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Leveraging Using Debts as a Safety Device


Under this strategy Leveraging is done with 100% backup wherein the backup money also earns Interest being invested in Debts.

Profit Assumptions: Considering the markets to go up in a long term, good Income is generated by investment in equity. The backup money meanwhile generates monthly Income being invested in Debt based Schemes. Assuming the Interest in Debts as 8% and Stock Market as 10%, an Investor easily gets 18% in long run.

Example: Considering the Invested amount being 10,00,000, buy 4 Nifty Index Futures  i.e. 200 units. The margin paid will be less than 1,00,000(10%) but exposure remains for 10,00,000 in Equity Market considering the spot price of Nifty as 5000. The balance 9,00,000 meanwhile being invested in debts generate Income every Month.

Risks: This is the strategy which have no risk at all as 100% backup is kept and the strategy is just as good as buying equity in cash Market.

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