Thursday, November 14, 2013

KISS - Get To The Next Financial Goal

The acronym KISS (Keep It Simple Stupid) should be regularly applied when creating wealth. Even though becoming wealthy is not a game, it can In our goal of financial wealth and independence, we (myself included) sometimes get caught up in the reaching the finish line by catching instead of focusing on reaching the next goal. It is important to remember to not just focus on the ultimate goal, but to provide enough focus and planning to get to the next step. Even when you don't reach a short term goal, and have to adjust the timeframe for the ultimate goal, the chances that you will have an easier time reaching the short term goal the second time around are high.

Sometimes you might not make the short term target. But you still moved forward. That is a big indicator that the goal is right but the plan needs to be adjusted. There are benefits just to make more money than you had before. Reaching a goal is important. But if you happen to create a lesser amount of wealth that does not reach your goal, do not despair. If you can focus your short term plan on getting to the next amount, you will be at your ultimate goal before you know it.

Trading options is a great example on how plans can get off track. The lure of making monster gains sometimes will take money from other sources and instead of monster gains, monster losses occur. I remember a time when I thought that options  were the way to get rich quick. This is true. Being on a roll options wise can make you a millionare very quickly. But a couple bad trades can take you (and it did take me) out of trading for a period of time. Using part of your capital for options trading (which is what I do now) can be a much safer A safer way to create wealth is to widen out the number of investments. Getting wealthy very rarely happens in a flash. For the majority of the population, it takes time, focus and managed work.

Having a longer term goal is important. But having a series of shorter term goals that lead up to the longer term goal is also important. It builds confidence and perspective as you look to the longer term goal.

3D Printing to Change Global Wealth

If you are a toy manufacturer in China, you should be very worried. The development of 3D printers is growing. It has manufacturing countries with low labor costs as their competitive advantage in the cross hairs. It will change wealth patterns and shift more wealth to heavy consumer countries like the USA from low consumer high manufacturing countries like China.

Thursday, May 16, 2013

Smaller Corporate Borrowing Is Good For Economy

Recently in a Wall Street Journal article by Dan Fitzpatrick and Shayndi Raice, the topic of smaller corporate borrowing was covered. The article has a negative tone towards the results of such activity for banks and the economy as a whole. But a couple of critical points are missing from the article.

The article stated that one of the reasons corporations are not borrowing is because of the fact that they have massive amounts of cash on their balance sheets. It is almost inconceivable that corporations would not borrow at these rates. It could mean that corporations feel that the growth from using their own cash will serve investors better than going into debt to do the same thing.

When was the last time banks were passed over to do their job? The government has almost literally handed them cash to lend. Even though standards have been raised, there were enough corporations and individuals that enjoyed the qualification and received extremely low rates when they borrowed.

This is all good news. For one, the fact that corporations are hemoraging cash on their balance sheets will get investors hungry for more growth and higher yields on their ownership. It has to get out somehow. The banks now will be forced to loosen the purse strings a little bit on new corporations and individuals that might not have the greatest credit. It's about time.

Tuesday, April 23, 2013

Passive Income General Information

Make no mistake. Everyone should be aggressive about creating passive income. The more PI that can be created, the less stress about making more working income is created. There are individuals in this world that are able to live simply off of their PI. There are many types of PI, from basic savings accounts to stocks and real estate. The benefits of having PI take the place of working income are numerous. Regularly, when an individual starts on a path to creating PI, it grows on a regular and continuous basis. Therefor, if you are not creating PI, the question of why needs to be answered.

The benefits of raising passive income are many. They include creating freedom of time and opportunities to do other activities. For instance, maybe you have children and want to be a more active parent in their lives. Having passive income can help create that time you need. Maybe you want to take classes or create projects, and you know that your passive income can cover some if not all the cost. Passive income can lead to the ability to fund philanthropic ventures that otherwise could not be formed.

Even if the passive income starts out small, you should be aggressive in looking to create more of it. For instance, But where do you find it? You can look to your local bank. They have all kinds of interest bearing accounts with small balance requirements which you can use to create passive income. Another place to look is the stock and bond markets. There are thousands of companies that pay a dividend to shareholders on a quarterly basis as well as interest for bondholders. For larger investors, there is also real estate.

