The tech crash shows why I don’t invest with either leverage or credit!

I don't invest with leverage or a loan, and I do so with conviction. The current tech crash is for me a good example of why investors should never actually do that. Even Warren Buffett or other star investors like Cathie Wood don't bet on these kinds of things. Whereas the Oracle of Omaha as an entrepreneur has borrowed money anyway of course.

But back to the topic: leverage or credit can make you sweat very quickly. Especially when the markets are once again volatile. Like just now in the Tech-Crash.

4 "inflation-proof" stocks to buy today! No doubt, inflation is soaring. Investors are rattled. Money that only sits in the bank loses value year after year. But where should you invest your money? Here are 4 stock favorites from The Motley Fool's editors that you can invest in as inflation rises. We have some of the most profitable stocks of this generation like Shopify (+ 6.878%), Tesla (+ 10.714%) or MercadoLibre (+ 10.291%) recommended early on. Hit these 4 stocks while you still can. Just enter your email address below and request this free report immediately. Request the free analysis now here.

Tech crash: leverage and credit as downfall!

Imagine: You would have invested even with a smaller leverage with a factor of two or three and the tech crash would have also caught your portfolio. What could have happened would have been quite rapidly the total loss. Or even more.

In the course of this tech crash, quite a few stocks and even some large caps have lost more than half of their market value. Yes, in some cases even up to 80% or even more. Anyone who had experienced this market phase with leverage would be sitting on a total loss today in the best-case scenario. Or possibly on an even worse performance with some margin call. A margin call would probably have liquidated many a position, you couldn't even hope for a turnaround anymore. The money would be gone, once and for all.

Credit would also be something that would make me at least beat more restless at night. The tech crash is probably a challenge for investors anyway. As already mentioned: Some shares have already corrected by 80 % or more. Imagine, one would have built up this still with a credit and would sit on a minus. But you would know that you would have to pay interest and repayment for the loan despite temporary book losses? That would unnecessarily increase the pressure and perhaps encourage many a bad decision.

This tech crash and the hypothetical aftermath therefore show me: I invest exclusively, 100%, with my own money. Neither leverage nor credit will I ever use to buy stocks or ETFs.

Simple remedy to save yourself worry

There may be settings where loans and leverage are appropriate. Or for certain types of investors. However, one thing is for sure for me: both is not my way. The tech crash and thinking about the consequences shows me this one more time. In any case, if I can't afford to buy a stock or a block of stocks of the size I want: Then I just don't do it either.

There's one company whose name is coming up a lot, a lot among The Motley Fool analysts right now. It is THE top investment for us for the year 2022.

You too could benefit. To do that, you first have to know everything there is to know about this unique company. So now we've put together a free special report detailing this company.