 I got 10 grand what should i invest it in?? |
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 How much can I make a year from $200K? |
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 How do you prevent a stock market from crashing? |
If there's a lot of panic, and distrust in stocks, and you know it's going to crash...what do you do??
Additional Details
sorry
i mean, what should the GOVERNMENT do?... |
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 I just came into $2000.I really want to invest it.But I dont know where to start.Any tips? |
I am thinking about stocks or mutual funds.If anyone got any experience in these thing, I'd really appreciate it.
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pps p | What EXACTLY "LEVERAGE" MEANS? |
I understand leverage means increased borrowings....But i do not know clearly what does that term means .....
Can anyone please explain to me clearly & in simple way for leverage .....Please give simple examples if you can.......Please explain like you explain to 5 year old kid.
Thank you., |
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07_ShelbyGT500
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Leverage is debt. You can leverage up your position in an investment by taking on debt. Over leveraged means you have too much debt, as in the amount of debt you have taken on in a business, in an investment, in a project, cannot be covered by the cash flows resulting from that investment.
One way to think of leverage and the power of being leveraged is buying a house (putting the current housing crisis aside for this simple example).
If you buy a house that is worth $100,000 with $100,000 cash, you have zero leverage. In 1 year, lets assume the value of the house has gone up to $110,000 and you sell it. In this case, you have earned a rate of return of 10%. You made $10,000 on your $100,000 investment.
Now, lets say you bought the house with a $10,000 down payment, and borrowed the remaining $90,000. For this simple example, we will assume no interest payments during the first year. At the end of the year, you sell the house for $110,000. You pay the bank back their $90,000. You have earned $20,000 on your $10,000 investment. Because you are leveraged, you have earned a return of 100%.
Leverage gives you exposure to the upside with not a large (relative) investment. However, on the flip side, as you see with the housing crisis, it cuts both ways. Now, people owe more than their houses are worth. Being leveraged has magnified their downside. |
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tomtabuchi
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leveraging usually comes into play in trying to determine a rate of return. rate of return is a measure of the percentage return or yield. for example, if you put $100 into a savings account and earn $6 over a year, your rate of return is 6% (6 divided 100).
now lets say that you want to invest 100,000 in an investment that gives you an annual income of 10,000. Your rate of return is 10% if you provide the entire $1000,00 investment. If you borrow $80,000 of the $100,000 investment your rate of return is increased because of leverage and is now 50% ($10,000 divided by $20,000 of your actual invested funds, ignoring the cost of borrowing the $80,000).
let's now assume that the cost of borrowing the $80,000 for one year is $4,800 ((@ 6%). Your annual income is $5,200 ($10,000 less $4,800), and your actual rate return is 26% (5,200 divided by $20,000).
final comment is that as long as your investment is profitable enough, borrowing or using leverage will increase your rate of return because you are using someone's else funds by borrowing those funds. the danger is that your rate of loss is increased if the investment looses money. |
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Upward
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Let's say that a kid's toy, laying out in the front yard, got stuck in the mud. The kid pulled and pulled but could not get it out. He walks over to the trash heap and picks up a board. He pushes one end of the board underneath part of the toy and bears down hard on the other end (using the board as leverage). This HELPS lift the toy out of the mud so the kid can pick it up and continue playing with it. Leverage is a helping hand, a jump-start, a leg-up. In the financial world leverage works the same way. Except you have to put the "board" back where you got it along with "extra money" for the use of the "board". |
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khanfar22
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Term mostly used in stock market and corporate world, in stock market people trading in futures are all leveraged. That mean if they have 1000 $ they may have have positions worth 5000 $ depending on the margin percentage requirements.
Companies at times borrow excessively, the ration between debt and Equity would tell you if the Company is leveraged or not. |
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wildbirdie
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When you use your money to buy less than 100% of an investment and borrow the rest, you have more investing power than if you limited yourself to what you could pay cash for.
Look at a lever where the balance point is not in the middle. If you move the short end 1 inch, then the tip of the long end will move more than one inch.
They don't use this term in Britain. The idea exists but they call it "gearing" for similar reasons. Think about what happens when two gears of different sizes move together. |
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Bl♥ndy
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think about the root of the word... "lever", which means to help lift something. Leverage helps "lift" what the bank sees as the most they can loan you. things that give you leverage are investments and assets that you may have that the bank can take from you if you fail to pay pack the money. for example, a house, savings bonds, etc. |
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Ja Ma
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to move a heavy rock that you could not possibly lift you could use a lever, a large steel rod with a pivot point close to the rock and a use a large motion on the long end of the lever to cause a small but powerful motion on the small end to move the rock. financial leverage works in the same way. if an investment goes up 20% and you bought it all with your money (all equity) you make 20% and if it goes down 20% you lose 20%. but suppose you make the same investment with 90% borrowed funds at 10% interest. then, on $100 invested, $20 gained less $9 interest expense leaves you with $11 with $10 of your own money invested - a return of 110%. a small movement in the investment returns generates amplified returns for the equity holder just as a small force impressed on the long end of the lever creates a large force on the short end. |
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boosta
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LEVERAGE--The use of a small amount of assets to control a greater amount of assets.
i read read and read it said nothing about increased borrowings |
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cz73kz
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Leverage is like being on a teeter-totter and keeping enough weight on your side so that no matter how much weight is put on the other side you don't ever get flung off. |
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jerrome
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explain leverage with example |
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