The Rational Reminder Podcast · Thursday, October 1, 2026
Victor Haghani discussed the rationale for borrowing to invest, suggesting it makes rational sense for young individuals with high human capital and low financial capital, as it allows them to align their total wealth exposure with a desired stock allocation. However, he cautioned that leverage is expensive and variable, and for most people, especially older individuals with significant financial capital, it's likely not worth the complexity and risk of substantial loss.
“So first of all, the... Iconic, sensible case for leverage involves young people where they have a lot of human capital.”
“But it's hard to be an individual investor and to be borrowing at less than 1% over treasury bills do on relatively small size, which is kind of the case of the person who doesn't have much financial capital.”
“Net, net, net, we would say that for older people that have a lot of financial capital relative to their human capital, probably it doesn't make sense to leverage. And for younger people, it's more of a borderline call and maybe just keeping things simpler and not doing it makes sense and just focusing on getting the savings into the markets.”