25M seeking perspectives on leveraged ETFs, i.e. UPRO (3x leveraged S&P500).
I’ve been investing for 3 years now. My strategy involves Dollar Cost Averaging into low cost broad ETFs like VOO/VT. I have a strong rainy day fund of 1 year expenses in cash in HYSA, along with seemingly steady employment, and 50% savings rate/cash flow.
Due to my young age and very long time horizon (20-40 years), I’m very comfortable taking slightly more risk in my portfolio while I am young. I’m interested in adding some leverage to my portfolio, perhaps around 5-15%.
I’ve been reading about leveraged ETFs and I understand the risks as well as the downsides like volatility drag/decay experienced on volatile assets in leveraged ETFs over the long run.
Over this last year I’ve probably watched this video by Ben Felix about 5 times: [Investing with Leverage (Borrowing to Invest, Leveraged ETFs)](https://youtu.be/Ll3TCEz4g1k?si=JSIYlUZXAob60G6u). I’ve also consulted LLMs as well as blogs from https://www.investopedia.com on this topic and it has really made me want to consider adding a slight amount of leverage to my portfolio.
I’m well aware that we are in an “interesting” market to say the least. One that is very volatile and wouldn’t be surprising to experience a 10-15% correction within the next 2 years (which would be a 30-45% correction in 3x leverage). I’m completely comfortable with this and doesn’t intimidate my conviction in the market.
With all that said, I’m curious to ask the community about their opinions on Leveraged ETFs
- If you own shares in one, what has your experience been, would you recommend it?
- Due to potential returns, is it better to add this position in a tax advantaged ROTH IRA vs a traditional brokerage?
- Is it asinine/very stupid to hold a leveraged ETF position for 10+ years due to the volatility drag/decay?
Or any other thoughts comments, thanks!
