Leveraging is a powerful strategy that allows someone to multiply their gains. Equally it can multiply losses if not properly implemented. Talbot Stevens parallels leveraging with a power saw. Used properly, it can greatly speed up construction. Alternately, it can severely injure someone in the wrong hands.
Before leveraging you should speak with an advisor who can help you to determine if it suits your situation. Just because the math works, doesn't mean that it is right for everyone. Commonly, advisors leverage clients into the markets - for which the client will have to have a strong stomach. Market volatility can make your investment value lower than the loan initially taken. Played for the long run, it is quite common for that strategy to be quite fruitful.
With the wide selection of fixed rate investments available, we have found that where leverage is suitable, most clients opt to leverage into a secured investment that pays income monthly or quarterly. This does 2 things for the client:
The beauty of this strategy is that there is little or zero maintenance. You sit back and watch the income flow in.
Leverage strategies are quite complex and minimizing all the risks is key to ensuring success. If you are considering a leveraged investment, let us help you to determine how this can work for you. We can show you performance information on secured investments and discuss which may suit your situation best. Call or email us today.