OPP: Using Other People’s Money Can Make You RICH!

Leverage is the Name of the Game!

Most brokers give you the possibility to use leverage to increase potential returns. Using leverage is a risky way to invest, but it can be a good strategy if you have a solid position.

There are a few things to be aware of before using leverage, and it’s best to wait until you have experience with investing before you consider using this option.

What is Leverage?

Leverage is using your broker’s capital to make a larger investment than you would be able to with your own money. So you’re leveraging your money.

For example, maybe you have $10,000 to invest. Using leverage would enable you to make a larger investment, perhaps $30,000. So you would control 3 times the shares, commodities, real estate, or other product with your $10,000 than you could before.

If the investment makes a profit, a larger investment in that item will bring you greater profits than what you would have made with your own money. On the other side of the coin, though, is the possibility of losing more than you would have if you had only used your own money.

Typically, brokers require you to keep a percentage of the amount you borrowed in your account. Your broker gets the rest of his money back, plus interest, from the investment’s profits.

Why Should You Use Leverage?