Why is buying on margin risky?

Buying on margin is risky because it involves borrowing money to purchase more shares than one can afford, amplifying both potential gains and losses. If the value of the investment declines, the investor not only faces losses on the purchased shares but is also still responsible for repaying the borrowed funds, which can lead to significant financial strain. Additionally, margin calls can require investors to deposit more money or sell assets at unfavorable prices, further exacerbating their losses. This leverage can lead to rapid and severe financial consequences if market conditions turn against the investor.