You’ve heard the saying “money makes money”, right? Well, this is true in any endeavour, not just trading, and there are examples all over society (we all know about that 1%). But how can ordinary people like you or me grow capital exponentially when we only have £500 to start?
I’ve been irked by this puzzle for years and never truly been able to solve it fully. The problem, it seems, is that when you start off with nothing it’s infinitely more difficult to build up that initial warchest. Especially when faced with the rising costs of today’s living.
Having studied this for years now, there is an answer, and it’s part of the reason why I chose to use spread betting as my initial step to creating huge amounts of wealth for myself.
Leverage. Loans. Gearing. Credit. Call it whatever you will but having that credit line to expand is, in my view, essential to rapid accumulation of wealth.
I’m not saying this from the point of view of a person who has never been in debt or does not understand the consequences of debt, because I’ve been in shitloads of debt. I’ve had to phone creditors up and tell them I couldn’t afford to repay what they were asking for and I’ve had to give up lots of life’s ordinary pleasures for years on end to claw my way out of it.
But who ever got anywhere by not taking risks?
Look, I’m not saying you should be irresponsible, but the simple maths of a credit line at 7.5% interest is far outweighed by a handsome 15% return on any investments you could make by putting this money to good use.
Do any of you smart-arse traders out there back yourselves to make more than 10% a year? If so, why aren’t you taking a 15k loan from Zopa.com to rapidly increase the speed at which you can accumulate wealth?
Wait, don’t bother answering that one. You’re one of them risk-averse types of people who will do alright in life, but you’ll never excel at anything and will coast by under the radar because you’re afraid to stick your neck out. Wealth? You might get there, but you’ll be too old to enjoy it.
Slow and steady wins the race….yes, yes…but this race is only about 85 years long and I don’t like sitting about watching mine tick away while I ‘preserve my capital’.
If you’re wondering if I am using any leverage in my trading, the answer is absolutely yes. I’m maxing my capital and trading with my unrealised equity and as soon as I have enough confidence in my system and setup and instinct and intuition, I’ll grab myself some cheap credit and start getting rich.
If you leave a comment, I might just throw you a bone.
ps. I’m not completely irresponsible, I also lend a substantial amount of my capital out via Zopa myself. More on this in another post.