Leverage is a financial strategy that involves using borrowed funds to increase the potential return on investment. By using leverage, investors can control a larger asset with a smaller amount of their own money, amplifying both potential gains and losses. This concept is commonly used in real estate and stock trading. In a broader context, leverage can also refer to the use of resources or influence to achieve a desired outcome. For example, a company might leverage its brand reputation to negotiate better terms with suppliers. In both cases, leverage can enhance effectiveness but also carries risks.