leveraged buying

Leveraged buying involves borrowing funds to purchase an asset, such as real estate or stocks, with the aim of increasing potential returns. By using leverage, investors put down a smaller initial amount (equity) and borrow the rest, magnifying both profits and losses. For example, if you buy property with a mortgage, any appreciation increases your equity more significantly than if you paid cash. However, it also means that if the asset's value declines, you could face substantial losses or debt, making leverage a strategy that amplifies both risk and reward.