So welcome to the 10th step of 40 days financial transformation, we are talking about Rahul who belongs to a middle class family.
He is an 18 years old boy but why does he need to learn financial leverage?
Now this financial leverage is going to be very useful in your life, now what does leverage mean? We will understand this in detail today we discussed that Rahul can get investors who can invest in his idea, so what is the need to invest, borrow money, take a loan?
See, when we talk about becoming rich, there are three ways to become rich, so if you want to become rich, the first and the easiest way is to earn money and invest your own money, which is a very good way.
We are going to talk about this so that people understand this method in detail that we have to earn money if we earn more money, we will become rich.
The second way is to take a loan, if you take a loan then you will get caught in a vicious circle, if you take a loan then you will have to pay EMI which is not wrong at all, all these things that you have heard are correct but in which scenario, we will understand this later and the third way is to take investment by making someone your partner, now when we take investment then you must have heard that we take investment in exchange of equity, now what is this? We will understand this today, so what is the meaning of leveraging? First of all let us understand financial leveraging, you must have understood all the three ways, see for example you have a business idea, now in this business idea you feel that you can get 100% return in the next 6 months, if this happens to you then it is a very good thing. 100% means that the money will double, for example, if you have 10 lakhs and you think that 10 lakhs will be spent in doing business or 10 lakhs in investing and I believe in this business idea or investment that in 6 months this 10 lakhs will become 20 lakhs then you will feel that this is a very good thing but where does leveraging work?
Leveraging works when you know that it can happen.
There are so many opportunities so what do you do?
First of all, you can take a loan. What can happen by taking a loan?
It is possible that you took a loan of 10 lakhs and you took a loan of 40 lakhs from the bank now you have 50 lakhs I will give you two real life examples of this so I am going to give you two real life examples so you have 50 lakhs and suppose your idea works and in 6 months, this 50 lakhs will become 1 crore so you have returned 40 lakhs from the bank and also paid some interest and you had 10 lakhs so let’s deduct it firstly, you have to return 40 lakhs from the bank and you had 10 lakhs now you have 50 lakhs if you pay some interest also, even then you will have 40-45 lakhs so this is what you have now how many times did this happen? Here you were earning 10 lakhs and I say you got the money at a very high interest rate still you earned 40 lakhs instead of 10 lakhs. You must have found out that they made a profit. When we invest in IPO there is risk but if we get good listing gains then we can also make profits. You must have heard that when they were talking to a Kotak employee and Kotak rejected their loan, their conversation went viral. What? Why were they taking loan from Kotak? Because they wanted to invest in Nykaa IPO, if you remember they got listing gains, so if they took Rs 500 crore from the bank and they got Rs 500 crore or 50 crore, this is an example, but they took Rs 500 crore from the bank and if they almost doubled, I say 500 crore, but you say 800 crore, so they returned Rs 500 crore to the bank, paid some interest also, but they were left with Rs 250-300 crore, you will say what is this?
Because 250-300 crores is no joke, it is not a joke, but the point is there is some disadvantage in leveraging, what if it reverses?
What if you don’t get positive listing gains? You took a loan and did not get a gain listing, on the contrary you say that when the IPO opened people incurred losses, if there is a loss of 100 crores then that person should have the ability to bear a loss of 100 crores when you believe in the idea then leveraging is very good but many times where there is a possibility of loss, the person is afraid of taking a loan, he understands that this loan can be risky for me, if it backfires then this loss will be very big and maybe I will not be able to bear it, then comes the third smartest move which you are seeing on Shark Tank,