Saturday, May 29, 2010

Gaining Financially

I'm guessing it is safe to say that most of the readers are interested in obtaining added financial gains. The question then becomes how do we go about achieving that status. I clearly remember the powerful insight Robert Kiyosaki and Sharon Lechter's book, "Rich Dad, Poor Dad" provided me. Though I suppose some part of me was already foggily aware of it, I took from the book the notion that for most of us (including me at the time) our only income producing asset was our time and that we could do much better financially if we created other asset producing entities that generated income or wealth without the necessity of devoting a great deal of time to them.

As I continued my studies, I became aware of many opportunities to create assets that produce income beyond what would be considered a job. On the basic end, for example, we can see a method that conservative investors have used for decades and that is investing in dividend paying stocks. With such an investment, all we have to do to add to our income is own the stock on the record date for the dividend. Some may choose to simply hold such stocks as they go up, down, and sideways in price while others may choose to trade them for the dividends. It isn't my intent in this article to create any hierarchy of what I think is a better or best way, it is simply to point out that there are quite a few ways just in the markets to create these additional streams of income.

I wrote "Smart Investors Money Machine" to attempt to educate readers to a wide variety of ways in which they might add streams of income and thereby add financial gains depending upon their age, family situation, and station in life. It is fairly obvious that the young single person is likely to have a different risk tolerance than a retired couple. So, too, a growing family may not have as much time to devote to trading or investing than might empty nesters. The fact is, however, that there are a number of opportunities available to each as set out in "Smart Investors Money Machine," and in each case the person or family can at least add some income in their lives without expending more effort than they are able.

I redundantly reiterate again... and again that knowledge is the key. I feel confident in saying that the students who have come to me for coaching have gone away with more knowledge and trading insight than they came. They were willing to invest their time and money in the knowledge that could gain through the coaching sessions and with that knowledge empower themselves to do better. As an example, selling naked puts may be a wonderful strategy (one of my favorites) and it is no more risky than writing covered calls, but that knowledge alone is insufficient to give oneself any likelihood of imminent trading success. One certainly would not want to have been in many naked put positions in the recent market fall, but with study and, perhaps, coaching, however, the trader could learn when and how to utilize that strategy profitably and with less risk than simply owning a stock.

There are many ways to make (and lose) moneys in the market. It seems worthwhile to learn how to make money and how to reduce or avoid losses if one is going to venture into the fray. Otherwise, without arming oneself with knowledge, I suspect it is better to forego the possibility of financial gain in the markets and simply live life on the sidelines. The risks for the ignorant are simply too great.

by Bill Kraft, Editor
Copyright 2010, Makin' Hay, Inc.
All Rights Reserved

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