Creating passive income can have a dramatic effect on time, imagination, results, and happiness. Finding the way to create PI should be a primary focus when thinking about money.

Tuesday, April 16, 2013

Multi-Timeframe Goals Are Necessary

One of the keys to success in building wealth is having multi-timeframe goals. That is to say you should start out with a long term plan (say 5 years) and work your way towards your short term goals (maybe weekly). Having this style of structure allows the individual to continue to work and tweak at the goals in the short term while keeping an eye on the long term. Some of the benefits that come with this type of structure are quantifiable, while others are not.  

There are some benefits of having a structured goal orientated timeline that you cannot quantify. For example, having longer term goals keeps the focus on achieving your shorter term goals. It gives some perspective and motivation for why you are accomplishing that short term goal. And almost like a present, the accomplishment of the short term goal acts as a motivation for you to continue working towards that long term goal. Having the journey to wealth cataloged in this way gives the person a real gauge as to how the work was done. Doing this also allows for the individual to pass the experience on to others who are desirous of how to build wealth.

Reaching that long term goal of wealth is a major quantifiable result. It allows for the person to see how the hard work, and persistence paid off monetary wise. There will also be smaller amounts (growing as the wealth builds) received along the way which helps keep the hard work and persistence going. Reaching a long term level of wealth due to a particular focus or profession regularly leads to wealth building in other areas which were not open to the person before hand.  

Happy Wealth Building!

Monday, April 15, 2013

Trading ETF Options To Wealth

One great way to increase your wealth is through trading options on ETF's. They provide access to indices and commodities that otherwise would be too expensive or not available. Traders with less capital can still participate and profit from moves in that particular asset class. Because moves happen every day, opportunities come up all the time. A few examples are shown below.

SPY - SPY is an ETF that covers the S and P 500 stock index. In this most recent rise in price of the S and P 500, SPY has risen at a similar level. Since mid November of 2012, SPY has moved from the $135 range to the $155 range. Purchasing 100 shares of SPY would have cost over $13500. The profit if sold now would be somewhere in the range of $2000 or 15%. Purchasing an April $135 call option in November would have cost somewhere near $400 - $500. The call option is now worth $2275. That is a profit of $750 or 150%.

FXY - FXY is an ETF that covers the Japanese Yen. In mid - November, it was trading in the $122 range. A news barrage about how the Yen would be devalued if Abe was elected prime minister in December (which has happened) has caused the price to fall to the $100 range. Shorting 100 shares of the ETF would have brought a profit of $2000.00. Purchasing an April $120 Put would have cost around $1 -$2 range. The April $120 put is now worth $21.00. That profit would have been about $1800 or 900%!

GLD - GLD is the main ETF for Gold. Just in the last couple of months, Gold showed a negative trend. It then ran up against some strong support at the $150.00 level. But on Friday it broke through and today it is trading in the low $130's. Put Options in the $140's late last week are now 5-10 dollars richer.

The ability to trade in all three markets exist because of ETF's. In these three trades, the stock market, currency market, and commodity market are all covered. Because of options, the profits can be very large.

***Disclaimer - Trading Futures ETF Options did have trades (closed now) in SPY and FXY options and has written about GLD as recently as last week. Always do your own Due Diligence before trading.

Wealth Through Paying Taxes

The tax deadline is today in the United States of America. For most people, the government takes an estimated amount out of each paycheck earned. Some people are left with all the responsibility in paying their taxes on a quarterly or annual basis. Others get paid in cash. The question is do you pay or not? 

One opinion is that you should pay the least amount as possible. If you get paid in cash, that means you have the opportunity to pay $0.00 in taxes. While this might look like a great thing, the stress attached to this style might be worth more than the taxes not paid. Having to worry about the IRS can take away your focus from building wealth. The consequences can be disastrous. Maybe you get by. But if you don't, you will not only have to pay the consequences, but family and friends around you will too.   

