Borrowing to Invest: Lessons From Buying a Mini Excavator
If you own a construction business, you already understand leverage, even if you don’t call it that.
Let’s say you want to buy a mini excavator. You’re not buying it because it looks cool. You’re buying it because you expect it to produce cash flow for years.
You generally have two options.
Option 1: Pay Cash
You write a big check and own the excavator outright.
That feels safe, but there’s a hidden cost.
If that cash could have sat in a high-yield savings account earning 3.5%, you just gave that up. That’s your opportunity cost.
You eliminated debt… but you also eliminated future flexibility.
Option 2: Finance the Excavator
Instead, you finance it at 4.5%.
Now:
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The excavator works every day
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The jobs it produces bring in cash
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You keep your original cash available
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The machine pays for itself over time
You’re not hoping the excavator “goes up in value.”
You’re counting on it to produce income.
That’s not speculation, that’s a business decision.
Margin Investing Works the Same Way (When Done Right)
Margin gets a bad reputation because most people use it wrong.
But margin, when paired with income-producing assets, is just financing.
If you borrow at 4.5% to buy a high-quality income ETF like SPYI or QQQI, you’re doing the same thing you did with the excavator:
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Borrow at a known cost
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Deploy into a productive asset
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Let cash flow service the financing
The goal isn’t price appreciation.
The goal is cash flow.
Why the Math Is So Resilient
Let’s use simple numbers.
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Borrowing cost: 4.5%
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Income yield: ~14%
That gives you a ~9.5–10% spread.
Here’s the key part most people miss:
For the income to fall below your borrowing cost, the market would need to drop almost 66% and stay there.
That’s not a normal correction.
That’s a full-scale, multi-year collapse.
And even then:
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Income would likely decline gradually, not instantly
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You still own all your shares (which will recover!)
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You are still breaking even in a depression level event.
This is why income-focused strategies behave more like operating businesses than lottery tickets.
The Mindset Shift
You don’t buy an excavator hoping to flip it next year.
You buy it because it helps you earn.
The same mindset applies here.
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Margin isn’t gambling
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Leverage isn’t dangerous
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Income changes the entire risk equation
When an asset pays you consistently, time starts working for you instead of against you.
Final Thought
Smart leverage isn’t about going faster.
It’s about building something that can carry itself.
Just like a mini excavator on a job site,
income-producing assets should:
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Pay their own way
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Protect your cash
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And quietly compound in the background
It's not flashy.
It’s durable.
Disclaimer
The information provided is for educational and entertainment purposes only and should not be considered financial, investment, or trading advice. I am not a licensed financial advisor. All investing involves risk, including the potential loss of principal. Always do your own research and consult a qualified financial professional before making any financial decisions.
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