Gearing (also known as Leverage)
Gearing, also known as leverage, is a financial term used to describe the process of borrowing money to invest in order to increase the potential return on investment. It is a way of using borrowed money to increase the potential return on an investment. Gearing is used by investors to increase their potential returns, but it also increases the risk of losses.
History of Gearing
The concept of gearing has been around for centuries, with the earliest known use of the term dating back to the 16th century. It was used to describe the process of using borrowed money to increase the potential return on an investment. In the modern era, gearing is used by investors to increase their potential returns, but it also increases the risk of losses.
Comparison Table
| Investment Type | Gearing | No Gearing |
|---|---|---|
| Stocks | 2x | 1x |
| Bonds | 3x | 1x |
| Real Estate | 4x | 1x |
Summary
Gearing, also known as leverage, is a financial term used to describe the process of borrowing money to invest in order to increase the potential return on investment. It is a way of using borrowed money to increase the potential return on an investment. Gearing is used by investors to increase their potential returns, but it also increases the risk of losses. For more information on gearing, investors can visit websites such as Investopedia, The Balance, and Investing.com.
See Also
- Debt Financing
- Margin Trading
- Leveraged Buyout
- Leveraged ETFs
- Leveraged Loans
- Hedge Funds
- Derivatives
- Options Trading
- Short Selling
- Margin Call
