Using Leverage when Young

Dear All,

I am interested in this specifc topic - whether using leverage when rather young (20-35 years) is an intelligent way (risk-adjusted) to improve returns to achieve FIRE earlier than initially planned.

Is anybody using any form of leverage?

  1. (Capital-)Leverage using debt (margin account)
  2. (Return-)Leverage using derivatives (options, futures and others)
  3. (Return-) Leverage using LEFT’s (Leveraged ETF’s)

If so, may I ask you what your concrete strategy is based on the leverage part of the portfolio? How much are you leveraging? What types of instruments are you using and why?

If not, what are the arguments against using leverage?


I don’t. But:

i also don’t. But:

A potential benefits of going leverage when young is to get more “constant” exposure to stocks over your lifetime.
Don’t get addicted though.
And I eventually advocate for leveraged ETFs vs margin and derivatives

Leveraged ETFs for the long term play is a trap for the math illiterate

Put two and two together a) they guaranteed you leveraged return on a daily basis only, b) you need always a bit higher return to recover from the loss, e.g to recover from -1% loss you need +1.01% and this only gets compounded by leverage

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Can work both ways. SP500 went from 880 to 3170 from 10.07.2009-today. So a 3.6x increase.
UPRO went from 2.09$ to 47.60$ in the same time, so 22.8x increase. That’s a 6.3 times higher return.

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I would like to hear your opinion about this 3x leveraged strategy with UPRO/TSM proposed buy Hedgefundie on

Initial strategy with detailed explanation (post # 1):

A small adaptation along the way:

Do you think the swiss tax office would consider this to be professional trading?

Ps: i do not plan to do it myself but find it interesting to talk about.

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At least one issue is that UPRO+TSM has a huge home bias for US folks, so if you’re not in the US that could be an issue.

I personally find risk parity super interesting, unfortunately there are currently no cheap way of implementing it (I wonder when cheap risk parity ETF will be a thing).

I’m also not 100% convinced that using leveraged ETF are actually the same thing as proper risk parity, I also have still not seen anyone explaining how risk parity is supposed to work with negative risk free rates (leveraging negative yielding bonds seems like a really bad idea).

Also I had the impression that risk parity fund didn’t do so well during the high volatility period back in March. (Might be because of the increasedb correlation between bond and stock?)

If you explain you’re doing risk parity, I don’t think it would be an issue, you’re not like daily trading, just trying to get a better risk adjusted return.


I’m looking to apply some leverage in my portfolio. I read recently life cylce investing and i found the idea and the results (they provide backtests in the book) really interesting.

after applying a discounted cash flow to my personal situation, i realize that i’m actually in a 85/15 allocation. despite being 100% in stock and having my 3rd pillar 100% in stock. so if i want to be diversified in time i better start applying leverage.

I have put a small portion of my portfolio in HFEA (55/45 UPRO/TMF). and i would like to have a 60/40 x2 leveraged portfolio. even a 40/60 (stock/bond) beats the SP500 with x2 leverage. backtest

40/60 x2 has 11.4 standard deviation, and 60/40 x2 13.8%, vs SP500 14.6%. so you get better CARG and better sharpe with a leveraged conservative portfolio.

once i get close to my f*ck you number, i would probably go for a SWAN strategy, this is 90% secure assets, like long and mid term bonds, with 10% leveraged on SP500.

i need to call my canton to discuss if this is considered professional trading. it’s always a grey area for me.

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You sure you want to do this?

In one of the reviews someone wrote „The 75/25 strategy and their approach had the same average wealth at end of life“.

75/25 is my approach shortly before FIRE. Before I‘m happy with 85/15 (The 15% mainly second pillar and some emergency fund money)

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