How to Grow Rich with The Power of Leverage

Accelerated Wealth Creation Blueprint, for the Success you truly deserve!

Praveen Kumar, Prashant Kumar

• Publisher: Praveen Kumar
• eBook ISBN: 9780473459796
• Edition: 1
• Topic: Business
• Subtopic: Wealth Management
• Index: Business

If you study the lives of the most successful people around you; these people without fail apply the principle of leverage and use it to maximum effect in their life. Without applying some kind of leverage there is no possibility of creating accelerated wealth. Bestselling authors Praveen & Prashant Kumar in this book explain how you can create massive wealth in quick time by simply understanding and mastering the principle of leverage. Correct application of leverage breaks through the barrier of 10% growth/ yield. With leverage we can grow at 50% or 60% and even 100% or more. On the other hand improper understanding and use of leverage can have reverse and disastrous effect on your wealth. In this book you will learn:

•What are the various types of leverage?
•What pre-cautions you should take when applying leverage?
•How you can maximize your leverage?
•And much more…. This book explains the fundamentals and empowers you to grow rich by using the power of leverage correctly.

Types of Leverage

There are not one but several types of leverage that can be used to grow rich sooner. I will start with financial leverage, which is the most common one, and subsequently explain the other forms of leverage that help make you very successful.

Financial Leverage

Irrespective of whether you are a businessman or an investor, you need fund to grow. Everyone starts with personal funds, but these run out sooner than later. To create wealth one has to borrow from relatives, friends, banks, financial institutions or public ones. In other words, we have to work with ‘Other People’s Money’ or OPM.

The borrowed funds have to be productively employed to earn a higher return than the interest payable. Banks do this all the time. They borrow money from us at a lower interest rate and then give out loans to businesses and property mortgages at a much higher interest rate. They pocket the difference and create millions of dollars in profit.

If you have money sitting in the bank in your savings account or retirement account, then others are using your money as their leverage’.

To create wealth, you have to think like a bank. You have to use Other People’s Money to grow.

To explain this point, let us see how leverage works in real estate. Let us say you buy an investment property for $100,000 at 10% down payment. This means that you make a down payment of $10,000 and borrow $90,000 from the bank. Let us assume that the rent from the property covers the interest and expenses on the property. If the value of that property increases by 7% over the year then the property would be worth $107,000. This would mean that your investment of $10,000 has earned a whopping return of $7000 or 70% yield.

This happens because you get to leverage not only on your investment of $10,000 but also on the borrowed amount of $90,000. There are sophisticated property investors who buy property with ‘no money down’ or very little of their own money i.e. they work on 100% borrowed funds. In this case, the return on investment will be infinity.

Borrowing money and creating debt is good if the funds are utilized intelligently to create wealth through business and investment. The profits need to exceed the cost of borrowing. A debt created for consumption purposes: for buying luxury items such as cars, television, etc. is bad debt. Such debts take money out of our pockets and have to be treated with great caution.

Good debts make us rich. Poor debts make us go broke. The power of leverage in finance, when applied correctly, can make us grow rich exponentially.

Leverage of Knowledge

Perhaps the leverage of knowledge is the greatest lever that a person can apply. Your wealth creating ability depends on what lies between the two ears. One has to develop financial muscles in the brain. Intellectual leverage is the most powerful leverage. I have seen entrepreneurs amass massive wealth with nothing more than an idea.

"Thinking is hard work. When you are forced to think, you expand your mental capacity. When you expand your mental capacity, your wealth increases." – Robert Kiyosaki

The fastest method to achieve intellectual leverage is to use ‘Other People’s Experience’ or OPE. It takes too long to learn on your own—become an apprentice and find a mentor. Learn from the experiences of those who have travelled the path.

Secondly, knowledge has become so complex that no lone individual can acquire all the knowledge one needs to grow rich. Wealth is created through knowledge or ideas of other people. One has to learn the art of using ‘Other People’s Ideas’ or knowledge. This may require collaboration or buying the right expertise to cover any grey areas that exist in our knowledge construction.

What is needed by a wealth creator is the judgment—as to what knowledge is needed for a particular project and from where it can be imbibed at the cheapest price. Our world is full of specialists who do not know how to apply their knowledge to create wealth. It is wealth creators who leverage the knowledge of the specialist to amass great wealth.

You have to develop a keen eye for talent and look out for skillful people, because these are the kind of people who will make you rich. You have to leverage and harness the intellectual strength and talent of these people. Intellectuals consist of professionals such as accountants, legal advisors, tax consultants, etc. They fill the gaps in your knowledge. Their intellectual strength helps you grow rich.

Microsoft Corporations grew mainly due to its ability to harness the intellectual strength of young computer whiz-kids on its pay roll. If Microsoft can do it, why can’t you?

Leverage Other People’s Time and Effort

All of us are born with different talents and proclivities. ...

Table of contents

• Introduction
• Types of Leverage
• Characteristics of an Ideal Money-Making System
• Caution about Leveraging
• How to Maximize Leverage
• Other Books by the Author
• About the Authors