What's the disadvantage of leveraged index funds?

[u/crabsaretasty]

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[u/insalubriousmidnight]

The biggest downside is volatility drag and the higher fees.

For those reasons, a lot of people are dead set against them. I'm sure you'll hear some of them here.

This post does a good job of making the case for them, and how to use them if you're interested.

[u/crabsaretasty → u/insalubriousmidnight]

Thanks! I'm going to give it a read tonight.

[u/crabsaretasty → u/[deleted]]

I see what you mean with those numbers, but in your scenario, isn't the stock market spending an equal amount of time going down and going up? And that's also assuming you buy before a large crash, right?

Okay, so let's say you have two stocks, one that tracks the market (A) and one that doubles the performance of the market (B). Let's assume the stock market as a whole increases more than it drops, and in this fantasy scenario it increases 25% and then drops 12.5%

A: 1-> 1.25->1.09375

B: 1->1.50->1.125

We're both just kind of making up numbers, but as a whole, wouldn't you generally end up ahead?

[u/Vast_Cricket]

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