Leverage is the plan by which an investor combines his money and other's money (borrowings) to increase the potential return of an investment.

Often, investment done by using a ratio of own and borrowed funds yields a better return as compared to investment done completely by owned funds (equity).

Leverage refers to the risk involved. When one refers to something (a company, a property or an investment) as "highly leveraged," it means that item has more debt than equity.