market correction. However, I think that most people with this concern focus on the wrong scenarios. We’ll see that as you increase leverage, your likelihood of going to $0 increases, and under certain situations, leverage constraints can force you out of the market involuntarily, which is quite bad.