What caught my eye this week.

A bad week for those who long for sunlit uplands swathed in magic money trees.

National insurance rates up. Dividend tax rates up. The triple-lock on pensions suspended.

It’s good that the government has at least made a stab at fixing the social care crisis, with a new cap on lifetime costs.

But otherwise the best that can be said about this week’s machinations is that nearly everyone has something to moan about.

Time to pay

Credulous people who voted to leave the EU on the promise of a £350m a week ‘dividend’ for the NHS – £17bn a year – might wonder why their incomes are now being docked in part to fund the health service.

Those who saw in Tory Brexiteers a plan for Singapore-on-the-Thames might question why taxes on wealth creators are rising and UK graduates will soon face a marginal tax rate of effectively 50% [search result].

Meanwhile those on the left – for whom even the unprecedented hundreds of billions of public money spent on Covid relief measures wasn’t enough – have been reminded that one way or another the bill always come due.

And those who argue – with some justification – that today’s low rates mean it’d be better for the government to keep borrowing rather than hiking taxes are re-learning that politics doesn’t work that way.

All this while the economy stops and starts, supply chains snag, and the US return to work stalls.

A rebuke to those who thought we could just put daily life into suspended hibernation via repeated lockdowns without deep economic consequences.

Tax take

None of this is to argue that lockdowns, the pausing of the triple-lock, extra money for the NHS, or even Brexit was necessarily a bad thing.

Well not today, anyway.

I’m just highlighting that this week’s reality check ought to be felt more widely than simply in one’s (digital) wallet.

It’s a theme picked up by Merryn Somerset-Webb in the FT [search result]:

You might be beginning to feel the sands shifting slightly beneath your feet.

Nothing is quite what it used to be — or supposed to be.

Indeed. When even the cosseted pensioner class starts complaining, the times are surely a-changing.

For us as investors of course, it’s (always) time to take evasive action.

This latest mishmash of tax measures makes things yet more complicated.

But nobody is more interested than you are in getting yourself through this tax maze.

(And yes, National Insurance is just income tax with better PR).

Hands off my castle

Make strenuous efforts to fill your ISA to avoid being taxed on your gains again later.

(Probably) only after contributing all you can to your pension, to truly soften the blow.

But when we recover from this week of tax whammies, we might ask ourselves why those owning property outside of a limited company were spared a hit to their income.

Or why as ever Government policy is hellbent on protecting those who would inherit a family home from the impact of social care costs.

All at the expense of young people from less-moneyed backgrounds who stand no chance of ever buying their own home.

It’s all very feudal.

Most Britons are against inheritance tax paid by those who’ve done nothing to earn it.

Yet they will shake their fist at this week’s tax hike on others struggling just to get by – whether young wage earners or pensioners living off dividends.

I suppose we can’t see the wood for our own magic money trees.

[continue reading…]

This is my take on the important elements of a bond fund / ETF1 webpage.

By running through the info that I pay careful attention to, my hope is that new investors will find it easier to understand bonds and to do due diligence on an asset class that many find confusing.

• If you’re doubtful about the wisdom of owning bonds, learn more to see why they may still be a good investment.

• If you’re truly a bond refusenik you can also check out my equity-orientated article on how to read a fund factsheet.

Diving into a bond fund

I’ll illustrate my approach using the webpage for iShares Global Government Bond ETF (IGLH).

iShares fund webpages are pretty good overall. They contain much that you need as well as plenty that you don’t.

Other fund providers offer similar fare, but the data may be labelled differently.

If any of the information below is AWOL from a bond fund webpage or factsheet then I mark it down versus other candidates on my shortlist.

Fund name and overview

Fund names can reveal quite a lot of information, which makes up for them being about as memorable as a robot’s serial number.

Our fund names explained piece reveals what’s in a boring name.

Several funds may share a similar name but actually invest in materially different sub-asset classes.

It’s like going to a big family gathering, when you’re age seven, and meeting an endless parade of uncles and aunts. They all seem friendly but you’re mystified as to how they relate to you.

A fund family tree can reveal a hierarchy of spin-offs (known as share classes) that differ by currency, cost, income distribution, and so on.

Note down the ISIN number, SEDOL, or ticker. This way you can guarantee you’ll get the same product when you later search for it via your broker’s platform. Don’t rely on the fund name.

iShares have a nice dropdown menu just under the fund name that reveals your choice of share classes.

