Financecalendar_todayLast updated: Apr 2026
What is Leverage?
/ˈliːvərɪdʒ/
Leverage means using borrowed money to amplify potential investment returns. It multiplies both gains and losses relative to the actual capital you put in.
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Everyday Example
If you use £10,000 of your own money plus £90,000 borrowed to buy a property worth £100,000, you are 10x leveraged — a 10% rise gives you a 100% return, but a 10% drop wipes you out.
publicReal-World Application
“Hedge funds routinely use 10:1 leverage, meaning a 10% loss on their positions would eliminate all their investors' capital.”
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Did you know?
The 2008 financial crisis was largely caused by banks operating with 30:1 leverage — a small decline in mortgage values was catastrophic at that scale.
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Key Insight
Leverage is a double-edged sword. It can accelerate wealth creation or wealth destruction depending entirely on which direction the underlying asset moves.
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