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Posted by Mark Pokorny October 09, 2017
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Investing 101: Simple Tips to Start Investing Your Money

Investing 101: Simple Tips to Start Investing Your Money

The world of investing can seem pretty complicated to an outsider. If you’re curious about investing, don’t be daunted by the myriad of terms. The basics are actually pretty easy to learn, and you can pick up more as you go. Capital markets are accessible to individual investors too, so you can invest almost anywhere. Here are 4 tips to help you learn the basics of investing.

 

 · 1. Decide How Much You Want to Invest

 

How much can you afford to invest? Many people have a set dollar amount or percentage of their income they can commit to investing each month. This doesn’t have to be anything exorbitant. If you can only afford five dollars every paycheck, that’s okay. It’s better if you can invest $50 or $100 every month, but even just $5 is better than nothing. You don’t want to put too much strain on your budget for other expenses, so choose what you can afford. So long as you can keep to that amount, every paycheck or month, the total amount you’ve invested will grow over time.

 

 · 2. Get Advice or Self-Direct

 

When investing, you can either pay to receive professional investment advice, or you can self-direct your accounts. The route you choose will depend on how willing you are to do the research needed in order to make smart investment decisions. Some apps help walk you through investing, and while you’ll probably want to research what exactly you’re investing in, a self-directed account, in this case, would be the way to go. If you’d rather let someone else take charge of it, you’d want to find a financial advisor. Advisors do, however, charge fees that can cut into your returns.

 

 · 3. Set Up a Platform

 

Before you start investing, you’ll need to choose an investment platform, which is a service that facilitates investment activities. There are many of these online. You can usually get up and going with these services pretty quickly after providing some personal information and funding your account. Full-service investment platforms offer sophisticated suites of investment research and other tools. More bare-bones platforms provide a way to buy and sell investments but not much else. Different platforms aren’t necessarily better than others; it just depends on your needs.

 

 · 4. Determine Account Type

 

You’ll need to consider the time frame for which you are investing. If you don’t plan on withdrawing your investments until retirement, an individual retirement account (IRA) may be beneficial. In an IRA, you invest using pre-tax money, and you’re not taxed on the gains until you withdraw them. The catch is that you have to wait until age 59 ½ to withdraw without a penalty. If you plan on withdrawing from the account before retirement, you’ll want a non-IRA, or “non-qualified” account. Earnings aren’t tax-deferred in these accounts, but there’s no penalty for taking withdrawals before a certain age.

 

Investing doesn’t have to be complicated. Anyone can learn to invest. Follow the above five tips and you’ll be on your way to investing your money properly.

 

Sources
Internal Revenue Service
CNN Money
Weisblatt Law Firm
The Balance




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Posted by Martin October 03, 2017
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September 2017 results


Another month is over and time to review my accounts, trading and investing results for September 2017.

September was volatile month mainly to my trading yet I was able to end higher than in August in all accounts.

Again, this month, I was not focusing on income but rather on bringing my accounts to the rules (trading account especially) which I have neglected before and now I am over invested/traded. This can be dangerous when the market turns down. If that happens, I might not be able to manage my trades properly so I must unload some positions to make room for violent turns. So far, I want to do it slowly without liquidating my positions and taking a loss.

 

 · ROTH IRA account:

 

September 2017 account value: $23,255.24   ▲ (up by $512.43;  2.25%)
September 2017 dividend income: $89.45   ▼ (down from previous $91.23)
September 2017 options income: $74.40   ▲ (up from previous $59.44)
XIRR: 9.59%   ▲  

 


 


 
Monthly dividend Income:

 


 
My dividend holdings:

Options Income
(Click to enlarge)
 

 

 · TD account:

 

My trading account ended higher for the month, however, I am still focusing on bringing the account back to my trading rules. Thus this month it was not about income (which was very low this month) but growth. And the account grew nicely. I hope, as I will be able to unwind some of my positions, the account will grow more.
 

September 2017 account value: $23,323.87   ▲ (up by $1,906.66;  8.90%)
September 2017 options income: $90.05   ▲ (up from previous -$1,308.67)
XIRR: -27.27%   ▲  

 

Month-to-moth trading results

Trading results
 

(The red dots on the chart indicate income estimate, blue bars actual earnings.)
 

 

 

We are presenting you our month-to-month business performance review:

 

 · Lending Club

 

Lending Club investing proceeded well in September, except one note. The first note got into a Grace period with an overdue payment. It was a “B1” note where the irresponsible borrower asked for 6,000 dollars loan for debt consolidation. He or she failed to pay their very first payment. Funny thing is that the borrower was a loan officer (probably in a bank) and it looks like he or she was determined to skim the lenders.

When reviewing the loan listing, I noticed a few things:

The employment length was less than 1 year (so this was my first note as at the very beginning I ignored employment length in selecting notes. Now I have a minimum 2 years and it seems like I will be extending this to a longer period of 3 or 4 years.