Vanguard doesn’t always list its funds’ available share classes, but the passive giant typically offers both Accumulating and Income flavours. Check your broker or dealing platform to see if it offers the version you’re after.

Investment objective

Check the fund’s description mentions the sub-asset class you expect the fund to track.

For example: ‘developed world government bonds’.

I also look for a phrase like ‘…tracks the performance of an index…’ to affirm I’m definitely dealing with an index tracker.

Performance

Past performance is not the big deal many people think it is.

You can’t tell anything from one-year returns and not much from three years.

Five years gives you a sense of how well the fund matches up against its rivals. Ten years is far better, and about as much data as you can expect for free.

But what really matters is your strategic asset allocation and the role your fund fulfills in that.

If you decide an asset class belongs in your portfolio, then make sure:

• Your fund properly captures that market – see the benchmark index section below.

• It’s not outclassed by its peers. (I’ve explained before how I use past performance to compare the best bond funds on the market.)

It’s irrelevant that a particular global government bond fund lost 1% over the last three years, provided other global government bond funds lost much the same.

Don’t worry if your fund trailed a competitor by 0.5% in one year. Subtle differences in index composition and fund methodology can easily explain that away. Your fund may well beat the pack next year.

However if your pick consistently underperforms its near-rivals by that amount or worse, on a five-year view, then investigate why.

If your fund always lags when you compare like with like, then switch to another.

Key facts

iShares’ ‘Key Facts’ mostly just need a quick eyeball to check nothing is amiss.

Net assets or Assets Under Management (AUM)

Small funds are vulnerable to closure if they don’t attract enough investment cash. Assume new funds will get 12-months to prove themselves profitable.

Anything over £100 million in assets under management should be okay.

Remember you don’t lose your money if your fund closes. Its underlying assets still retain their market value.

However your shares will be sold on closure of the fund. That could trigger Capital Gains Tax, if your fund isn’t tucked inside your tax shelters.

You also run the risk of an adverse market movement when you’re sitting in cash.

Your provider may offer two AUM figures.

A larger one labelled ‘fund’ or ‘umbrella’ is liable to be the sum of the master fund’s share classes.

Go with the smaller figure, which concerns your particular sub-fund.

Currency

Your exposure to currency risk depends on the currency your fund’s underlying assets are priced in.

Remember, you are still taking currency risk if you choose a GBP (British Pound) version of an unhedged fund that invests in overseas securities.

If your global bond fund holds US, Japanese, and German securities, say, then you’re exposed to the pound’s exchange rate versus those country’s currencies.

Terms like base currency, denominated currency, or fund or share class currency refer to the currency your fund reports in. These are simply accounting terms.

Trading currency means the currency the fund is bought and sold in on your local stock exchange. That makes no difference to currency risk but choosing GBP can save currency conversion fees.

You’re only shielded from currency risk if your bond fund explicitly states it is hedged to GBP or if it only holds securities priced in pounds. 

• Dive deeper into currency risk and the hedging decision.
• For more on global government bond funds.

Ongoing Charge Figure (OCF) / Total Expense Ratio (TER)

Your fund’s headline cost is a key metric. Cheap is good and less is more when it comes to fees.

But neither the OCF nor TER include all charges due. 

Fund providers routinely deny us the complete picture because they’re not harried into full disclosure by the regulator.

For instance, transaction costs add up like baggage fees on a budget airline flight.

I give bonus transparency points to providers who publish transaction costs on their fund’s webpages. Xtrackers does this, for instance.

Vanguard scores half marks because it publishes its extra expenses – but only in an obscure PDF squirrelled away on its website. 

If iShares does us a similar service then it keeps it quiet like a shameful family secret.

You can uncover the impact of undisclosed charges using this tracking difference technique.

Product Structure / Replication Method

Physical means your ETF actually holds the assets it claims to track.

Duh, yeah. So what?

Well, you’d think that it’s de rigueur but it’s not…

Because in contrast synthetic means your ETF typically does not hold the assets it aims to track.

Instead, investors’ cash is ploughed into a derivative that matches the return of the fund’s index. 

Synthetic ETFs get to the same place as physical funds by way of ever-popular financial engineering.

The term synthetic has an image problem nowadays. Hence these synthetic ETFs are usually branded as ‘indirect replication’ or ‘swap’.

