OPM, other people’s money, is a slang term that refers to financial leverage. Other people’s money refers to borrowed capital that is used to increase the potential returns as well as the risks of an investment. OPM can be used by gym owners.
ABOUT THIS VIDEO
Using other people’s money is considered a double-edged sword – it cuts both ways. If you lever with other people’s money and it turns out to be profitable, then the profits are magnified by the effects of the leverage, you essentially made money without using non of your own.
However, if you take money and have no plan for how you’re going to multiply it, when investment goes sour, you can incur steeper losses.
The principles of OPM used all the time in the business world and are the same regardless of economy. Investing with Other People’s Money takes a high level of financial intelligence.
OPM when used correctly is whats called “good debt”. Good debt is any debt that puts money in your pocket. By contrast, bad debt takes money out. So, a car loan, for instance, is bad debt as you’re paying money out on something that makes you no money, has a cost of up keep, and devalues as you own it.
Check out the video and let me know what you think in the comments?
To Your Success!
Will Hurst & the team at Big Little Gyms
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