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Leverage means using borrowed money or assets to increase the potential return of an investment.
In Depth
Leverage is a strategy where you use borrowed capital to finance an investment. The goal is to magnify your returns; if the investment performs well, your profits can be much larger than if you had only used your own money. However, leverage also magnifies losses, meaning you could lose more than your initial investment if the asset declines in value. It's a high-risk, high-reward approach often used in real estate and stock trading.
Example
Buying a house with a mortgage is a common form of leverage, as you're using borrowed money to purchase a much larger asset than you could afford outright.