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 every rich man knows and doesn’t joke about. No man knows everything. If you want to create wealth with minimal stress, you must use the power of leverage in its many dimensions. In business, there are five types of leverage:
1. Money from other peoples (OPM)
2. Experience of other people (OPE)
3. Idea of other people (OPI)
4. Other people’s time (OPT)
5. Other people’s work (OPW)
This dimension of leverage has been the essential tool of rich men and I think it is important for you and me to begin exploring this gold mine in our quest for wealth creation. Your level of mastery of this leverage will largely determine not how much wealth you will be able to create, but will accelerate the rate at which your desire to create wealth will come true. There is something that is common to all these dimensions of leverage. The five types of leverage are people-centered. If we begin to analyze each type of leverage raised, we will discover that people, I mean human resources. What I’m saying is that understanding leverage in terms of human capital will definitely convey your desire to create wealth. There is no solo success.
What leverage does is amplify your bottom line. Take, for example, investing in real estate or in stocks. On occasion, you’ve spotted a money-making opportunity in either of these two investment opportunities, yet you don’t have the financial resources to fund the deal. In that case, as a smart entrepreneur, you know it’s time to go for a margin or loan knowing full well that once you can close that deal, the loan or margin will be settled with a good profit for you in the end. It will end with a win-win situation without a penny out of your pocket. You can see the need to really master the use of leverage in depth to enjoy all the benefits that come with it.
I must also clearly state that there are demerit sides to leverage when it is not managed well.
