What is Leverage?

You have most likely heard this term but not sure what it really means. Another term used is gearing and so the definition is to use resources to increase the negative or positive aspect of the end result. Another way to look at it would be it is synonymous to borrowing.
If you were to reinvest a previous loan, you would be using leverage to better the ROE on that loan. This is risky but many investors find it work the risk. Greater potential and better returns can be increases when leverage is used. Basically, you will be taking risks when using leverage and the technique has been said to far outweigh the mentioned risks.
A lot can be gained if you are tricky enough to use this leverage in the right place at the right time. Everything has its pros and cons so make sure you understand it all before you use it yourself. You just might be glad that you did.