Is leverage good or bad?

Leverage is defined as the process of borrowing money to make an investment, with the expectation that the profits made from the investment will be greater than the interest on the debt.

In my investments in bonds and reits, I like to use leverage. On the other hand, some of my friends stay clear of leverage. They try to pay off their loans as soon as possible.

So is leverage good or bad?

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OTC Bond Opportunities (July)

Since Feb 2018, bonds and reits have fallen and have not recovered to Feb highs. With interest rates rising, they have fallen out of investor’s favour. Yet recently, many SREITS are now making 20 day highs, outperforming most SGX stocks. Like wise bonds have recovered slightly after long tenor bonds were beaten down.

I sold ASTREA IV S$242M4.35%B280614 (RMRB.SI) retail bond at 1.05 last friday. Nothing wrong with this bond, in fact, I like this bond (seeĀ http://wealthlions.com/2018/06/astrea-iv-4-35-retail-bonds/). 5% is more than one year’s coupon. The money can be channeled elsewhere.

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