The world high jump record stands at 2.45 metres, set by Cuban athlete Javier Sotomayor in 1993—an incredible feat that remains unbeaten over 30 years later. Yet, in 2024, Sweden’s Armand Duplantis set a new pole vault world record at 6.26 metres.
Both sports share the same goal: to clear a horizontal bar at the highest possible height. The difference? Pole vaulters use a vaulting pole, a simple yet powerful tool that allows them to soar significantly higher than high jumpers relying solely on their own strength.
How Leverage Works in Investing
Just like a pole vaulting pole helps athletes clear greater heights, leverage is a powerful tool that enables investors to achieve higher returns than they could with their own capital alone.
By borrowing money to invest in property or shares, investors can amplify their gains, as they benefit from the appreciation of the entire asset—not just their initial investment.
A Simple Example of Leverage in Action
Imagine an investor has $100,000 and uses it as a deposit to purchase a $500,000 property, borrowing the remaining amount. If the property’s value increases by 10%, it is now worth $550,000—a $50,000 gain. Since the investor’s initial outlay was $100,000, this represents a 50% return on their investment.
By contrast, if they had simply invested their $100,000 directly into an asset appreciating at the same 10%, their gain would have been only $10,000.
The Risks of Leverage
While leverage can significantly boost returns, it also comes with increased risk. Just as a pole vaulter must carefully control their movements to avoid a fall, investors using leverage must manage debt and market fluctuations to avoid financial setbacks. Magnified gains in a rising market can quickly turn into magnified losses in a downturn.
How Northhaven Can Help
At Northhaven Financial Management, we help investors understand when and how to use leverage effectively, ensuring they maximise opportunities while managing risk. With the right strategy and guidance, you can confidently make financial leaps—without the fear of falling.
📞 Contact us today for an obligation-free consultation and let’s discuss how leverage can work for you.