But I don’t particularly discriminate between physical and synthetic because both types usually come bundled with counterparty risk, anyway.

Methodology

Sampled or optimised means the fund doesn’t hold every last security covered by its index. Very few funds do because small and illiquid securities rack up costs while making little difference to your returns.

You can use tracking difference to test whether the methodology’s deviation from the index has historically cost much by way of return.

Securities lending return

Many funds lend out your securities to short sellers (including active fund providers that often neglect to mention it, incidentally).

Your provider’s lending policy should be published. Some portion of the fees earned may be paid to the fund, which should nudge up its returns.

Securities lending exposes physical funds to counterparty risk, however.

I don’t worry about this risk but I’m aware of it. I think of it as a tie-breaker situation.

Ideally, my choice will keep its securities under lock and key. If it lends them out, then I want the highest possible share of the profits. 

But if one fund lends and regularly beats my other candidates then yeah, I’ll probably take jam today. 

Domicile

Where is the fund based and regulated? Most ETFs are quartered in Ireland and Luxembourg. The UK regularly crops up for funds, as opposed to ETFs.

A UK domicile offers you the comfort of the FSCS compensation scheme.

Ireland and Luxembourg’s equivalents are much less generous.

Ireland’s double-taxation treaties give it a withholding tax edge over Luxembourg.

Benchmark index

Trackers track indexes. That’s their job so make sure you get the right match. Google the index and read its factsheet.

Think about:

• What market does the index track?
• Does that market adequately capture the asset class returns you’re after?
• Is the index widely used by the industry? If not, why not?
• Can you find good information about the index?
• Is the index diversified? If not, does that matter?
• Do the index holdings overlap with other funds you own? That can mean the fund is redundant in your portfolio.
• Does the index guard against over-concentration by capping the weight of its constituents? If not, do its rivals?

Other Key Facts

Risk rating – I don’t think this offers much in the way of genuine information. Still, if you think that you’re buying a low-risk fund but the rating indicates Indiana Jones-style adventures ahead… that could be a sign something is wrong. 

UK reporting status (UKFRS) – Check it’s a yes, otherwise you may pay excessive tax.

UCITS – Again, we’re after a straight yes. This is comforting EU regulation that was transposed into UK law after Brexit.

Use of income – Distributing or Income means interest will be paid into the account of your choice – handy for retirees. Accumulating or capitalising means the fund automatically reinvests your payouts – handy for accumulators.

Minimum investment – Don’t be thrown if this says something like £100,000. That is directed at institutional investors, not us. Look for the product on your investment platform. If stocked then you’ll be able to invest the minimum decreed by your broker – £50 or whatever.

Portfolio characteristics

These elements are key to understanding what you’re getting from a bond fund:

Yield to maturity (YTM)

This is the annualised return you’d expect to receive if you invest in a bond and hold it to maturity (accounting for its market price and the remaining interest payments, which are assumed to be reinvested at the same rate).

Providers will often display other yields but yield to maturity is the only one you really need. That’s because you can use it to compare similar bonds that vary by price, maturity date, and coupon rate.

The Investor wrote a classic piece about the most common bond yields.

Maturity

We often talk about short, intermediate, and long bonds on Monevator. Those lengths refer to the average maturity dates of a bond fund’s holdings:

• Short-dated bond funds are the least risky, least rewarding and least sensitive to interest rate changes.
• Long-dated bond funds are the most risky, most rewarding (potentially) and most sensitive to interest rate changes.
• Intermediate bond funds sit somewhere in the middle. They hold short and long bonds, along with medium maturities, in a diversified portfolio.

See the duration metric below for a practical measure of your fund’s interest rate risk.

• Short bond average maturities are five years and less.
• Long bond average maturities are 15 years and more.
• Americans think of five to seven years as the intermediate maturity sweet spot. But gilts skew longer.

Long bond funds should have a higher yield to maturity and duration than short bond funds of a similar type.

Duration

Duration can be used to gauge your bond fund’s sensitivity to interest rate changes:

As a rule of thumb, a bond fund with a duration of 7 will:

• Lose 7% for every 1% rise in its yield to maturity.
• Gain 7% for every 1% fall in yield to maturity.

Whatever your bond fund’s duration number, that’s roughly how big a gain or loss you can expect for every 1% change in its yield.

Duration helps you assess the risk you’re taking, assuming you have a strong opinion about the future direction of bond interest rates. 

