Congrats on the house Denis. I'm happy for you.
As far as leveraged decay goes, 2-5 years is kinda long. They re-set over night, and mirror daily percentage returns x2. I'm a math fail, so its kinda hard for me to describe with technical accuracy, but here goes...
If a stock is worth $100, and loses 1%, it is now worth $99, right?
When the daily gain on that $99 is 1%, you only recover 99c. Thus, your gain must be 1.01% to recover a 1% loss. As they go up and down in daily activity over a long period of time, that really starts to play on the numbers. Thats decay. And in a 2x, its more pronounced.
You stand to make more than you lose, so its all good. But you can really see a droop in very long charts. Its worth it to reposition yourself if they are losing buckets in a several day slump. I know you don't like to day trade, but if the talking heads talk about a significant factor thats causing a large market trend in the wrong direction, like oil falling through the floor, you may want to consider making a readjustment until a new low is bottomed.
That's mostly right, but it's missing part 2 which explains why this occurs with leveraged ETFs and not unleveraged ETFs (aside from fees eating into principle in both scenarios). Mathematically:
$100*.99=$99 (1% loss)
$99*1.01=$99.99 (1% gain)
To break even, you need: (current amount)/(1-loss%)
To turn that into a percent, just divide that whole thing by the current amount. A more dramatic example would be a $1 loss on $5 principle. That's a 20% loss. However, to get back to $5 you need a 25% gain.
PART 2This all matters to
leveraged ETFs because they aim to double (or triple, etc.) the daily return (or loss) of...whatever. So, if you take my $1 loss on $5 principle example, your double-levered ETF would give you a -40% return on the 20% drop. You're down to $3. The next day, the underlying asset returns to its previous value. Great! That means it went up 25% and you get a 50% bump! Not so fast... $3*1.5=$4.50. You just lost 10%, my friend. That is decay. It sucks.