Posts Tagged ‘Wealth’
Getting Wealthy on Other Peoples Money
An article about using leverage for wealth accumulation
Everyone wants to do a little better, or get ahead a little faster. Borrowing to invest, if arranged properly is often a very attractive method of helping a client to reach their financial planning goals. The trick is in showing them how to take the risk without over exposing themselves to loss. There are many ways to minimize the portfolio risk and the leverage risk while still achieving the client’s goal. This article hopes to explain some of the options available. Leverage investing is not for every client but an awareness of its potential and the safeguards available, need to be considered so as to make it available to those that might not otherwise consider it.
Most of the very wealthy people throughout history have gotten there by borrowing to invest. Whether it was to start a business, or an enterprise, or to make an investment, it is only by taking some risk that they were able to succeed. For most people buying a home is the largest single investment and it is most often also their biggest debt. Many homeowners would be surprised if you told them their home was a highly leveraged and high-risk investment. In fact, it also lacks the basic safeguards of diversification, liquidity and debt servicing options. I am not suggesting that home ownership is a bad thing, only that it needs to be kept in perspective.