There are multiple types of duration but it’s not worth losing sleep over the slight differences between them.

This piece on bond prices helps explain how interest rate changes impact bond yields.

Credit rating / credit quality

Credit quality is a verdict on the financial strength of the bond issuer as delivered by the main credit rating agencies.

The lower the rating, the greater the perceived risk that the borrower will fail to pay their debts.

All things being equal, investors demand higher interest rates from weak borrowers.

Annoyingly, many providers don’t publish an average credit rating for their fund’s holdings. Kudos to Vanguard who does.

So when you’re parsing your fund’s credit quality chart, be mindful of these thresholds:

• AAA is tip top.
• AA- and above is considered to be high-quality.
• BBB- and above is investment grade.

Anything below investment grade is junk. (That’s the industry term, not my opinion. Well, not exactly! A less evocative term for junk is ‘high-yield’).

Only investment grade to high-quality funds belong in the defensive side of your asset allocation.

Investors flee to quality in a crisis. So that’s when you need your bond funds to come through.

Beware – Some naughty providers feed you the index’s key characteristics and not the fund’s. That’s a serious transparency transgression.

Sustainability characteristics

Given the finance industry is deluged with greenwash, I don’t pay much heed to self-reported sustainability metrics.

If you think that sounds glib then please read this Monevator piece on the complexity of Environmental, Social, and Governance investing.

Here’s my take from the days when trying to do good was called Socially Responsible Investing

Holdings

I look at the Top 10 holdings to ensure they tally with what I think the fund does.

I’ll also check the Top 10’s percentage weights to verify my pick isn’t over-concentrated in comparison to its alternatives.

A diversification once-over isn’t necessary for gilt funds. All gilts are high-quality bonds priced in pounds. There’s no need to look under the bonnet.

I also stop short of wading through spreadsheets that name-check hundreds of holdings. I’m not qualified to judge individual securities.

What’s more, I’m not a masochist. This article not withstanding. 

Exposure breakdowns

Reading the portfolio breakdown section is like checking the ingredients label on a supermarket food item. Write-off the calories, wince at the sugar content, then stare blankly at the long list of emulsifiers and other chemical mysteries.

Well, there’s no sugar in bonds but it’s worth corroborating there aren’t any other nasty surprises in store.

Returning to our iShares Global Government Bond ETF candidate, you may be surprised to see that the currency exposure on a global government bond fund is 99.6% pound sterling. However that simply confirms we’re definitely looking at the hedged version.

The currencies listed show you what currency risk you’re taking in an unhedged fund.

The geographic breakdown verifies this fund invests purely in the developed world. I don’t attempt to second-guess whether, for example, 7.35% German bunds is just the right amount, however. Knowing that is about as useful to me as wine notes:

“Oh, this bond fund has wonderful notes of coarse sausage, accented with wild French garlic, and a heavily hocked public sector. One can almost hear the creaking of the balance sheet.”

Sector / issuer splits are worth a shufty, especially in aggregate market funds. The weight of corporate holdings is liable to reduce your fund’s recession-resistance versus high-quality government holdings.

You should get credit quality and maturity breakdowns, too, but we’ve discussed what to look out for earlier. 

Fund documents

Read the KIID and factsheet at least. The factsheet often contains useful, extra info.

Valuable nuggets can occasionally be plucked from the legalese spoil within the annual report.

Check the Reportable Income docs if your fund sits outside your ISA / SIPP tax redoubts.

Bond article survivors’ group

Peace be with you weary reader. It’s over! Please give me a shout-out in the comments if you made it this far.

It took me seven years to summon up the strength to write this beast. Hopefully it will help someone struggling with bond funds.

As for me, I’m off to have my head examined.

Take it steady,

The Accumulator

1. An ETF is a type of investment fund, so I’ll use the term ‘fund’ when referring to generic characteristics shared by index trackers. [↩]

This article on gearing is by Planalyst from Team Monevator. Every Monday brings more fresh perspectives from the Team.

Borrowing to invest – or ‘gearing’, as seasoned investors call it – is as simple as it sounds to get started.

You take out a loan. Then you invest it as you would your own capital for potential growth. 

However the journey and outcome you’ll get from gearing is much more complicated and uncertain from there.

What a difference a decade makes

The Investor explained in a mini-series a decade ago why borrowing to invest is usually a bad idea.

