In today’s modern, Leverage is happening everywhere. Most of us know about leverage, but we never know how to put the leverage in the right use. The right use of leverage can make you wealthier, or it can make you poorer. It’s perilous if you don’t know what you are doing when using the leverage. In this blog, I’m going to talk about the power of leverage. So, what is leverage?
What is Leverage? Why Should We Use Leverage?
Leverage is power and it can happen anywhere when load, fulcrum and force exist. In finance, leverage is a technique that amplifies investor profits or losses. We commonly used to lend money to magnify profit potential for you to grow faster.
The reason humans are better than animals is because humans know to use leverage, but animals don’t. In the beginning animals are better than humans, but with good use of leverage, we can fly higher than birds, moves faster than animals. In our daily life, we use the leverage on the bicycle, motorbike, cars, trains, airplane, and many transportation tools as a leverage tool. Today’s, we use the computer and internet to communicate, shopping, running business and many more. It could saved us a tons of time and money with lesser effort and cost.
However, there are some disadvantages of using leverage. If you are using leverage for borrowing money to magnify your profit, it may also potentially scale your loss. Too much leverage can be bad, it may easily get you into bankruptcy because the losses can exceed your deposit. When you use the leverage tool, you are responsible to know what you’re doing when using it.
Methods Of Leverage (Ideas)
- OPM (Other People’s Money)
Eg: Borrow Money from Bank, Looking For Investor Or Sponsor.
The concept is simple: You (as an individual or business entity) acquire or build income-producing assets-your business-by using money from sources other than your own.
- OPT, OPW, OPE, OPI (Other People’s Time, Work, Experience, Ideas)
Eg: Hire Professional to Work for You.
The concept is to make effective use of your time on important things, not on trivial matters
- Health (Long Term Leverage)
Eg: Exercise Consistency, Eating Health Food.
When you are in good health, you save time visiting the doctor, suffering from disease, time to recover, money and many more. So, you can have a better body condition to concentrate on the important thing. In the beginning it may consume your energy, but in the long run it’s a good leverage that is worth a lot more than you invested.
- Education (Long Term Leverage)
Eg: Reading Books, Learn New Things, Self-Improvement
The concept is to improve yourself with education. It may cost a lot in the beginning, but in the long run it will be worth it.
- Time (Good timing, Right Time)
Eg: Analysis of The Future Trends
The concept is to enter anything at the right time. It’s a very good leverage if you know when it the good timing to perform something.
- Social Network Leverage (Business Related Leverage)
Eg: One friend introduces Two, And Two to Four Or Even more
Social networks are a strong power, using social networks to expand it is especially important. Look at the trend today, if you have good content that is posted in the right item. The social sharing on the internet can start from 10 to 100, 100 to 1000 even to share by a million in a day.
- The Mentality (Mindset Leverage) – The way you think (I can’t afford it, how can I afford it)
Eg: Achieve More With Less, Stay Possitive
The concept is the way you think it affected your emotional and reaction. A good mindset will bring you to the best mode to success. Consistency in a good mindset and discipline will bring you a good difference.
The Future of Leverage
But in nearly this 5 years, I believe the OPD(Other People’s Data) and OPAI(Other People’s Artificial Intelligence) will be the trends or future leveraging tool. We are not going to create own data and artificial tools, but we will utilize what in the market and other people’s have to leverage it and helping our business.