Leveraging money is certainly not a new concept. The idea has existed even before the concept of money itself. People converted their work into goods and used the goods to acquire other goods. When you work for a salary, you are basically doing the same thing. If you are a carpenter, you trade your skill for money, and the contractor uses your finished product combined with other people’s skilled labor as leverage for profit.

Money leverage can be used in many ways. One of the easiest ways is to lend money at a percentage. When you deposit money into a savings account, the bank gives you a percentage back for its use. They pay you a percentage of your money and in exchange they lend you the money, let’s say the contractor for a higher percentage. You can also go to the contractor and lend the money for a higher return, bypassing the bank.

Retailers take advantage of the money by buying products wholesale and selling at retail, which produces a profit. If you are going to invest your money entrusting it to a business consortium; Investigate the background of the people involved in ensuring the safety of your money. Don’t listen to the get-rich-quick schemer, always look at past projects and the performance it has generated.

Stay true to the program

It doesn’t matter if you are buying and selling, exchanging labor or investing, you must stick to the ten percent rule. Do you remember from the last lesson? Ten percent of everything you do is yours! This is your savings, your ace in the hole. This money must be used for profit. It is a simple matter of budget. Maybe you won’t be able to afford that new sound system, or you’ll have to drive a cheaper model of car, but you’ll be laying the groundwork for the future of you and your loved one. You’ll be ready when the kids are collage-ready, because you’ve taken the steps to prepare for the future. You are a responsible person with vision, as you have recognized your duty to yourself and your loved ones. Ten percent; in many places you pay so much in sales tax. Impose yourself and use that tax money to leverage your path to wealth and security.

Second: the most important leverage of money is in insurance. This is life and health insurance. Term life insurance is simply lending money to the insurance company in exchange for a certain return. When you’re young, the insurance company will pay your money because they know the chances of you dying are low. As you get older, the odds get higher and the reimbursement gets lower, which is why it’s known as “term insurance.” You can stick with the term and use your accrued interest to help pay your payments or collect and invest the interest earned. The important thing is that your benefactor is paid because you covered any mishap that might happen to you.

Earnings are automatic

If there was a thousand dollar bill attached to this article, could you start today and between now and next year, double that amount? It takes a bit of skill, but it can be done. Starting with $1,000.00, at the end of the first year, your investment has grown to $2,000.00; at the end of the second year, $4,000.00; At the end of the tenth year, you will have accumulated a wealth of $1,024,000.00. now its financial performance is accelerating. The technique has been the simple one of investing your money to obtain a certain yield during a certain period. You still have to apply OPM techniques or external leverage.

Let’s look at an example of using OPM to raise money. The example begins with an investment of $1,000.00 and assumes that you do not make any personal cash additions during the ten-year growth period. The amount grows at a rate of 35%. However, in this case, you will borrow against your net worth and an amount equal to it, in other words, you borrow $1,000.00 against your initial investment of $1,000.00 and then invest the $2,000.00. at 35% per year. The cost of this loan is, say, 8%.

Assuming you have $1,000.00 to start with, you then borrow another $1,000.00, giving you a working capital of $2,000.00. the first year’s earnings, at 35%, are then $700.00. From the total of the working funds plus your 35% return, that is $2,000.00, or $2,700.00, you must deduct the 8% interest paid and the OPM return. These deductions total $80.00 and $1,000.00 respectively, leaving you with a year-end net worth of $1,620.00.

it is for your benefit

Remembering that you won’t be adding any more of your own money to your investments at this point, you’ll now take that $1,620.00 and project earnings for the second year, again borrowing an equal amount to give you an investment capital of $3,240.00. Adding a 35% yield to this amount and then deducting interest and the OPM payment, your second year net worth will grow to $2,624.00 By the third year, you’ll borrow an equal amount, giving you working capital for a total of $5,248.00. Continue this projection for ten years and you will find that from your initial investment of $1,000.00, your net worth has grown to $124,386.00 by simply reinvesting and using OPM.

do it today

In the next chapter we will talk more about OPM leverage or other people’s money. Always remember that nothing will happen if you don’t start paying yourself 10% of your earnings. Ten percent for investing in a more secure future is a small price to pay. Don’t delay, pay yourself a personal security tax and put it to work.

happy trails

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