Part 7/10:
Throughout 2022-2025, Mike actively used margin to accelerate his investments, carefully managing his margin health to avoid risking overleveraging. By keeping his margin utilization at around 65%, he could deploy more capital during downturns and benefit from the market’s eventual rebound.
His portfolio growth reflected this strategy, with returns up approximately 30% in the recent year, all while paying an average interest rate of just over 5%. The key was deploying borrowed money during market dips, then riding the wave of recovery.
Risks and Caution: Managing Margin and Debt Smartly
Mike stresses that leveraging is a dual-edged sword. While it can magnify gains, it also can accelerate losses if not managed carefully. He advocates: