suppose someone has gotten their first job, saved their first thousand dollars, and wants to know what they should allocate it to. What’s their bankroll? The simplest answer is that it’s $1,000, and they should allocate some of it to cash, some to low-risk bonds, and some to equity. But really, their bankroll is the net present value of their future earnings less necessary expenses, which is a number a few orders of magnitude higher than $1,000 (and, as academic research suggests, they should be levering up as much as possible). They won’t run with that kind of leverage forever, but if the net present value of your future savings is $100,000, and your Robinhood account has $1k, using 3x leverage just means putting 2.97% of your wealth into stocks instead of 0.99%. This is a fairly small shift, and is still well below optimal. (Byrne Hobart)