| Kippreport.com

Business of… investment tips

November 8, 2010 11:43 by Katherine Azmeh

We all know you should hold more in stocks when you’re young, less as you near retirement. Stocks tend to be unpredictable in the short term, but the rough ride (hopefully) will even over years, with a bigger payoff in the end. Yale economists Ian Ayres and Barry Nalebuff suggest taking that notion to its most extreme conclusion: hold all your savings in stocks, and then borrow on top of that to buy even more stocks. Their method advises that “every $1 of your own money [in stocks] is effectively matched by another $1 borrowed.” The pro here is that young people with decades of future earning power, can afford to leverage some of those future earnings, particularly if they have strong incomes and good savings habits. A big con here is the fear factor. Investors tend to be happy to leverage when markets are performing well, but often yield to the impulse to bail when the going gets tough.

Pages: 1 2 3 4 5 6

Tags: chasing performance, commodities, equities, fundamental indexes, index fund investing, index funds, leverage, lump sum investing, momentum investing, money magazine, savings, share prices, stocks, unconventional investment advice