Leveraged Finance


The American corporate debt is a staggering figure of $9 trillion. US companies borrow money on a regular basis and there’s a negative connotation attached to the word ‘debt’.

But there’s another side of the picture. If the companies don’t borrow money, nor take on a private equity investment, then they won’t be able to continue their operations and sustain the business for long and as a result, the national economy will collapse. So it’s basically debt that’s keeping the corporate world and the national economy going.

Now that we’ve established that debt doesn’t have to be necessarily bad, let’s dig deeper and take a look at good debt:

Understanding Good Debt

Taking debt is usually a burden for people because they’re worried about repaying it. But when you take debt to invest in assets that can yield profitability, your debt becomes good debt. You can earn from trading assets and make it a means of additional income. For example, if you buy stocks from the amount borrowed, you can earn dividends as well as profit when you sell them.

Here are some top ways you can convert debt into profit:

Invest in Leveraged ETFs

Leveraged Exchange Traded Funds (ETFs) are marketable securities that use debt to enable traders and investors to multiply the returns on a particular index fund. They’re traded on the stock exchange and amplify the returns by 200% to 300%. You can use these funds to invest in commodities, indexes, and bonds across different sectors.

However, ETFs can also work in the opposite direction and result in huge losses. But if you use a good strategy and knowledge about the financial markets, you can convert them into extraordinary profits.

Currency Trading

Currency trading—also known as Forex or foreign-exchange—is known as the buying and selling of currencies in foreign exchange markets for a profit. Two of the biggest benefits of currency trading are that you can convert a very small amount of money into significant profits in a relatively short period of time and the liquidity of Forex market, which means you can withdraw your investment any time.

Forex market is the largest capital market in the world with a daily turnover of $3 trillion and a number of people take debts for currency trading.

Real Estate

Real estate is an appreciating asset, which means its value always tends to increase over time. Many people borrow money to buy real estate, sell it at a profit, repay the debt and use the return on their investment to buy another property. They keep on repeating this cycle and earning increases profits.

You can buy a property that has a high return potential at a low price and sell them at higher prices. Real estate auctions organized by local or state governments are a great place to buy undervalued properties.

Visit our website, Money Cash and Value to explore about leveraged finance and value creation. Our educational resources will help you understand the concepts in detail so you can use debt as an investment to yield profitability.

Considering how extensive they are, it’s difficult to know the ins and outs of all the laws pertaining to managing and operating a business.

However, effective and well-planned legal strategies are the key to maximizing success in the corporate world. The law can often be limiting and restrictive, but when used to one’s advantage, it’s incredibly rewarding.

It’s not enough to treat local and international legal policies as mere parameters within which business is conducted. These days, law firms are facing intense competition as corporations invest in internal legal teams and strategists. These experts are hired by companies who are looking to seize and maintain a long-term competitive advantage.

According to researchers, there are five legal pathways that companies can take when it comes to shaping their policies. They are:

(1) avoidance—wherein companies avoid paying heed to the law and the consequences of their decisions

(2) compliance—this approach leads to companies working within the limits of the law, which is considered unwelcome and restrictive, but also necessary

(3) prevention—here, the law is viewed as guidance, with companies and executives actively seeking legal counsel. MIT Sloan refers to this as a “proactive instead of reactive” approach to law

(4) value—the law in this pathway is essential when trying to add value to a company’s products or services. That is to say, the company’s legal teams work to maximize return on investments through the use of law, factoring in important stakeholders—both internal and external. In fact, the legal team itself becomes a stakeholder in this approach

(5) transformation—this is when companies successfully integrate legal frameworks into their corporate strategies and business models. It can be a tricky transition to make, especially for companies that have operated for a while without following this model, or have no resources to do so.

It’s about figuring out your company and its executives’ understanding of legal models and frameworks to see which pathway suits your organization more. To learn more about what legal strategy works for you, get in touch with me through my website.