Buying S&P500 stock index lots, using leverage and a monthly deposit

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Hi,

I had a question regarding purchasing S&P500 stock index lots, using leverage and a monthly deposit, with returns compounding on the initial deposit & monthly deposit on the S&P500 monthly return. The returns are listed monthly with this experiment.

I have a excel spreadsheet I built that takes an initial deposit to purchase S&P500 index lots say £10,000, but we leverage 6 times to purchase £65,000 worth of S&P500 index lots (using CFD derivatives). Then each month we add a monthly deposit say £400 to purchase an additional S&P500 lot. Each month we also reinvest our profits from the initial purchase as well as the monthly deposit.

I need an expert to tell if my calculation is correct.

Here is my calculation. With an example.

Lets say

We have £10,000 and we use this to purchase £65,000 worth of S&P 500 lot CFDs. We are leveraging 6.5 times our initial capital.


Month 1
We have balance of £10,000
Month 1 S&P500 return is 0.51% which is 0.51 x 6.5 = 3.32% return for us (we used leverage)
Total return profit is £331.50
Total balance is now £10,331.50

2nd month
We have a balance of £10,331.50
We add £400 at beginning of month
Balance is now £10,731.50 (we reinvest all our profits by purchasing more S&P500 lots)
Month 2 S&P500 return is 2.41% which is 2.41 x 6.5 = 15.67% return for us
Total profit is £1,681
New balance is £12,412.59

3rd month
We have a balance of £12,412.59
We add £400 at beginning of month
Balance is now £12,812 (we reinvest all our profits by purchasing more S&P500 lots)
Month 3 S&P500 return is -0.56% which is 0.56 x 6.5 = -3.64% return for us
Total loss is £-466.37
New balance is £12,346

Is this correct technique I am using? and could you explain if anything is wrong?

Many Thanks
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