Let’s get real! The most successful people 4 types of leverage to become wealthy, and not many people are talking about it! So I want to share with you what has completely changed my financial life – leverage! It’s the secret weapon that has helped me go from trading my time for money to building real, lasting wealth. But you might be wondering: what types of leverage exist, and how can use them to your advantage?
What is Leverage? – Leverage Definition
Leverage is using a small amount of effort or resources to create a much bigger result. It’s about working smarter, not harder, and using the tools and opportunities around you to make a bigger impact.
The Four Types of Leverage
There are four main types of leverage that I’ve used to build my wealth:
| Type of Leverage | Description |
|---|---|
| Financial Leverage | Using other people’s money (OPM) to invest in assets that generate passive income and appreciate in value over time. |
| Time Leverage | Outsourcing tasks and delegating responsibilities to free up your time and energy for high-value activities. |
| Code Leverage and Media Leverage | Code Leverage and Media Leverage is permissionless leverage that is the greatest type of leverage out of the four leverage types |
| Network Leverage | Building relationships and partnerships with people who can help you achieve your goals and open up new opportunities. |
By combining these different types of leverage, I’ve been able to create a powerful system for building wealth that helps me achieve my goals faster and with less effort.
By the way, I am not the one who came up with this the concept of categorizing leverage. It was inspired by Naval Ravikant, check out his tweets and the Navalmanak to learn more.
The Difference Between Rich and Wealthy Based on Types of Leverage
A lot of people think being rich and being wealthy are the same thing, but they’re not. Being rich is about having a high income or a lot of fancy things. But it’s often temporary and depends on your current job or business. If you lose your income, your richness can disappear quickly.
Being wealthy, on the other hand, is about having a solid foundation of assets that make you money and grow in value over time. It’s about building a life of financial freedom and security, where you’re not dependent on any one source of income. Wealthy people have mastered the art of leverage, using their resources to create even more wealth and opportunities.
What are the 4 Types of Leverage
There are four types of Leverage: Financial Leverage, Time leverage, Code and Medial Leverage, and Network Leverage. Each type has different advantage and disadvantages, however, Code/Media Leverage is the most powerful type of leverage since it is permissionless leverage
Financial Leverage
Financial leverage is all about using other people’s money to invest in assets that generate passive income and appreciate in value over time. This could be things like rental properties, dividend-paying stocks, or investing in businesses. The key is to use a small amount of your own money and borrow the rest, so you can control a much larger asset that makes you money while you sleep.
Time Leverage
Time leverage is about outsourcing tasks and delegating responsibilities to free up your time and energy for the things that really matter. This could be hiring employees, working with freelancers, or using technology to automate parts of your business. The goal is to focus on the high-value activities that only you can do, and let others handle the rest.
Code Leverage and Media Leverage
Code and media leverage is all about creating digital products or content that can be sold an infinite number of times without any additional cost. This could be things like creating an online course, writing an e-book, or building a piece of software. Once you create it, you can sell it over and over again, without any extra work on your part. This is the power of scalable, passive income.
Network Leverage
Network leverage is about building relationships and partnerships with people who can help you achieve your goals faster and open up new opportunities. This could be joining a mastermind group, attending networking events, or collaborating with other successful people in your industry. By surrounding yourself with the right people, you gain access to their knowledge, resources, and connections, which can help you accelerate your own success.
By combining these different types of leverage, I’ve been able to create a powerful system for building wealth that helps me achieve my goals faster and with less effort, let me give you some examples.
I’ve made a video about the types of leverage that you can check out here:
What are the best types of leverage?
The best leverage you could use is Code and Media Leverage. That is because it is permissionless, almost infinitely scalable with insignificant incremental cost. Other types of leverage such as network and time/labor leverage require other people to be effective and are not as scalable. Financial leverage can be highly scalable (imagine doing the investment research for a stock; it is the same amount of work, but the reward depends on how much you invest in the stock that determines your outcome.) The diagram below showcases the strengths of the types of leverage in an easily understandable way.
Example of the Types of Leverage
Below are some examples of how I used each type of leverage in my own life. Hopefully, this inspires you to use the different types of leverage for yourself as well.
