Have you heard of the turbo’s for investing? These products put a real boost on your investing as they are leveraged somewhere between 5-15 (give or take a few). The market goes up 1pct, you get 15pct return! Great, let’s go!
By the end of February, I decided to use this Turbo that is available to me. Instant success. In a few days, I increased my portfolio from 100k to 105K. Not to bad. This looks like a strategy for the future. Maybe FIRE is a sprint and not a marathon?
So, what are these Turbo’s? They are financial products, quoted on the stock exchange, whereby you used borrowed money to invest a multiple of what you normally can invest. This creates great leverage and can swing your returns out of the park. The financing cost is taken in the quoted price of the product. When a certain loss is made, they shut down themselves. You can not loose more than you put in.
With this new found tool, I decided it was time to go ahead and bring that FIRE date a little closer. After all, every year won, is a year more of freedom. I can not resist. I decided to put on some more trades to make some easy money.
The second time, my view on the market is wrong. I also learned that you can loose money as fast as you can win money. As I have a full time job, I could not always react as fast I would like. Some of my trades created a few major losses. Almost back to square one.
Should I continue this strategy?
I think I should. It is a great learning opportunity on how these products work, what the limitations are and how you need to trade with them. The losses are not important at all. After all, this trading is taking place in a stock competition with fake money, not in my real money portfolio. At the start, we all got 100k. Whoever has the most gain by mid May wins.
This year I decided to participate and learn about Turbo’s. As leveraged products are not part of my strategy for FIRE, I took this learning opportunity with both hands and decided to go full steam ahead with Turbo’s. The first few days, I felt good… Then, I got hit by a run away train. Both feet back on the ground. You need to be directional right. And if you are wrong, you need to take your losses quite fast. At least, that is how I see it.
I can see a small place in the future for these products in my portfolio, only in a well ring fenced part of my net worth, with a relative low leverage. And maybe as a hedge for my real portfolio. That is also possible: Look at them to insure my portfolio. The idea needs to mature further in my head…
Before going into any trading with any instrument, make sure you do your own homework. I test these Turbos in a play setting and learn a lot. Sorry if the intro has mislead you.