Playing The Game of Leverage (4)

Read? Playing The Game of Leverage (3)

The mind of an investor can easily change their perception of risk/reward when the investing idea for the SAME financial instrument is presented in different scenarios depending on the mind perceiving it as Greed, Doubt or Fear.

Let take DBS 6% NCPS as an example for such financial instrument

Scenario 1

I believe Investor easily has SPARE $20K that can be used for investing; but he rather keep it in bank or money market earning low return of 1% for whatever reasons or simply waiting for better investing opportunity to come.

If you ask him to invest this SPARE $20K in DBS 6% NCPS to earn passive income of 4%. He have to think hard whether is this a good idea or not?

Scenario 2

But for the same financial instrument, in this case DBS 6% NCPS can be thought to be a good candidate for leveraging for passive income.

To use your OWN money to invest in such financial instrument to earn passive income.  NOT SURE.

To BORROW $20K and use it as leverage for passive income looked like a good idea. Really strange? Greed playing out in the investor's mind?