Awhile ago, I visited the personal finance blog of my friend from Canada, I found out he is using “leveraged investing strategies”. So, what is leverage investing all about? A leverage investing is simply borrowing money from the bank or other people and invest it that earns higher than the loan rate.
Example, if you borrow $1,000,000 than has a loan rate of 7% per year and you put the borrowed money in the stocks that earns (example only) 12%, therefore, you are earning 5%. In leverage investing you are using OPM (other people’s money). I believe in this strategy wherein most rich people are using this strategy.
Use Leveraged Investing Strategies for Your Advantage
Anyone who wants to get rich fast must do leverage investing. Sounds good, right? But mind you, leverage investing is risky.
The question is how aggressive are you in taking risk? If you are not comfortable in leverage investing, beware, don’t do it. This strategy is only for people who has guts and prepared for the consequences. You know what, if you know how to manage risk and sure about the rate of return of your investment, take advantage of leverage investing and you are surely getting rich.
OPM – Other People’s Money
Your turn, if you want to try to borrow money and invest the money. Make sure you invest the money in an investment vehicle that earns higher than the loan rate. What do you think? Do you have guts to do this investing strategy? In my own experience, it’s effective. I borrowed money and invest in a mutual fund. This way, I am doing not just OPM other people’s money but OPT other people’s time. The fund manager of the mutual fund will invest my money for me.
I will post some updates in this blog – total investment, after three years, since I get a loan that has a rate of 9% per year in 3 years. But I am so sure, my investment funds will earn higher than that. Of course, if you want to do the same thing, you have to research and investigate first and it is advisable to talk to a CFP- certified financial planner.
What about you? What’s your leveraged investing strategies? Can you share some effective investing strategies and ideas now? Join the conversation, use the comment box below. Thank you.