What Is Leverage, and How Can I Use It to My Advantage?

What Is Leverage, and How Can I Use It to My Advantage?
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Rodd Mann
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Financial leverage is the choice to borrow money to invest in assets. The intent is to generate returns higher than the cost of borrowing these funds. If done strategically, carefully, and correctly, leverage can increase profitability without the need to add additional personal investment capital.

Investor use of leverage is intended to increase returns on investment. You can leverage your investments using various instruments, including options, futures, and margin accounts. Companies use leverage to finance the assets they own. The combination of selling stock and borrowing funds can be optimized to provide the best overall return to a given firm.

Rodd Mann
Rodd Mann
Author
Rodd Mann writes about carving out a creative and unique new career in a changing world. His own career has taken him all over the world, working in accounting, finance, materials, logistics and manufacturing operations. Author, teacher, writer, consultant, Rodd has worked in many high-tech roles.
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