buying stocks on borrowed money

When purchasing stocks you don't always have to bet everything you have on them. There are other ways to buy stocks. A few ways to borrow and invest in the stock market are like taking out a loan, using home equity, buying on margin or purchasing a leveraged exchange traded fund. Doing things such as this to buy stocks means that you dont have to risk everything you own. This year the stock market has dropped a total of 40%. While it might be a good time to buy some stocks there is always a chance that it will contuine to drop. Sometimes that 40% loss cause turn into 80%.


When people take money that they dont't actually have to buy things with it causes problems and debt. If they make money of that stock they can easily pay it back but if it drops, you are loosing more money then you orignally invested. If that happens when people have taken out loans then they have to find a way to pay back the borrwed money and could go into debt.

i got this article from cnn.com