Monday, May 14th, 2012
Creating a significant amount of wealth during your lifetime cannot be done by saving alone and usually requires the use of other people’s money. Borrowing money from others to invest in businesses and property is referred to as a leveraged investment strategy. Leveraged investments are capable of producing significant wealth, providing the funds invested produce a return greater than the cost of borrowing. Most commonly, this strategy is used for investing in property. The problem with leveraged investments is that while they magnify the effect of good investment returns, they also magnify the effects of bad returns. A leveraged investment strategy therefore requires a solid foundation to avoid financial ruin. The basic building blocks are:
Building on these foundations won’t eliminate risk but will certainly reduce it.
Enter your information below to receive all latest news, tips and advice from Moneymax, directly into your inbox.