Is leverage investing always bad?

Leverage is GOOD.

1. Investors use leverage (borrow others' money) to make more money.
2. Platforms use leverage (their members' time & insights) to generate content & views for their Search Engine Optimization & selling ads.

Are tall buildings bad? No. but people climb on top of tall buildings & jump off.

Always remember. In life, you are presented with tools. How you use them dictates the good and bad. Give a man a fish Instead of teaching them, you create dependency. Or you could give them 1 fish and ask them to create value from it (resell and repackage, make a cooked fish etc). Or even teach him to fish, if fishing is his intention.

So for leverage, it's a tool that the wealthy commonly use. It's how the grow their wealth.

However, its a difficult tool to use, because it magnifies whatever result that you get. E.g if you are a chef, you use the correct knife to cut the correct stuff. If you didn't take precaution, you cut your fingers (sometimes by accident). But with proper training and knowledge, the risk is reduced (having finger protection).

So proper risk management (the skillset and knowledge) can help you to leverage (knife).

Hi there!

Leveraging isn't always bad - especially in stocks trading. Basically, what it does is that it magnifies your returns on your profitable trades, (and yes you've guessed it) as well as your losses on your non-profitable trades.

Another function of leveraging is that on certain trading platforms such as Saxo Capital Markets, an investor will need to use leveraging to purchase derivatives such as Options & Futures. Moreover, one would need to use leverage in order to "short sell" a stock.

However, as the others have mentioned and I would like to reiterate - leveraging is highly risky and one should never do speculative leveraging. Proper risk management can help to mitigate (but not entirely eliminate) these risks. For example: Adding a stop-loss order to your stocks that you purchased on leverage can prevent you from losing too much money in the event that the price of the stock does not go according to plan.

No. One man's food is another man's poison.