Leverage the Stock Market Like Real Estate Investors

What If You Could Buy Stocks Like You Buy Real Estate?

Real estate investors have known a secret for decades. Put down 25%, borrow the rest, and watch your returns multiply. A 3% gain on a property becomes a 15% return on your actual cash invested.

But what if you could do the same thing with the stock market?

That’s exactly what Erwin Szeto shared on the LendCity podcast. After building an 8-figure real estate portfolio, he’s found a way to apply the same leverage strategy to stocks. And honestly? The math is pretty compelling.

Book Your Strategy Call

Why a Real Estate Pro Started Looking at Stocks

Erwin isn’t some stock market guy trying to sell you on Wall Street. He’s been in the trenches of Ontario real estate for over a decade. He’s owned or had interest in more than 40 properties. His team has helped clients buy close to half a billion dollars in investment properties.

But here’s the thing. His 8-figure portfolio got “nearly slashed in half” in recent years. His clients feel stuck. And he noticed a dangerous pattern.

Over 90% of his clients have their entire investment portfolio in one thing: local Ontario residential real estate. One currency. One country. One asset type.

No financial planner would ever recommend that kind of concentration. It’s risky.

Enter Leveraged Segregated Funds

This is where it gets interesting. Segregated funds are basically the insurance industry’s version of mutual funds. They’ve been around forever, but most people ignore them because the fees are higher than regular index funds.

Here’s what changed Erwin’s mind: most segregated funds guarantee you’ll get back at least 75% of your principal. Major Canadian insurance companies back this guarantee.

And that guarantee? It’s good enough that lenders will now loan you money to invest in them.

The Basic Setup

You put down 25% of your investment
You borrow the other 75%
You invest the full amount in the stock market
Your gains (or losses) happen on the full amount

Let’s Do the Math

The S&P 500 has averaged over 10% annual returns for more than 50 years. Warren Buffett famously bet a million dollars that no hedge fund could beat a simple index fund. He won that bet easily.

Now apply leverage:

You invest $25,000 of your own money
You borrow $75,000
Your total investment is $100,000
If the market returns 10%, you make $10,000
That’s a 40% return on your actual $25,000

Compare that to real estate. With 5% Appreciation and 25% down, you’d expect about 20% returns. The leveraged stock strategy potentially doubles that.

Why This Might Beat Real Estate Right Now

Here’s what really caught my attention. With this approach:

No mortgage applications
No tenants calling at midnight
No property managers to hire
No repairs or maintenance
Completely passive
Easy to sell when you need cash

And here’s the kicker. Your losses are capped at what you invested. With real estate, you can lose more than you put in. Just ask anyone who bought a pre-construction condo in the last few years.

The BRRRR Strategy for Stocks

Real estate investors love the BRRRR method. Buy, renovate, rent, refinance, repeat. You pull out your equity and do it again.

Turns out you can do the same thing here:

Invest $25,000 (controlling $100,000)
Wait for gains (say $20,000 over a couple years)
Borrow against that new equity (3x = $60,000)
Deploy that $60,000 in more stocks
Keep compounding on your original investment

The lending is scalable too. You can borrow up to $2 million per person, per corporation. Multiply that across your spouse, kids, and different business entities.

What About Risk?

Every investment carries risk. Let’s be clear about that.

But here’s the safety net. That 75% principal guarantee from the insurance company means your maximum loss is your 25% down payment. On a $100,000 investment, you can’t lose more than $25,000.

With real estate? There’s no one guaranteeing 75% of your home’s value.

The Estate Planning Bonus

Erwin got his insurance license specifically because of what segregated funds do for estate planning.

When you pass away, these funds skip probate entirely. Your beneficiaries get cash within days. The funds get sold, the loan gets paid off, and the rest goes to your family.

Here’s something Erwin learned from working with 350+ real estate clients: about 90% of their kids don’t want their parents’ rental properties. The headaches, the management, the local ties. Nobody wants to inherit that.

But a portfolio that has the potential to generate 20-40% annually with zero headaches? That’s a different story.

Getting Started

The minimum investment is $50,000 total, which means you’d need about $17,000 out of pocket. That’s a lot more accessible than buying Canadian real estate right now.

Erwin recommends sticking with index funds like the S&P 500. Lowest fees. Best historical performance. Even Warren Buffett says that’s the smart move.

The Bottom Line

This isn’t about abandoning real estate. It’s about not having all your eggs in one basket.

Erwin still believes in real estate. He still helps clients buy investment properties. But he’s also realistic about what’s working right now and what isn’t.

If you’re feeling stuck with your current investments, or you’re looking for a way to diversify without the headaches of being a landlord, this leveraged stock strategy deserves a look.

The math works. The risk is capped. And you might finally have an investment you don’t have to babysit.

This content is for informational purposes only and does not constitute financial, investment, or legal advice. Past performance does not guarantee future results. Always consult qualified professionals before making investment decisions.

Book Your Strategy Call

Frequently Asked Questions

What are segregated funds?

Segregated funds are the insurance industry's version of mutual funds. The key difference is that most segregated funds guarantee you'll get back at least 75% of your principal, backed by major Canadian insurance companies.

How does leveraging stocks work?

You put down 25% of your total investment and borrow the remaining 75%. Your gains (or losses) happen on the full amount, which can multiply your returns significantly compared to investing with just your own cash.

What is the minimum investment required?

The minimum total investment is $50,000, which means you'd need approximately $17,000 out of pocket as your 25% down payment.

How is the risk different from real estate investing?

With leveraged segregated funds, your maximum loss is capped at your 25% investment thanks to the 75% principal guarantee. With real estate, you can potentially lose more than your initial investment.

Can you use the BRRRR strategy with stocks?

Yes. Once your investments gain value, you can borrow against that new equity and deploy more capital into the stock market, compounding your returns from your original investment.

What happens to these investments when you pass away?

Segregated funds bypass probate entirely. Your beneficiaries receive cash within days of your passing, as the funds are liquidated, the loan is paid off, and the remainder goes directly to them.

Which funds should you invest in?

Index funds like the Su0026amp;P 500 are recommended because they have the lowest management fees and historically outperform managed funds. Even Warren Buffett endorses this approach.

How much can you borrow for this strategy?

You can borrow up to $2 million per person and per corporation. This can be multiplied across spouses, children, and different business entities for significant scaling potential.

Disclaimer: LendCity Mortgages is a licensed mortgage brokerage, and our team includes experienced real estate investors. While we are qualified to provide mortgage-related guidance, the broader financial, tax, and legal information in this article is provided for educational purposes only and does not constitute financial planning, tax, or legal advice. For matters outside mortgage financing, we recommend consulting a Chartered Professional Accountant (CPA), licensed financial planner, or qualified legal advisor.

Written by

LendCity

Published

January 12, 2026