Leverage

Leverage refers to using borrowed funds or resources to increase potential returns from an investment or business activity. Think of it like using a small push to move a larger object; borrowing amplifies your ability to invest more than you could with just your own money. While leverage can boost profits if investments perform well, it also increases risk—if things go poorly, losses are magnified and can even surpass your initial capital. Essentially, leverage enables greater potential gains but requires careful management due to its accompanying risks.