Investing is extremely important and a necessity for people to build long-term wealth. Unfortunately, it can often seem impossible to start investing because you do not have any liquid capital, to begin with. While you may not have any money in a savings account to invest, you could still gain access to some liquid assets if you are willing to leverage your personal assets. There are several advantages of leveraging personal assets to consider when you are looking to invest.
Increases Investment Ability
One of the main advantages of leveraging your personal assets is that it will be able to increase your investment ability. If you have assets that can be leveraged and liquidated, you will immediately have more money that you can invest. This could provide you with the capital you need to invest in some more capital-intensive investments, such as starting your own business or investing in a real estate project.
Attractive Interest Rates
Another reason why it can be a good idea to invest by leveraging your personal assets is that you can receive great interest rates. Today, many assets that are lowly levered will allow you to receive very low-interest rates that are quite affordable. In the majority of situations, these investment rates are much lower than the potential ROI you are going to get on your new investment. This can make the investment option very accretive when it comes to leveraging your assets to fund the initial investment.
Options to Leverage Assets
While there are advantages to leveraging your personal assets to earn a greater return on investment, you must also understand which assets can be leveraged. One asset that many people try to leverage to obtain personal capital is their home. If you have a lot of equity in your home you could qualify to either do a cash-out refinance or to take out a home equity line of credit.
Both of these will allow you to tap into the equity in your home to liquidate for other investment purposes. An additional advantage to this is that the interest you pay when you cash out your home will be tax deductible, up to $750,000 of mortgage balance amount. This can make your overall investment return even more accretive.
Another option leveraging your personal assets is to take out an auto title loan. When you have equity in your vehicle you will be able to quickly take out a loan that will be secured by your vehicle. An Arlington title loan will provide you with immediate access to personal capital. In many situations, you can receive the money you need within just a few days.
While there are clear advantages to using your assets as leverage to gain additional liquid capital, you need to carefully consider the investment risks. All investments, even those that seem like a sure thing, do come with risks. It is important that you spend time considering all of the potential risks and making sure that these are acceptable to you.
If you do leverage your assets and the investment does not work out, you could find yourself in some additional debt so it is important to make sure that you have a plan for mitigation to make sure you are prepared for the worst situations that could arise.