Just as he was writing coming out of a recession, so I am with this article. 

Gearing is common practice for businesses, investment trusts, and fund managers. And it has been steadily increasing to the point that margin debt – gearing directly applied to an investment portfolio – is at its highest level in the US for more than 10 years. 

But a big difference between now and back then when a younger, better-looking Investor was sharing his thoughts is that personal loan interest rates are much lower today.

Best Buy personal loan rates are below 3% APR. That’s a far cry from the 10% The Investor talked about in the aftermath of the financial crisis. 

Still, with the post-pandemic economy recovery we’re already hearing talk of central banks pushing up base rates to combat higher inflation.

Does that make it a good time to gear up your portfolio by fixing a low interest rate loan for long-term investment? 

The good, the bad, and the gearing

I recently explained gearing to Mr Planalyst. He wondered why I didn’t use gearing for my investments to try to ratchet my returns even higher?

Particularly, he noted, because my investments have made an average 11% return a year. (Thank you, bull market!)

Mr Planalyst saw it in simple terms. Why not use someone else’s money to make us more money? 

So we sat down to planalyse this idea. And I created the tables below to explore the following ‘what if’ scenario.

Say we borrowed £30,000 to invest, at a 3% annual interest rate over a 10-year term.

For simplicity, we’ll assume the compounded debt interest is rolled up to be repaid at the end of the term, with the original capital. (Personal loans are usually repaid over time, but this makes the maths very complicated).

A calculator tells us that this borrowing and interest totals £40,317.

We’ll also assume the borrowing is all invested in a single passive tracker fund. And we’ll model returns according to two example scenarios.

Gearing scenario 1: good times

The UK market tends to see at least one steep decline every ten years or so. Typically stocks will fall 20% or more during these drawdowns. 

Our first table therefore shows the potential position of a borrowed £30,000 after ten years that suffers one such crash. (All numbers rounded to the nearest pound.)

In this (fictitious!) example we see an average annual return of around 4% overall. But there’s a fall of -20% in one grim year halfway through:

Year	Portfolio value	Annual return %	Annual return £
1	£30,000	9%	£2,700
2	£32,700	8%	£2,616
3	£35,316	9%	£3,178
4	£38,494	7%	£2,695
5	£41,189	-20%	-£8,238
6	£32,951	2%	£659
7	£33,610	4%	£1,344
8	£34,955	5%	£1,748
9	£36,702	7%	£2,569
10	£39,272	9%	£3,534
End total / average return	£42,806	4%

In this first scenario, using gearing worked out positively – although the end result was only a little ahead of the cost of borrowing (£40,317).

Remember: market volatility means you can’t guarantee any returns.

There’s no certainty of a gain at the end of the borrowing period to repay the debt and the interest accrued. Never mind enough to deliver a profit for going to all this trouble in the first place!

Even if you come good in the end, seeing your total invested assets that you bought with gearing go below the amount at stake during the term won’t be easy. It could be emotionally upsetting.

Obviously it’ll be even worse if you come up short at the end of the term.

Talking of which…

Gearing scenario 2: bad times

In this scenario our returns are almost as before – except for the last two years.

This time the market’s recovery from its decline is very sluggish, rather than it bouncing back to pre-downturn levels as in the first scenario.

And again, after ten years your term is up and your debt must be repaid:

Year	Portfolio value	Annual return %	Annual return £
1	£30,000	9%	£2,700
2	£32,700	8%	£2,616
3	£35,316	9%	£3,178
4	£38,494	7%	£2,695
5	£41,189	-20%	-£8,238
6	£32,951	2%	£659
7	£33,610	4%	£1,344
8	£34,955	5%	£1,748
9	£36,702	4%	£1,468
10	£38,171	2%	£763
End total / average return	£38,934	3%

After ten years you don’t have enough to repay the loan plus its interest – £40,317 – let alone seen a profit.

This example demonstrates the risk of having to sell when your capital is down to repay your debt. You are forced to realize a loss.

You might have fretted about this outcome for half the loan term – from year six onward. And the risk would have come true.

Maybe you’ll have greyer hair, too.

Debts must be repaid. You would have to dip into other savings or income to repay the bank what you owe. Assuming that was even an option for you.

