The world of finance is full of opportunities to leverage your physical assets such as your house, your cash & your income in order to maximize investment opportunities and gain the most return with the least input. Developing passive income, gaining giant sized returns on investment and so on is only possible when you leverage what you already possess, with the remaining investment coming in the form of co-investments, loans, or using time-bound instruments - such as options. However, this type of leverage is only the tip of the iceberg of leverage, and a world of opportunities awaits you in almost all fields of endeavor if you can properly leverage your known assets - both tangible and intangible.

The Opportunity
Skills Needed
Risks
Resources

When you wish to buy a property, such as a house or land, that is worth say $100,000, but you possess only $10,000 - you can go to a bank and borrow the remainder. The money is offered to you on the basis of your ability to repay it, but now you own a $100,000 house. Over time, as the house appreciates, say 3%, your investment value now rises by $3000. If instead, you had simply seen a 3% rise on your original investment of $10,000, you would have only experienced a $300 rise in value. This is one of the top reasons why home ownership is considered a good investment by most advisors.

Similar reasoning applies to stock purchases on the margin, investments in options and so on - and in each case, the extra investment one is able to make with the leverage results in outsized gains compared to the original cash investment you had to make.

A small extension of the above notion in the field of business is when a company, for example, buys the option to purchase a piece of property within a certain time period. The company takes this route as opposed to purchasing the property outright because its use may depend on the firm winning a large contract with a potential customer. If the deal falls through, the company lets the option expire, and has only lost the money used to purchase the option. However, if the firm wins the contract, it can go ahead and exercise the option to buy the property and use it. This is use of leverage where a much smaller amount of cash is being used to control a much more expensive piece of property.

A further use of leverage occurs in the field of expert knowledge. Say for example, you are an expert karate school instructor, and establish yourself reasonably well in your community. Assuming your business is running reasonably well, and you are making a net income of about $50,000/year. At this stage however, you have the opportunity to leverage your knowledge for a further increase in income through:

1. Taking a few 1-1 classes for select students at a significantly high price. This is essentially moving into the "higher end of the market" leverage.
2. Creating special teaching DVDs for students who may be moving out of the area or those who do not wish to enroll directly at your school, or for those who may have graduated but wish to keep up. This leverages the hidden needs of your market through a high-margin product.
3. Using your existing references and goodwill in the community to expand the number of schools you are operating - and doing so by training suitable teachers at each center to run the actual classes. This moves you out of the day-to-day work of actual teaching (and makes you only available for an even higher price for teaching select classes).
4. Training other professionals to run a business such as yours. This is the "teach the teachers" leverage.
5. Going national! Expanding on the above themes, one can see how expanding to a national or large regional reach is possible with a resulting income in the many millions of dollars.

The above example shows how expertise in one area can really be taken advantage of in creating a huge net-worth and income.

Sometimes, you may not be running a business using your expertise, but may simply be an employee at a firm. Leverage is still a key ingredient to success. Judge your skill sets and immediately move to an area within your company or to another company where those skill sets are most in demand. Perhaps your skill is in teaching French, your demand in a French school would be about average - for there would be many other French speaking teachers, several much better than you. However, moving to an area and to a school where they wish to teach French, but lack the teachers to do so - your value would be significantly higher. Generally, not only would you be paid more, but your input would be valued very highly - which is a source of great job satisfaction. This is leveraging your skills based on demand and supply in the marketplace.

Many individuals have built terrific careers by simply moving to the right place at the right time, as opposed to seeking to conquer illusory walls at prestigious institutions where many individuals with identical skill sets compete with each other for a few select positions. The rat race goes on, while there are hundreds of other locations worldwide seeking individuals with those skill sets and willing to pay top dollar for their services. Stand out from the crowd by following your heart to locations that will value your services and your presence.

Yet another opportunity to leverage your skills is by transferring them to a more lucrative domain. For example, your ability to drive large trucks can be transferred to the driving of armored trucks for banks. Your skills as a salesman can be better deployed at large investment banks where they are essentially trying to sell loan packages to large clients. In each case, you will have to augment your existing skills with additional knowledge (and in the case of investment banking, significantly more education) - but at the core, the skills required are those that you already possess and are passionate about.

Opportunities to leverage your skills, knowledge, know-how as well as money abound all around you.

Skills Needed

The primary skills required in leveraging your existing assets (tangible and intangible) are - knowledge of the marketplace and your own desire to employ leverage. Knowledge of the marketplace comes from reading - newspapers, trade journals, books- from talking to people in the field, from volunteer efforts and through your existing job. And the desire to employ leverage will come naturally when you find yourself loving your job and wishing to expand your role and influence in that field. Please note that we are not recommending that you must use leverage and seek expansion - one can be perfectly happy in one's current situation without looking to expand. However, if a desire for expansion emerges - as it often does in the expansion phase of life, leverage can provide the desired answer.

Risks

The primary risk in employing leverage is whether you are adequately covered in the event that your bet does not pay off. This is most obvious when borrowing to buy a house or a business that does not work out. But this is also applicable when you attempt to say, sell your own DVDs for karate - but the effort bombs. Perhaps the marketplace was not ready for your new product, or perhaps your product was of poor or inadequate quality. In either case, you will need to be able to recover from the setback, cut your losses, and continue making strides in your main business.

Resources

The best suggestion would be to read excellent motivational books such as

1. Think and Grow Rich by Napoleon Hill and
2. Lead the Field by Earl Nightingale

These books will provide you with the basis you need to execute on the growth side of your life and career.