Power of Leverage

I talk about Wheel of Wealth: Education, Cash Flow, Growth, Big Hit, Leverage, Tax, and Asset Protection. The critical element of the Wealth Wheel is leverage. The ability to take something small (capital, opportunity, energy, or intelligence) and use items is a massive result.

Leverage is a crucial element for wealth and even success. Take limited resources and use them for capacity. Whether in business, real estate, stock market, or life, this is a philosophy and strategy that you must master. Let me give a few real-life examples of how to apply this tool to various fields in building wealth.

Stock Market Leverage

Options can be high leverage on the stock market if you know what you are doing. If not, it will only be a waste of money. Make sure you get a strong education about options, before investing.

If the price of XYZ shares is $ 50 per share, we might be able to buy options for $ 5 per share. Options usually sold “contracts” which represent 100 shares. We buy 100 shares at a time (1 contract). I can buy more for 5 dollars vs. $ 50 per share. Therefore, the return on investment is higher (leverage). Plus, I can start with a small investment.

Now many new options investors buy options that expire in less than 30 days. What they don’t realize is that the option value will rot quickly. Even the greatest decay (loss of profit) is in the last 30 days. That means that if you buy an option, it must be at least 60 to 90 days. So, we see changes in value based on markets, not decay.

There are other examples of leverage in the stock market, such as credit spreads, naked positions, and margins (loans).

Real Estate Leverage

The two main leverage areas for real estate are creative financing and loans.

Every time you borrow money to buy an asset, you can end up with large leverage, provided that asset appreciation is substantial. Example: I bought a 100k house, placed 10k, and borrowed 90k. This valued at 5% per year (or 5 thousand a year). Well, my growth based on 100k or 5% (5k). But I only invested 10k down. So my cash on cash return is 50%. Borrowing money (at a reasonable level) with a reliable performance can be extraordinary leverage. That might be the reason many millionaires invest in real estate than other vehicles.

Creative investment is another area in real estate to increase leverage. If you can use a home buying strategy of less than $ 1,000, you have a significant influence. Maybe use seller financing, rent with options to buy, or contracts for deed strategies. Each can have a down payment or low investment.

There are other ways to increase real estate leverage such as: negotiating equity or prices, balloon payments or suspension of payments, OPM (Other People’s Money) such as PPO (Personal Placement Offer).

Business Leverage

The fastest and cheapest form of business today is the Internet. For a few hundred dollars, you can own a store and make thousands of dollars every year. The internet is often better than a franchise, or a distributor investment. In many cases, you don’t need a product, because you can quickly become an Amazon affiliate or a dozen other programs.

Other forms of business leverage include:

• MLM. Building individual bottom lines, where you get residual income, can be considered leverage.

• You are building a Business. Independent business, which you create and manage well, is high leverage.

• Go Public. I take a small company; reverse merger to shell reporting, and then go public. The shares come out with $ 3.75 per share and have more than one million shares: leverage big time, and resources.

• Value of profit. Get or create value for a limited fee. I sell tax products for years. We provide a way of “audit” protection when we pay taxes for people. The perceived value would be hundreds if not thousands of dollars if you audited. We also know that less than 1% of the population verified. We receive a considerable profit, with little costs or obligations.

• Brand. Good intentions associated with a brand can be millions. I remember drinking coffee with George Ross (Trump’s right hand at the time), and he said if the name of the name installed, the minimum value would be 5 Million dollars in “brand value.”

Intelligent Leverage

Intelligent leverage is one of my favorite types of leverage. Use “intelligence” to take advantage of situations or opportunities and make use of the process. There are many strategies, but the number one on my list is a joint venture.

Cooperate. Find the database and then find the product needed by the database, match the two and take a percentage of the agreement. Example: I found a group of former IRS agents who offered services and products. I know financial groups that have more than 200 thousand members. The result, we sell more than 14 million dollars in tax products to the business database for more than three years. I have a 2.5% royalty in the agreement. All parties are happy. I like intellectual influence!

Information Products. A few decades ago, Ken Blanchard taught me a strategy: making money while you sleep. Write a book, audio record, or video. And sell it online or offline. I have sold more than 30,000 self-study manuals — sales made through third party individuals or companies. I receive a small royalty on the sale of each product. Now I sell information products online — high leverage.

Leverage is the key to success in life, business, and wealth building.