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How To Use Leverage Like The 1%
We often hear stories about billionaires using debt to their advantage. Some wealthy person borrows money at a low-interest rate and then invests their loan into a high-yielding asset or inflationary hedge.
Headlines about these practices always stir up public outrage. However, the average person has access to many of these same tools.
Here’s how you can use leverage like the 1%.
Turn Zero-Interest Loans Into An Inflation Hedge
If you have good credit, most traditional payment processors will offer you a zero-interest, multi-month loan.
PayPal has a financing option where you pay no interest on any purchase over $100, as long as you pay the balance off within six months.
And American Express offers their Plan It program, which allows you to create a zero-interest payment lasting years (depending on the size of your purchase).
Many people aren’t even aware these services are available, and they're a great hedge against inflation.
Let’s say you get an American Express Blue Cash Everyday Card which pays you 3% cash-back on all U.S. Supermarket purchases. You know that inflation is becoming a huge issue, so you go out and use your card to buy $1,000 of non-perishable groceries.
You then use Plan It to break the $1,000 grocery bill into 12 monthly payments of $83.
Over the next year, grocery prices skyrocket 25%, so you’ve effectively saved yourself $250 and you still receive your $30 from the 3% cash-back bonus.
The American Express Blue Cash Everyday Card is fairly accessible too (you don’t need a super high income or a perfect credit score), so this is definitely a way for regular people to shrewdly use leverage like the 1%.
Learn To Trade Low-Risk Options
Many wealthy people vastly increase their cash flow by selling puts or covered calls against their stock holdings.
