investing
leverage
The use of borrowed money to amplify potential returns (and potential losses) from an investment.
Example
"The real estate investor used leverage by putting 20% down and borrowing the rest."
💡 Memory Tip
A LEVER amplifies force — a little effort moves a big weight. Financial LEVERAGE amplifies returns (and losses).
Etymology
From 'lever' — using a lever to amplify force. In finance, leverage amplifies financial force.
Common Misspellings
leveregeleverigelevrageleverge