Leverage: Your Secret Wealth Builder (Don't Be Scared!)
Leverage: Your Secret Wealth Builder (Don't Be Scared!)
Leverage—just the word can make people nervous. But why?
For most, it’s because they:
- Don’t fully understand it.
- Heard one bad story and think it could happen to them.
Here’s the truth: leverage is one of the most powerful tools for wealth creation. In fact, you’re probably already using it if you have a mortgage!
Think about your home loan: most people can’t save enough to buy a house outright, so they borrow 80% of the price. That’s leveraging!
So, what is leverage really?
It’s simply using someone else’s money (like a bank’s) to invest, aiming for the value of that investment to grow over time.
For example:
- You buy a home, contributing 20% from your savings and borrowing the rest.
- As property values rise, so does your wealth.
- You can then use your home’s equity (the portion that has grown) to buy another property—or even shares!
But is it for you?
Here’s what to consider:
1. Can you handle risk? Will debt keep you up at night?
2. Is your cashflow strong? Can you save comfortably month after month?
We have more criteria but that’s a starting point.
Everyone’s situation is unique. That’s why we work with clients to assess their goals, cashflow, and risk tolerance before making any recommendations.
If you’d like to learn more about how leverage could help you reach your financial goals, message us with "leverage" and we can outline next steps.
This blog contains information that is general in nature. It does not constitute financial or taxation advice. The information does not take into account your objectives, needs and circumstances. We recommend that you obtain investment and taxation advice specific to your investment objectives, financial situation and particular needs before making any investment decision or acting on any of the information contained in this document. Subject to law, Cobalt Advisers Pty Ltd nor their directors, employees or authorised representatives, do not give any representation or warranty as to the reliability, accuracy or completeness of the information; or accepts any responsibility for any person acting, or refraining from acting, on the basis of the information contained in this document
