It seems the whole deal is dependent on margin interest rates, so I would appreciate more discussion of the available margin interest rates available to retail investors and what rates were used in the simulations. I would also like more evidence to the statement in comments that says “the fact that a young investor with 100% equities does better *on the margin* by adding a bit of leverage is very robust” to be able to take it as a fact, as it only seems true at certain rates that don’t seem obviously available.
As one datapoint, my current broker retail margin rates are high, at 8.625% under $25k, 7.5% > $25k loans. Given that this is a period of relatively low interest rates, (and I would expect it to be higher in other periods), it would not seem like an indisputable fact to me that a young investor expect a better return by investing $1 on the margin after interest. But I have no idea how it compares to other brokers. (Unless you are considering leveraged funds, which I considered to be a different beast).
It seems the whole deal is dependent on margin interest rates, so I would appreciate more discussion of the available margin interest rates available to retail investors and what rates were used in the simulations. I would also like more evidence to the statement in comments that says “the fact that a young investor with 100% equities does better *on the margin* by adding a bit of leverage is very robust” to be able to take it as a fact, as it only seems true at certain rates that don’t seem obviously available.
As one datapoint, my current broker retail margin rates are high, at 8.625% under $25k, 7.5% > $25k loans. Given that this is a period of relatively low interest rates, (and I would expect it to be higher in other periods), it would not seem like an indisputable fact to me that a young investor expect a better return by investing $1 on the margin after interest. But I have no idea how it compares to other brokers. (Unless you are considering leveraged funds, which I considered to be a different beast).
Indeed these margin rates are way too high and it would be madness to borrow at such rates.