How Does Cash Leveraging Work?

Every day I get a question about what leverage is, how does leverage work, and how can I benefit from it? First, let me explain what leverage is. Leveraging is when you take something of value, and use it to receive money, it’s that simple. Most people, 97% of the population, make use of time for money. You use your time and expertise in exchange for cash. The biggest problem is that you are only one person, and there are only 24 hours a day, so whatever you do, the amount of money every day, every week or every year is limited, unless you put it in a system that can generate income for you. You caught in a rat race.

Those who are concerned with their financial future do take action, and they understand that unless they want to work until the undertaker plants them in the ground most people start taking evasive action early in like. They begin by placing a small portion of their income into retirement accounts such as an IRA or Mutual fund however if you change your thinking from being an employee to an investor or entrepreneur then you start having people money work for you; this creates freedom.

For example, let’s say you have $2,000,000.00 sitting in the bank. Most financial institutions pay interest depending on the type of account but for a primary savings account currently just about any bank or credit union is paying at least 3%, With 3% interest compounding on $2,000,000.00 you would earn $60,000 per year in just interest alone. That is how leveraging works. You leveraged $2,000,000.00 to get $60,000 which to me doesn’t sound like a fair exchange, but it is still better than nothing.

So most of us just don’t have $2,000,000.00 laying around so we can earn $60,000 in interest however it would not be unreasonable to have $3,000 to $10,000 in account which is again is only making 3% interest, so you could leverage that cash for a better return on your money, so lets look at some examples.

1st you could put your money into a high yield mutual fund; the national average shows that most high yield mutual funds have a return on your capital of 6 to 8% depending on the size of the fund and where the majority of the assets are.

2ND You can use your money by putting it in the Blue Chip Stock portfolio, these stocks usually have a higher return of 21%, and if you follow the trend quite well, you can make a lot of money very quickly, but this requires continuous monitoring so you can withdraw funds from bad returns and put it in stocks that perform better.

3rd you can purchase real estate with the current economic condition both commercial and residential property are extremely keep and with the right location for any given asset most property doubles its value every ten years. The only problem is I don’t have time to wait ten years for the fruits of my labor to start paying off,