Outcome

Here’s how the numbers work out from these two scenarios after ten years:

Scenario	Debt and interest	Portfolio	Balance
1	£40,317	£42,806	£2,489
2	£40,317	£38,934	-£1,384

In the second example, we see how interest – the cost of debt – has amplified the losses compared to just investing £30,000 of your own money.

Of course you might see far higher average annual gains than 3% or 4% over ten years. That would make borrowing to invest very lucrative.

But you could also see lower returns, too.

This unpredictability of future market moves is why I wouldn’t consider gearing to invest. The risk of volatility and market falls at the worst time are too great to ignore – even for that chance to make a healthy profit.

Historically, stock market returns have been far higher than today’s low cost of debt, which might make the odds seem pretty good.

But personally I don’t have the stomach for it.

Gearing up for a fall

You say you’re willing to accept the market’s ups and downs? There are other factors and caveats to consider before you gear up. 

More risks to think about

In the above examples, I kept the structure of the loan very simple.

You could use monthly or annual interest repayments instead to take the pain away from repaying a lump sum at the end. The exact loan structure chosen upfront could even make or break the eventual returns. This adds extra risk – it could turn out to be wrong for your future circumstances. 

With such an arrangement you’d also need to keep up regular repayments, adding to your household expenditure. This would reduce your disposable income for any other investment opportunities that may arise over the fixed term of the loan. 

In the event of a market crash – perhaps with a recession – having to make regular repayments could prove tough if you faced job insecurity. 

And don’t forget investment costs along the way. These haven’t been explicitly broken out in my examples above. They will eat into any growth. 

You may also have taxes to pay on your gains when it comes time to repay, though this depends on how you invest.

Investing in an ISA can take away the tax pain, as a Monevator article by Finumus recently stressed. 

Risk reducers

You might be attracted to variable interest rates loans, particularly if they start off lower than a fixed rate option.

But variable rates add extra interest rate risk. Locking in a fixed rate now makes future budgeting certain, even if your investment returns are not.

Taking out a long-term loan for investment can soften the blow of short-term market volatility. Investing is a long-term game. Securing returns is more about time in the market than trying to time the market.

In contrast, you’re likely to risk making even greater losses by gambling to chase returns to repay a debt over a short timescale. 

This is why The Investor suggested in his series that a mortgage is the only debt that’s prudent for most people to consider while also investing in risky assets like shares.

Finally, you may choose to diversify across different asset classes and funds, rather than rely on one tracker.

Properly diversified investments would mitigate the downside risk, at least to some extent, but it could also curb your expected returns. 

Changing gear

Even if gearing is not for you when it comes to your portfolio, knowledge of how it works might still prove useful.

Case in point: there exists a financial calculation called the gearing ratio, which analysts use when assessing companies.

Companies typically take out debt to invest in their own businesses. 

The gearing ratio is a company’s total debt divided by its total equity.

If the gearing ratio is: 

• Over 50% – The company is highly geared, so future downturns and high interest rates could put the company in trouble.

• 25%-50% – Considered normal for most large companies.

• Under 25% – Probably a lower-risk investment, but potentially also a slower growing business

Gearing ratios need to be considered in the context of a company’s sector/specific industry.

For example, utility companies have strong recurring cash flows. Their higher levels of gearing might therefore be considered less risky than for instance a manufacturer borrowing to build a factory.

Gear for you

The gearing ratio might also be applied to your personal finances.

The ratio could give clues as to how much debt a household could comfortably carry before things get risky. Not only when taking out a loan for investing, but also when deciding to take on a mortgage or car loan.

To work out your personal gearing ratio, you’d divide the total level of actual or proposed debt by your total net assets.

Note: as far as I know there are no hard-and-fast rules here.

If we took the thresholds I gave for companies, for example, then having more than 50% of your personal assets in debt would seem very unwise.

However, this is typically what happens when buying a house, with today’s high prices. Many young buyers have very little elsewhere in the way of assets after scraping together the deposit for a 90% loan-to-value mortgage.

At least your home’s value won’t fluctuate like the stock market. (Which is exactly why borrowing to invest in a house is a mainstream activity.)

Reverse gear

If you’re thinking of gearing to invest, do your homework and thoroughly consider all the costs and the additional risks.

Some sophisticated investors could make it work for them.

But for a typical individual, gearing explicitly to invest in the stock market is not a risk worth taking. Better to get rich slowly!

See all Planalyst’s articles in her dedicated archive.