Leverage means you get out of the safety zone where nobody can force you to sell your assets, i.e.: you might have to sell low even if you don’t want to. How likely that is and how it compares to the potential additional profits one can have is a matter of risk and profit assessments.
Things that could happen (not comprehensive):
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you could have an urgent need for money and need to sell assets, having to sell more of them than you otherwise would because of leverage (bad thing happening in your life, support for family/friends, etc.)
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the value of your assets can go down, forcing you to add new funds or deleverage. With a standard margin requirement of 100% (one can borrow up to the same amount as one’s initial assets, equity multiplier = 2):
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For a 1.1 equity multiplier, it happens after a drop of 81%
For a 1.2 equity multiplier, it happens after a drop of 66%
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Note that as major market drops tend to happen slowly, you would probably have the opportunity to invest more assets during the drawdown, making your stack able to withstand lower drops (that is if you still have money to invest and can manage the psychological barriers and/or familial pressure to/against doing so).
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The lender can unilaterally change the conditions of the loan, requirering more margin at the worst of time or, potentially most disruptive, deciding that your collateral is not safe enough for them anymore and writing it off completely, at which point, you would have to either close the loan or sell your collateral to buy something else that the lender would agree to be agreeable collateral.
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You can be subject to psychological tensions that can make your life way harder and/or push you to sell at the worst time or buy additional assets on margin at higher prices.
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You can be subject to the risk tolerance of other people in your life (most prominently life partner) that may put pressure on you and prevent you of buying when you should or forcing you to sell when it would not be a good time for it.
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A mix of the previous factors can happen. Shit tends to compound in hard times (loss of revenue due to a recession, loss of asset values due to a joint market crash, lender tightening their margin conditions due to the increased risk of default of their borrowers and life partner suddenly not liking that very risky asset allocation they did agree to when times were nice and it brought home outsized returns).
One thing to keep in mind, at least when it comes to IBKR (I haven’t checked other brokers) is that margin accounts don’t benefit from the same protections than cash accounts (mainly regarding segregation of assets).
The main thing I’d keep in mind is that when using margin, the bank/custodian has a hand on your assets → they’re subject to the will of other people than yourself. Not investing money we’re not willing to actually put at risk goes double when the investment is done on margin.
I’d say it depends on the need, ability and willingness to take risk. In my opinion, the need factor is the one that should guide a decision to invest on margin or not. People with very high need for higher returns might consider it. I wouldn’t do so based on simply having the ability and willingness for it as I think the changes of dynamics between cash and margin investing requires a very high motivation to make them worth it.
On a side note, there would also be a tax factor if we were subject to capital gains taxes (there is also a tax factor in the current Swiss situation but I don’t think it moves the needle in a significant way): live, borrow and die is a legitimate rich saving-investing-spending strategy that does use margin to finance purchases.