Financial Leverage Example
Let me give you an example of how I’ve used financial leverage to build wealth. Ever since I made money from trading time for money with hourly jobs when I was 14, I’ve invested in stocks and bonds. I put aside some emergency money, and any money I made beyond that, I invested in ETFs and Bonds. This has made a return of over 200% so far and keeps growing consistently.
Besides investing in equities, I’ve also invested in startups and real estate. A few years ago, I saved up a small down payment and used it to buy my first rental property. I put down a relatively small amount of my own money and borrowed the rest from the bank. That property now generates rental income every month and has gone up in value over time.
I then used the rental income from that property to save up for another down payment, and another, and another. Over time, I built a portfolio of rental properties that generated a significant amount of passive income each month.
By using financial leverage, I was able to build a real estate empire that would allow me to quit my day job (if I wanted to) and live life on my own terms. I now have the freedom to work on what I want to, travel, spend time with my family, and pursue my passions, all while my assets continue to grow in value and generate income.
Time Leverage Example
Time leverage has been a game-changer for me too. As my business grew, I found myself spending more and more time on administrative tasks and less time on the work that I loved. So, I hired a virtual assistant to handle things like email, scheduling, and customer service. I also invested in hiring a video editor and freelancers to help with burdensome work I didn’t want to do anymore. At home, I stopped cleaning and hired a cleaner. Overall, just think about your hourly wage: if there are things in your life you don’t want to do and it would cost less than your hourly wage, just hire someone to do it for oyu.
By using time leverage, I was able to focus on the high-value activities that grew my business, like product development and marketing. I was able to double my revenue in just six months, all while working fewer hours than ever before.
Code Leverage and Media Leverage Example
I’m always investing in building things that are infinitely scalable such as code or media.. I take courses, attend conferences, and seek out mentors to help me learn and grow. By continuously acquiring new knowledge, I increase my value in the marketplace and open up new opportunities for growth and advancement.
Network Leverage Example
I’ve built a network of successful, motivated people who share my goals and values. I attend networking events, join mastermind groups, and form strategic partnerships with other entrepreneurs. By surrounding myself with the right people, I gain access to their knowledge, resources, and connections, which helps me accelerate my own success. But remember, it is not just about taking! You need to give first, and be helpful, and trustworthy before you get any benefit from your network.
People should want to work with you because they enjoy spending time with you and because they can trust you and rely on you. Once you’ve built a circle of like-minded people, your knowledge and abilities will compound.
How to Start Using the 4 Types of Leverage
So, how can you start using leverage to build wealth in your own life? Here are a few actionable steps you can take:
- Set clear goals for what wealth means to you and break them down into smaller, actionable steps that you can work on every day.
- Take a hard look at your current financial situation, including your income, expenses, assets, and liabilities. Look for areas where you can use leverage to improve your financial position. If you don’t have investing experience, start investing in ETFs and index funds. If you find a real estate opportunity, do your due diligence and buy a property.
- Invest in your own education and skill development. Take courses, attend conferences, and seek out mentors to help you learn and grow.
- Outsource any tedious tasks that aren’t worth your time and use labor leverage so that you can focus on what is most impactful
- Build media or code that is valuable to other people and start sharing it. At first for free, like this blog post, but you can add to that by providing even more benefits such as with this template that helps you find business opportunities that take advantage of leverage: [BUSINESS OPPORTUNITY MASTERMIND]
- Build your network by attending events, joining groups, and forming friendships and partnerships with others who share your goals and values.
- Don’t be afraid to take calculated risks and invest in opportunities that have the potential for high returns.
Why are the Types of Leverages Important
Remember, building wealth is not about getting rich quickly or making a lot of money in the short term. It’s about creating a solid foundation of assets and levers that generate passive income and grow in value over time. It’s about using leverage to work smarter, not harder, and creating a life of freedom, security, and purpose.
So, start today. Assess your situation, set clear goals, and take action to start leveraging your resources and building the life you’ve always dreamed of. With the right mindset and strategies, anything is possible!
Entrepreneurship Resources
If you want to learn more about building your own business, check out my other blog posts on how to launch businesses.
For a more detailed explanation of the types of leverage check out: https://moelueker.gumroad.com/
For examples of businesses you could start based on each type of leverage, check out this list of X businesses you could start today.
