Is leverage investing a good tool for a young investor?

What is your personal opinion on leverage investing? I am 21 years old and have a couple years of experience as an investor. I want to know if leverage investing is a worthwhile strategy and if an advisor would recommend it to someone as young as me.

Investing, Starting Out
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November 2016
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Yes, now let me explain further. Leverage either via margin investing or options can be very dangerous. That being said, it is one of the simplest ways to lose or make money. So, let’s go over a few things. First, congrats at 21 years old already investing for a couple years, you are way ahead of the pack. You may want to buy a home in a few years and need a down payment of up to 20%, if so, I would leave this portion of your funds in a safe place. Beyond this, let's take a look at the merits of what you want to do and maybe a better way to do it. As an advisor, I use options to increase leverage, not margin. The reason for the use of options is simple, asymmetry of returns, and only purchasing puts and calls limits your risk to your invested capital. In my own strategy, I keep about 90% cash at all times, which limits my invested capital. Usually the options I purchase are between .5-2% of total portfolio. If you start small, and focus on total capital at risk, this could be a worthwhile endeavor. Let me sweeten the pot for you, the Roth IRA. The Roth is the holy grail of options investing, because you receive a greater reward for taking that risk.You can put up to $5,500/year into a Roth IRA, and on retirement, make tax free withdrawals of these funds. Before I started trading options, I paper traded them for two years. You can learn via this manner weather or not this is a profitable endeavor for you, without losing money. Good luck, and remember one thing, options trading is sharks water, you need to be smart or you will be no more. 

Please note that the information above is not a recommendation.

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