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Since the beginning of this year, I’ve been thinking about taking on margin in my Robinhood account to buy income ETFs and use that to amplify my dividend income. So far, I haven’t done it. But as each day goes by, the idea becomes more and more appealing.

One person whom I’ve been friends with on X for probably a year is @8bitsteveo. Both him and I share an interest in income ETF investing, and I remember being one of the early folks who encouraged him to consider taking on margin to buy income ETFs.

For my thesis, the math simply made sense. If you’re borrowing at a 5.75% interest rate or lower, and you buy an asset that is giving you a higher rate of return in the form of cash, then you’re enhancing your cash flow. That extra cash flow, after paying the interest costs, can be used to pay down the margin loan or be used to buy more dividend-paying ETFs.

Then, in the beginning of this year, Steveo finally decided to take on margin to buy dividend ETFs on Robinhood. He bought: $SPYI ( ▼ 0.33% )  $QQQI ( ▼ 0.4% )  $XDTE ( ▼ 0.29% )  $QDTE ( ▼ 0.29% )  $RDTE ( ▲ 0.35% )  $IWMI ( ▲ 0.17% )  $YBTC ( ▼ 1.33% )  $YETH ( ▼ 2.77% ) and $BTCI ( ▼ 1.89% ) . As time went on, his holdings shifted, and lately, he has been big on $BITY ( ▼ 1.87% ) and is slowly accumulating $ULTY ( ▼ 0.36% ) .

You can read more on why I like $ULTY ( ▼ 0.36% )  here.

Time flew. When the market crash of March and April came, things were brutal for him. With margin, naturally, the market fluctuations would be bigger, and the risk of getting a margin call was high. At the bottom of the market crash on April 8, 2025, Steveo’s margin buffer was 28.59%. If the markets went lower, he would’ve been in bigger trouble.

Even if the math was still in his favor, even if higher volatility meant higher dividend income, many wouldn’t have the stomach he has. Not only did he keep up his investing strategy, but he also kept reinvesting his dividends back into the market instead of using the cash to pay down the margin loan and play it safe.

Today, Steveo is making around $9,800 in dividend income each month, after accounting for the interest cost on his margin loan. With that monthly income, he has replicated the salaries of most people. And he isn’t stopping there. He’s got bigger plans, and we are all cheering for him and inspired by what he has done for the dividend investing community.

Seeing Steveo’s journey from the ups and downs of this year is a big inspiration as I consider taking this next step in my investing journey. Interestingly, I already use margin in my investing portfolio. As a Gold member, I get a $1,000 interest-free margin loan, and I’ve used it to maximize the amount of dividend income I get monthly. I haven’t paid any interest to Robinhood, and while I know the math will work out in my favor, I need to break free from the fear of paying interest to a lender.

Economic Concepts

When inflation was really high in 2021-2022, wealthy people found a smart way to protect and grow their money. They borrowed money to buy investments, then let inflation make their debt cheaper over time while their investments grew.

Two Types of Investment Gains:

• Nominal gains: The raw dollar amount you make. If a stock goes from $10 to $20, you made $10.

• Real gains: What you actually made after accounting for inflation. That same $10 might only be worth $8 in today's buying power if inflation was 20%.

When you borrow money to buy investments, you win in two ways:

1. Your investments can grow faster because you bought more with borrowed money

2. Inflation makes your debt worth less over time, so you're paying back cheaper dollars

For Steveo’s example, he borrowed money at 5.75% interest to buy investment funds that paid him 20% in dividends. He pockets the difference (about 14.25%) as extra income. Plus, inflation makes his loan cheaper to pay back over time, giving him even more real profit.

How I Plan To Approach It

When taking this big leap of faith, I plan on being more conservative about it. There are several income ETFs that provide great cash-on-cash returns while also providing downside protection and stability in the dividend income they produce.

$JEPQ ( ▼ 0.36% ) is one dividend I’m looking to take on margin to buy as its strategy ensures its monthly dividends are steady. $ULTY ( ▼ 0.36% ) is another income ETF I’m considering to leverage on, but only a little, as it has attractive cash-on-cash returns while I’m giving their new strategy time to add historical data. Then there are other ETFs like $QYLD ( ▼ 0.36% )  $YMAX ( ▼ 0.22% ) and $GPIQ ( ▼ 0.36% ) .

I need to do more research, but I’ll get a basket of different income ETFs as having diversity in different funds with different approaches can help ensure stability in the dividend income I’m earning each month. It will help me sleep at night and ensure I have money to pay my margin loan.

As for what I plan to do with the dividends I receive outside of paying the interest, that will depend on market conditions. I may pay down the margin loan more aggressively if I find the markets risky, or reinvest the profits aggressively.

There is also the tax benefit of deducting the interest expenses from your net investment income, but you’d need to have it done in a taxable brokerage account and need to consult with a tax advisor on. Since many of these income ETFs attribute their dividends as “return on capital,” aka “ROC,” the overall tax liability may be even lower than one would expect, until the ROC officially pays back your investment.

From a personal development standpoint, taking on margin to buy income ETFs that yield more than my margin interest rate is also a way to become more comfortable with taking on calculated risks in life. I’ll start small and grow my way up with time. The last thing I want to do is load up on tons of margin at the market peak and risk getting a margin call when a big market crash comes.

The end goal of building my income portfolio is to have a high level of passive income that I can afford to be an entrepreneur and take on big risks in the emerging markets. The emerging market nations have many opportunities for entrepreneurs, as these nations tend to have many problems that can be solved through entrepreneurship. Having tons of passive income will help me afford to stay in these nations and provide capital to fund my business ventures. I want to pay talented people well and ensure I can fund the buildout of infrastructure and provide sales incentives to help get my business customers. It’ll take time for the business to be self-sustaining, and the passive income will allow me to approach these business ideas with a long-term perspective. Long-term decisions lead to long-term gains.

For those who invest with margin, what ETFs or stocks do you buy with margin? And for those that don’t invest with margin, what has kept you on the sidelines?

Disclosure

About Me

I am an independent personal finance writer and blogger. I do not have any formal training or certifications in finance, but I have a deep passion for the subject and have been researching and writing about personal finance topics for several years.

Disclaimer

The information provided in my articles is for educational and informational purposes only. It is not intended to be a substitute for professional financial, investment, or tax advice.

I encourage you to do your own research, consult with a licensed financial advisor, and make decisions that are best suited to your individual financial situation and goals. I cannot guarantee any specific outcomes or results from following the advice in my articles.

Please remember that investing involves risk, and you should only invest what you can afford to lose. Past performance is not a guarantee of future results.

If you have any questions or concerns, please don't hesitate to reach out to me. I'm here to help!

I/We own QDTE, RDTE, XDTE, YMAG, YMAX, YBTC, TSLW, AAPW, ULTY, LFGY, YETH, MAGY, CHPY, GPTY.