Importance of Leverage in Personal Finance



Quick Summary
Leverage, or the use of borrowed funds, can be a powerful tool in personal finance when used correctly. It's beneficial when the returns on your investments exceed the interest paid on the debt. However, like the mythological Icarus flying too close to the sun, misusing debt can lead to significant problems. Using debt for asset creation during economic expansions or for essential purchases like a home can be wise, but borrowing for lifestyle expenses or during economic downturns is detrimental.

Leverage means the use of debt or borrowed funds to earn more return on investments. When the return on investment is higher than the interest paid on debt, leverage is beneficial. The use of debt isnt always bad. It depends upon the economic cycle and usage of debt. I have mentionedthe story of
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