Tuesday, April 1, 2008

Leverage - The Greatest Double Edged Financial Weapon!!!

Whats the difference between a saver and an investor? or a wealthy person and a person on track to be a pensioner after 40 years work.


It's the single greatest tool for creating wealth, with the exception of your own financial education. Nothing is more important than increasing your knowledge base. Once you have the foundations of knowledge. Leverage can assist you to jump to the next level.

So what is it??

Leverage in financial terms means using given resources in such a way that the potential positive or negative outcome is magnified.

It is so much more than just borrowing money. Leverage is using other peoples money (OPM), other peoples time (OPT), other peoples knowledge (OPK)

We can use this is so many ways, I'll mention just a few;

  • Use a Property Manager to manage your Investment properties
  • Use a buyer's Agent to find quality investment property's
  • Use a good accountant to get maximum tax benefits
  • Read books to acquire other peoples experience
  • Network with like minded people to exchange other ideas
  • Use a good stock broker to find opportunity's in share market
  • Borrowing money to fund investments
Whilst leverage can be a great tool, and can also be the worst thing you have ever used and leave you screaming at yourself and any one else and dirt poor again. For this reason you should always tread the waters carefully , when using leverage to assist you, take it easy and go no further than that is comfortable each time. Don't rely on someones knowledge until you are comfortable and do some research yourself. The same with borrowing money to invest always do your due diligence.

There are many many people out there that would love nothing better than to separate you from your money. Be a good custodian of your wealth and it will flourish. Hand over responsibility to other's and it will flitter away.

Wealth is constantly being re-distributed from the dumb, silly and uneducated to the smart operators and financially knowledgeable people.

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