I. Leverage Employee stock options are the ideal leveraged investment. Employees are given an asset which cannot lose money. They are not required to invest a single dollar and yet they receive all the appreciation in the stock. This is similar to a long-term interest free loan of the exercise price. Employees should wait as long as possible to pay off the loan.
Most people are unfamiliar with leveraged investments.
However, they almost all purchase their homes with leverage. The leverage in a house purchase is often what makes the house a profitable investment. The remainder of the purchase price is borrowed from the mortgage company. As a result of the leverage, if the house appreciates she will make money more quickly than if she simply paid cash for the house. Therefore, she will make a higher return on her investment if she has leverage.