Massive wealth creation requires leverage. What is leverage? It is the power to control a lot with just a little. This is an important principle that all rich men know and don’t joke about. No man knows everything. If he wants to create wealth with minimal stress, he must use the power of leverage in its many dimensions. In business, there are five types of leverage:
1. Other Peoples Money (OPM)
2. Other People’s Experience (OPE)
3. Other People’s Idea (IPO)
4. Other People’s Time (OPT)
5. Other People’s Work (OPW)
This dimension of leverage has been the indispensable tool of rich men and I think it is important that you and I start exploring this gold mine in our quest for wealth creation. Your level of mastery of this leverage will largely determine not the amount of wealth you will be able to create, but it will accelerate the rate at which your wealth creation desire comes true. There is something that is common to all these dimensions of leverage. The five types of leverage focus on people. If we begin to analyze each type of leverage mentioned, you will discover that people, I mean human resources. What I am saying is that understanding leverage in terms of human capital will definitely impart your desire to create wealth. There is no success alone.
What leverage does is amplify your bottom line. Take, for example, investing in real estate or stocks. There are times when you have spotted an opportunity to make money in either of these two investment opportunities, and yet you do not have the financial resources to fund the deal. In such a case, as a savvy entrepreneur, you know it’s time to look for margin or a loan knowing full well that once you’re able to close that deal, the loan or margin will work out at a nice profit for you. the end. It will end for you a win-win situation without a penny from your pocket. You can see the need to really master the use of leverage in depth to enjoy its full benefits.
I should also make it clear that there are downsides to leverage when it is not managed well.