How to successfully invest money?

How to successfully invest your own money?

What is the financial leverage? How to multiply your own money? How to get higher returns with reduced risk?

Leverage or otherwise leverage your own money (money multiplication) gives you the power to quickly multiply your capital and increase your return on investment.

The lever is nothing more than: higher performance with less effort. We leverage leverage in various areas of our lives without even realizing it. For example, to lift a heavy object, we can use a crane or lift. The plane to move from place to place is a lever designed to be the beginning of the 20th century.

Investing money

In the same way, by leveraging, we can accelerate the multiplication of our money. In order to get bigger returns from the money invested, however, we need financial intelligence and the knowledge that will allow us to achieve this with minimal risk. Only lack of financial knowledge prevents or maximizes the risk of applying advanced financial leverage, because leverage can act in both directions:

1. Get rich quick - if you have high financial IQ and you know what you are doing.

2. Put you very quickly into bankruptcy - if you're a financial ignorant, and yet you want to get rich quick. Then the lack of financial knowledge causes that investing is pure gambling (you do not know what you are doing).

A person who, for example, puts his or her own money into the bank, has no leverage. He uses his own money. Money saved in this way has a leverage factor of 1: 1. A bank saver covers 100% of this investment with its own money.

However, if you take into account, for example, the investment in a rented apartment building, where the bank covers 80% of the total investment, and rental rents flow to me, then - with leverage, the leverage is already 1: 4. For every dollar invested by me, the bank lends me four.

Investing in funds and bank deposits

Unfortunately, most people prefer to invest their own financial surplus in banks. Although savings on deposits and a diversified portfolio of mutual funds are one form of leverage, they have a historically low return. To be honest - as most people probably know - saving money and investing in mutual funds does not require having too much financial intelligence. That is why the return of this type of investment instruments is historically very low.

In order to get higher returns (than those from bank deposits and investment funds) from the money invested, you need to have a higher financial intelligence. Many people think that a higher return on investment requires a higher level of risk. It's not true. It all depends on financial intelligence.

One of the reasons why so many people are struggling with the financial leverage of their own money is that they donate their own money to "experts," such as a banker, investment fund manager, or financial advisor.

The problem is that if you pass your money on to someone else - you will not learn anything about finance and investing, you will not increase your financial intelligence and you will not be able to become a financial expert for your own money. If someone else manages your money and solves your financial problems, and you just pray to do it well - then you can not increase your financial intelligence.