Friday, February 15, 2019

Investing on leverage

Sometimes during 2009, a retired couple approached me. They had invested $200,000 with a local bank and had lost $100,000 during the Global Financial Crisis.

I learned that they were long time customers of that bank and had been advised by the bank's relationship management to invest in dual currency investment.

The bank offered them a loan of 4 times of their invested sum. They were able to invest in dual currency investment for $1 million. This comprised their capital of $200,000 plus $800,000 in borrowed money.

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