Evaluating 2x Leveraged ETFs vs. 3x Leveraged ETFs for Portfolio Management
Evaluating 2x Leveraged ETFs vs. 3x Leveraged ETFs for Portfolio Management So, you're thinking about diving into the wild world of leveraged ETFs ? Buckle up, because we're about to take a rollercoaster ride through the land of amplified returns and magnified risks. Understanding Leveraged ETFs Leveraged ETFs are like the adrenaline junkies of the investment world. They use derivatives and debt to pump up the returns of an underlying index. Think of them as the financial equivalent of a double shot of espresso. A 2x leveraged ETF aims to give you twice the daily return of the index, while a 3x leveraged ETF is like, "Hold my coffee," and goes for three times the daily return Performance Comparison · 2x Leveraged ETFs : Imagine if the S&P 500 goes up by 1% in a day. A 2x leveraged ETF like SSO would be like, "Let's make it 2%!" But if the S&P 500 takes a nosedive by 1%, SSO would be like, "Oh no, we're down 2%!" ...