How do you manage your money? Do you store it under your mattress? Keep it in a savings account? Invest it in equity mutual funds or stocks? Perhaps you buy and sell securities daily. Have you borrowed money to invest?
Every Canadian who sets aside money for any reason falls into one of four categories on the money management scale. Your risk tolerance, in addition to your personal objectives, experiences with money, education about money, and values, among other things, shapes where you are on this scale.
The four categories are: Penny Savers, Speculators, Investors, and Upvestors™ (those who borrow to invest).
As unfamiliar as the term "Upvesting" may sound, the strategy has been used by thousands of successful investors over hundreds of years to build wealth.
Upvesting is simply the strategy of prudently borrowing money to invest. Also known as leveraged investing, this strategy can allow investors to achieve higher effective rates of return and accelerate the wealth-building process when utilized over the long term.
An Upvestor is much like the long-distance runner who receives a boost of energy at just the right time. Just as an additional boost of adrenalin can help a long-distance runner finish the race much more quickly, Upvesting can help you to achieve your financial goals sooner.
Is Upvesting for everyone? No. But where Upvesting makes sense and is prudently practiced, the benefits can be significant.
Keep in mind that Upvestors are not penny savers. For Upvesting to work best, you need to maximize your long-term investment returns. Putting money in low-yielding interest-bearing deposits won’t accomplish this goal.
Speculators too should stay away from Upvesting. Speculation is risky enough without adding the risk of losing someone else’s money as well as your own. Earning positive returns when Upvesting is critical to making the strategy work and speculation offers little guarantees in this regard.
Perhaps you’re an investor today. If so, you may be a candidate to become an Upvestor. This booklet has been designed to share insights into prudent Upvesting.
