17. Understanding the Role of Leverage in a Financial Plan

Leverage is often viewed cautiously, and while it can be a useful financial tool in certain situations, it is not appropriate for all investors and involves meaningful risks.In this episode of Dime After Dime, Tony Stich speaks with Julie Rich about what leverage means in the context of financial planning for both individual and high-net-worth investors. They discuss several common forms of leverage in this episode!Leverage, including securities-based lending, margin, and home equity borrowing, involves significant risks and is not appropriate for all investors. Borrowing against investment assets may increase losses, result in margin calls, and require the forced sale of securities at unfavorable times. Interest rates and loan terms may change, increasing borrowing costs over time. Using leverage as a source of liquidity or as an alternative to holding cash reserves may reduce financial flexibility and expose investors to market risk during periods of volatility. Any examples discussed are for illustrative purposes only and do not represent recommendations. Investors should carefully evaluate their financial situation, risk tolerance, and objectives and consult with a qualified financial professional before implementing any leverage strategy.These approaches involve additional risks, including the potential for market declines and margin calls, and may not provide the same stability or accessibility as traditional cash reserves.The content on this page and/or video is for educational purposes only and should not be construed as investment advice. Specifically, the content is intended to provide education and tools for individuals looking to handle their retirement planning on their own. Should you need personalized investment advice, you should consult with a registered investment adviser. Any communications on this page with other individuals that are not associated with Moran Wealth Management, LLC are done voluntarily by users and are unsupervised and unaffiliated with Moran Wealth Management, LLC and Moran Wealth Management, LLC has no responsibility or liability over any discussions or advice that may be given. Moran Wealth Management, LLC is a registered investment adviser and can provide investment advice. If you are interested in Moran Wealth Management, LLC’s advisory services, you can contact us at 239-920-4440 or [email protected] disclosures, visit: https://www.moranwm.com/disclosuresThis communication may contain testimonials of Moran Wealth Management’s clients. These testimonials reflect the real-life experiences and opinions of these customers. However, these experiences are personal to them and are not necessarily representative of all clients’ experiences. Moran Wealth Management® makes no claim, and you should not assume, that all clients will have the same experiences. Your individual results will vary. The views and opinions contained in the testimonials belong solely to the individual client and do not reflect our views and opinions. Clients are not paid or otherwise compensated for their testimonials.[Resources]1:52 - “I looked up on the FINRA website today, there's over $1 trillion worth of margin, which is just one type of leverage we're going to be talking about today in the country.” https://www.finra.org/rules-guidance/key-topics/margin-accounts/margin-statistics2:14 - “Also UBS, I did some research, and UBS actually states that 42% of investors, high net worth investors that use leverage actually use it not to speculate, but to improve their liquidity situation.” https://www.ubs.com/us/en/wealth-management/insights/market-news/article.3215635.html