5. What is Leverage? - savingandinvesting.com
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Agreed, more people need to be financially literate. This should be manditory part of the curriculum in schools. Sadly it's not
4 years ago 21
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This is the best way ive ever heard any one explain leverage !!!
3 years ago 13
All Comments (22)
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Move to England and teach accounting over here, PLEASE.
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thank you for this video!!
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Thank you so much for the layman's definition. After hearing you explain it, the concept is actually quite simple. All the other explanations I found were so bogged down in jargon that it can become difficult to fish out the practical meaning. Cheers!
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@almac4 because the people who run the world make money off the financially illiterate... they wouldn't want to educate the general public as it would eat into their wealth...
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thanksssssssssssssssssssssssss
ssssssss I never understood what it meant -
Amazing explanation...I've been reading a book on mutual funds...but still did not understand what the leverage was...i wish everyone could explain it in simple way like you....keep it simple, thats the way. thank you!
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you broke it down so perfectly that i had to favourite this video
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How do central bank policies of low interest rates and providing extra credit into the market contribute to leverage? More specifically would banks accept such small down payments on the mortgages taken out if the fed funds rate had not been so low?
Also regarding your example, if the price had gone down to $80 then then that would be no different than the price going down to $90 as we had still have $0 and still owe $90 in both cases... am i correct?
bonfirejovi 1 year ago
@bonfirejovi Low interest rates contribute to leverage primarily by making debt more affordable - I can afford to pay interest on twice as much debt if interest rates are half as high for example. With lower mortgage rates (which are longer term rates), people can theoretically afford larger houses (until rates rise).
If price falls to $80 and $90 owed, then equity is wiped out and owe $90 as you say. If this happens in case of a property this is referred to as negative equity: $80-$90=-$10.
savingandinvesting 1 year ago