Leverage

Use other peoples’ money

Achieve your financial goals more quickly

The bar graph below shows how a £15,000 deposit on a property is used to leverage the same return as £100,000 worth of shares by using other peoples’ money.

If you had shares and a property both worth £100,000 and they increased in value by £15,000 they would have increased in value by 15%.

If you had used £100,000 of your own money to purchase shares and made £15,000 the return on your investment is 15%

If the property was purchased using £15,000 of your own money and you borrowed the rest you would have used £15,000 of your own money and made £15,000. You have now used the banks money to leverage a return on your investment of 100%.

If you had invested £15,000 in shares instead and they increased in value by 15% you would have only made £2,250 compared to the £15,000 you would have made from your property.

Which makes more sense?