Another opinion is that you just follow the tax code and pay what the IRS says is owed. It is not necessarily stress free (especially when going through all the paperwork), but in the long run, it will allow you to focus on building wealth, and not on avoiding and stressing whether or not the IRS is going to knock on your door later in life. 

When building wealth, remembering that money alone doesn't build wealth is important. Receiving services like defense, infrastructure, and others given to you and those around you knowing you haven't paid enough in taxes can also get in the way of building wealth. These organizations also spend that money back into the community and might be a customer or revenue generator for you. Paying your share of taxes eliminates that worry and is worth it. 

Thursday, April 4, 2013

Wealth Creation by Adsense

When I created this blog, the intent was to have a space to express ideas about wealth. So far, the blog has been a great resource. I not only get to publish current ideas flowing through my head, I get to look back at previous posts to see what my mind set was on a certain topic. Also, with the help of Google Adsense, I have been able to make money doing it.

Google Adsense allows you to manage what ads end up on your site. It has an excellent account section that gives all the analytical tools you might need. If you are starting a blog, and qualify for the service, I would highly recommend using Google Adsense if possible.

Tuesday, April 2, 2013

Finding The Right Broker

When someone starts trading, investing, or both, one of the most important and yet least focused on part of the process is finding the right broker to handle their trades. The chances of you finding a broker correct for your trading and investing is high. There are many brokers that cater to all styles of trading and investing.

Topics to think about when choosing a broker include but are not limited to price per trade, transaction speed, access to different markets, accessibility to human brokers, account limits, fee structures, and other issues that pertain to you. You should first have an answer to all of these questions before choosing a broker.

As an example, Sell The Call and Trading Futures ETF Options accounts have found that Optionsxpress is best for their trading.

Make sure and take the time to research which broker is best for your situation. Beware of deals from brokers. Sometimes getting the immediate financial benefit is not worth the long term cost. Choosing a broker not suited to your needs can and will hurt your trading performance in the end. Choosing the proper broker will at least not hurt your results and could possibly enhance your results.

Monday, April 1, 2013

Kickstart Your Project With Kickstarter

In the last few years, a finance website named Kickstarter has been influential in getting art projects (tv, movies, literature, etc.) up and running. The site is focused on funding art level products. The process starts by the artist posting what they are looking to fundraise. After that is done, donors fund the project. The catch is that if the fundraising does not reach the target level set by the artist, it does not get funded.

The founders, Perry Chen, Yancy Strickler, and Charles Adler set up shop in 2009 and in 2012 distributed over $274 million to project creators. Donors do not receive money back. They receive their rewards through products or credit listings in movies and other odd ideas.

Be sure to check out the website and let all your artist friends know!

Tuesday, January 22, 2013

Knowing When To Sell

Knowing when to sell an asset is extremely important for building wealth. In trading, it can be argued that it is the king of the jungle. Selling too early or too late can haunt wealth builders. Getting the best price for an asset is almost impossible. But if you can get a price near the high, you can consider yourself lucky. Whether it is the stock market, the real estate market, or any business market, selling at the right price at the right time can mean the difference in the ability to become wealthy.

The stock market is a fantastic example of how knowing when to sell can create or prevent wealth. Recently, the trading blog Trading Futures ETF Options wrote about a trade in the S&P 500 ETF SPY and the Japanese Yen ETF FXY. Both trades had good entries. The plan for when to sell was another matter for both. Had the exit plans on both trades been executed properly, the trader would have made in excess of 3000%. A quick synopsis is below.

The goal for SPY trade was changed due to the mindset of the trader when it should not have. Profits were cut short. The profit was 10% when it could have been as high as 500% had the trader waited another couple weeks to let it work out.

The FXY trade was deja vu. The trade had a great entry. The initial goal of the trade was actually reached. But instead of letting the trade run, the trader sold at first blush. The trade made 100% but missed out on an additional 700% had the trader waited another couple weeks to let the trade work out.

Remember to understand your business plan before the need for a decision needs to come up. That way emotions will be kept at bay and the business can succeed at a higher level.