When it comes to money, I’m about as conservative as you can get.
I save religiously.
I always keep a healthy amount of cash available – enough to cover years of expenses.
And when it comes to investing, I’ve dedicated most of my 20-plus-year professional career to income-producing assets like dividend stocks.
So it might be shocking to hear that I’ve been using serious leverage to turn $235,000 into more than a million-dollar profit over the last five years.
After all, leverage is one of those words that makes investors nervous.
In simple terms, it means using borrowed money to control more of something than you could otherwise.
Since leverage amplifies results and could lead to substantial losses, many “experts” tell investors to avoid using it at all costs.
But it’s not that simple.
Leverage is a powerful tool when you use it correctly and under the right conditions.
In a minute, I’ll tell you how leverage can help you pull forward decades of gains from the stock market in less than 90 days.
But first, let’s talk about my $235,000 investment…
The Leverage That Underpins Most Houses in America
Most people take out a mortgage when they buy a home…
They commit some amount of money as a down payment, typically 20%. Then they borrow the rest and pay it back in monthly installments.
Most homeowners do this because they can’t pay it all upfront in cash.
But even the wealthy still take out mortgages for various reasons… ranging from tax advantages to greater financial flexibility.
And in all instances, these mortgages are essentially leveraged investments.
I’ll use my own mortgage as an example. (I don’t mind since this is publicly available information.)
My wife and I bought our current house for $1,169,500 back in October 2017.
We gave the bank a standard down payment of 20% – $235,000 in this case.
Because of the ongoing boom in real estate, our house is currently worth at least $2.2 million.
So that’s a paper profit of more than a million bucks in less than five years.
Now, to put that into proper context, consider two different scenarios.
In Scenario No. 1, I would have paid all cash for the property.
Frictional costs aside, I could walk away with a $1 million profit on my $1,169,500 investment today.
That would be a very nice return of 88% on my invested capital over five years.
But Scenario No. 2 is my actual situation…
I still paid $1,169,500 for the house… But I financed 80% of the transaction.
So, if I sell for the same $2.2 million right now, I’ve made more than $1 million on an initial investment of just $235,000.
That’s a return of 438% – almost five times what I would have made by paying cash.
Of course, the recent rise in property prices has been pretty exceptional.
I feel very fortunate that things have worked like this in such a short period…
If prices went the other way, I could have easily found myself “underwater” – owing more on my house than it’s worth.
That’s the downside of using leverage. And millions of Americans learned that lesson firsthand during the 2006–2008 financial collapse.
So, I’m hardly saying that leverage is foolproof.
It’s a sword that cuts both ways.
But if you know how to wield it, you can get outsized returns in a relatively low-risk way.
In the case of real estate, it’s pretty straightforward…
Buy quality. Don’t borrow more than you can afford to pay back. And plan to own the property for a relatively long time since real estate typically rises in value over long periods.
When it comes to the stock market, I recommend using options – which are leveraged investments – in much the same way.
But this isn’t how Wall Street tells investors to use leverage.
Instead, they push people into trades that lose money 95% of the time.
That’s a shame… because on the other side of those trades, Wall Street is making billions. And it’s a strategy any investor can use.
The Right Way to Use Options
Now, when you hear about options, you probably think of risk. But there are safe ways to use them that can return thousands-percent gains in just a few months.
You see, like a mortgage, options give you leverage. They allow you to turn a small grubstake into a huge windfall – and it’s often much bigger than you’d make from holding stocks.
For example, in 2021, our subscribers used options to make 422% on CVS in about one month.
If you bought and held CVS stock over that same period, you’d only have made 16%.
Or look at Jeffries Financial Group… our subscribers used options to make 612% in a month and a half. But buying the stock outright would have only made you 30% in that time.
It’s all thanks to our “No-Money Down Alpha Trade” method.
Here’s how it works…
First, we earn an upfront cash payout from selling put options on the best blue-chip companies on the market.
Using puts, we agree to buy shares in a company for a certain price and length of time in exchange for an upfront cash payout.
Second, we take a portion of that instant payout and buy a “call” option on the same company. This is a bet on the possibility of the stock rising higher.
By buying call options, we can use a small amount of capital to control a much larger position. (For instance, one call option gives you exposure to 100 shares of stock.)
It’s like using leverage to buy an amazing house you’d be happy to own for many years… But you’re using someone else’s money for that leverage.
Like any other investment, No-Money Down Alpha Trades do come with risks.
While you won’t lose any money if the call option expires worthless (after all, you used cash from another trader to buy the option)… the stock could plummet in price, meaning you could end up owning (or “put”) the shares at a loss.
But that’s why we only choose world-class companies. Eventually, they bounce back. And you’ll potentially recoup your investment as share prices appreciate.
Options can be a dream come true for anyone looking to fast-track their retirement.
That’s why we’ve put together an entire course on how to use options easily and safely.
You can learn more about our approach right here.
You’ll even get a free list of stocks to play an Anomaly in the market that’s creating near-perfect conditions for our options trades.
Options and leverage make a lot of investors very nervous. But just like buying a home, using options can lead to massive windfalls in the future.
And if you use our No-Money-Down Alpha Trade strategy during the right market windows, that windfall can come in a mere fraction of the time.
Best Wishes,
 |
Nilus Mattive
Analyst, Palm Beach Daily