Put the turbo on my investments

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!

PortfolioBoost

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.

PortfolioBoostneg

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.

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16 thoughts on “Put the turbo on my investments

  1. Ciao ATL,
    Never heard of them before…But then again, leveraged investments are not really my bread and butter when it comes to “defensive portfolio”… Still, it’s an interesting tool, I’ll check them out!
    ciao ciao
    Stal

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  2. I played with sprinters (the ING equivalent of the Turbo). Did very well at first, then lost several thousands during the 2009 Crisis. The upside is potentially great, but markets tend to go down faster than they go up during volatily times, which makes it very tricky when playing with leveraged products (if you sink below the cut-off, you loose everything). It’s really just gambling.
    Still having a bad hangover. No intention to start again, not even with a small portion of the portfolio.
    Good luck though if you want to give it a try.

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  3. Thanks for sharing. Leveraging can take your portfolio in either direction..and the risk should be highlighted whenever such products are talked about. There are a lot of traders who do not understand and jump right in — but looks like you understand the risks.

    R2R

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  4. I have used turbo’s and sprinters in the past. There are turbo’s with a low leverage of 1.5-2; it means stock markets could drop 50% until you waste your position. Not bad if you are a trader, I think.
    For my portfolio to get financially independent I don’t use these products anymore, too much risk for that portfolio.

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    1. The lower leveraged products could indeed be an alternative to look at. For now, It is just a concept I can test in this game. It is free learning to me.
      Did you get good results with your trades?

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  5. Hey ATL, thanks for sharing. I don’t quite understand – you mentioned ‘You can not loose more than you put in’, ‘Some of my trades created a few major losses’ and ‘After all, this trading is taking place in a stock competition with fake money, not in my real money portfolio’. Is it real money investments or not? If your very first investment goes down, how do you make any money?

    Anyway, it’s nice to learn about something new but leverage isn’t something we’ll ever use I don’t think. Good luck to you and I hope it works well 🙂

    Tristan

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    1. Hey Tristan, Thx for your questions
      To be clear: these trades are not made in a real account. They are made as part of an investment competition that is ongoing in Belgium. When you subscribe, the gamehost creates on the game platform an account for you with 100K. You then can invest this money. When the game is over, it is over. You do not get the money, unless you are the winner.
      Turbos work with leverage. You pay 1 to invest 15 (as an example). Imagine you buy for 1000EUR turbos on a stock, and the stock goes up 1 pct. Then, the turbo goes up 15 pct. SO, in stead of ending op with 10 profit, you have 150 profit. When it goes down, the same happens. There is build in protection. The turbo can not go below zero. So, the maximum loss you can have is your initial investment.There are other leveraged products – margin accounts – where you can loos more than the initial margin that you deposit.

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  6. We’ll stick with indexfunds and possible dividend stocks I think. With this kind of leveraged things I think there are always some guys with more time and faster computers/connections who will outsmart you..

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  7. Hi ambertreeleaves,

    I personally wouldn’t use them. The stock market is risky enough without leveraging. I do think that you could get a false sense of confidence from playing in simulated trades, as whatever “learnings” you gain from the game are unlikely to help you succeed in actual trades.

    Of course I’m always interested to read how you get on, but I can’t help thinking it’d be less painful and have a faster result to just go to a casino 🙂

    Best wishes,
    -DL

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    1. Thx for the honest opinion. In the short term, turbos will not be part of my investment assets, that is sure.
      In a game setting, they are fun to use. What helps to keep my hands off in real life: i am loosing money in the game

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