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The difference between savers and investors
There is an important difference between people who save their money and people who invest their money. It’s leverage-the ability to do more with less.
Old beliefs and financial habits are deeply ingrained and hard to change. Yet educated investors know how to use leverage and other people’s money to create their wealth. Savers also invest, but they invest from a saver’s point of view-mutual funds, 401(k)s, stocks and bonds. A well-informed and disciplined investor can gain much higher returns with much less risk and less money, but doing so requires financial leverage. Most savers don’t use financial leverage. They’re more passive about borrowing. They don’t use debt to their advantage, and they don’t use it to get richer. Investors, however, use smart borrowing techniques to make their money grow faster.
What are the benefits of OPM and OPT?
Most people have the ability to apply the strategies of wealthy people by using OPM-other people’s money. Using OPM is a solid path to creating long-term wealth. As an example, banks are eager to lend money for smart real estate investments. It’s a win-win situation: banks earn money by lending money, and you earn it by purchasing properties below market value and having your real estate appreciate.
In contrast, most bankers will not lend money to buy mutual funds. Why? Apparently bankers think that mutual funds are too risky and that real estate is a safer investment.
It’s also wise to use OPT-other people’s time. This is a very important factor in effectively using leverage. Engaging professional assistance can help you gain more knowledge about leverage and become more astute about how you invest your money. It also enables you to save your valuable time and enjoy it with family and friends.
Retirement is easier for investors than it is for savers
With so much opportunity to become financially secure, why do so many people continue to do nothing? Simply put, it is because of fear. Fear that mortgage interest is a bad investment, fear that equity pulled from a home will be lost in risky investments, fear that a home could be lost, even fear that we lack self-control and would waste available money on unnecessary luxury items.
The irony of this is that continuing to maintain large equity positions in our homes can be extremely risky. The risk of losses from unexpected life changes, housing market drops, even natural disasters, are increased when too much of our cash is buried in a single asset-our home.
For more information on leverage and how you can use it to your advantage contact us.
Zach Anderson
Cobalt Financial Services
425-828-2651
The Author: zanderson
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This entry was posted by zanderson, on Tuesday, July 29th, 2008 at 5:21 pm and is filed under Featured, Foreclosures, Marketplace. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response on the right, or trackback from your own site.
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