The second thing I noticed was Revolving Line Utilization at 79.80% and that is very high in my opinion. I do not have this metric included in my selection process, so I will be adding it to eliminate overextended borrowers which are more likely to fail paying their debt.

What baffles me though is a high credit score of this borrower. He has a score at 714. With such behavior and line of credit it is a mystery to me that he has such a high credit score.
 

September 2017 account value: $414.14   ▲ (up by $100.97   32.24%)
September 2017 interest income: $2.28   ▲ (up from previous $0.00)
XIRR: 3.69% ▼  

 

 

 · IRA Account

 

As I wrote in my previous post I recently changed jobs and got a new one. This move had many positives. I have a better, satisfying job now, and it also released my 401k funds which I decided to transfer into a self-directed IRA account.

My old 401k account ended with $87,646.23 dollars which I will be rolling in October to my new IRA account (an estimate is around October 5, 2017).

Once rolled, I will apply the exact same strategy as I use in my ROTH IRA account.

I will be selling jade lizard trades which will consist of cash secured puts and call spreads against dividend stocks with approx. 30 days to expiration in an attempt to collect monthly premiums.

In a dividend month, I will let the put option assign to the stock so I will attempt to sell in the money puts or near the money puts to make sure I get assigned. If not possible (for example there will be a risk of being assigned too deep in the money) I will do a buy-write strategy to buy the stock out right and sell a covered call. My friend Bob from our trading group mastered this strategy so I will follow his lead to make sure I do the buy-write correctly.

After I buy the stock, I will collect dividends and sell covered calls (if jade lizard will still be on, then I will sell the long call and keep a short call as a covered call).

The goal will be to sell the stock using covered call. Once I will be out of the stock again, I will start selling new jade lizards to repeat the process.

I also decided to include this account into my reporting here from now on.

 

 · Conclusion

 

My market and economy outlook is still bullish and I think no investor or trader should be selling their positions based on the valuation. If inflation is included into the equation then this market is still very cheap and may run higher.

Since May 2017 I keep saying that the US economy is improving and accelerating that we saw increasing year-over-year sales, earnings (the second best since 2011), in June 2017 I showed you the numbers on consumer confidence. increased capital expenditure, corporate profits, all up. And this trend continues as recently financial media reported revised GDP above 3%, something I have been saying since June 2017 that our economy is increasing from lack luster 1.4% (and back then to 2.5%, now to 3%).

As long as we see this improvement there is no need to be selling your stocks on valuation. Instead, buy every dip you can.

 
What do you expect from the stock market in October? What is your strategy for the rest of the month?
 




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Posted by Mark Pokorny October 02, 2017
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How to Protect Your Assets without Breaking the Bank


Avoiding debt is the primary and most efficient technique for protecting your family assets. To achieve this, you have to design a comprehensive asset protection plan for your family. This involves purchasing insurance and actively managing your family finances to avoid exposure and help you pay off debts. While there are many options to managing your assets, these are the foundations to a comprehensive protection plan for your resources.

 

 · The Limitations of Homeowners Insurance

 

Insurance may provide some degree of security for your family. However, it does not shield your assets from exogenous threats. Insurance policies are usually limited to a specific range of disasters. For instance, insurance cannot protect you from the harsh economic downturns which occur in unprecedented circumstances or improve your ability to pay your off creditors. However, an insurance policy covers your losses resulting from unfortunate events like accidents. In such a situation, your insurance agency is justified only to cover these losses while not addressing other unrelated variables like your electricity bills.

 

 · Emergency Savings

 

Unlike insurance, your own cash can be accessed at your discretion. The challenge of emergency savings is that they are about the single least sexy thing you can do with your money. Having massive stockpiles of cash just sitting there, not making any money, drives investment gurus nuts! And there is a legitimate caution there – don’t park your entire investment portfolio in your mattress and expose it to the ravages of dust mites and inflation. But it is wise to keep a small amount (between 3-6 months of household expenses) in liquid cash in a money market account, so you can weather an unexpected financial storm. That way, you won’t be tempted to pull money out of your investments every time your radiator leaks. That’s how you end up selling at the bottom of the market.

 

 · Avoid Endangering Assets

 

Speaking of not pulling money out of investments, the last thing you want to do is endanger your assets in the event of an emergency. Avoid HELOCs and Title Loans at all costs, and never pull money out of a retirement account – unless maybe it was necessary to avoid a bankruptcy or a foreclosure. We talk about this in our post NEVER Cash Out Retirement!. According to Want A Fresh Start, it’s very common to feel overwhelmed and stressed when being harassed by unrelenting debt collectors. Don’t let these snakes pressure you into making a bad decision! Money withdrawn from a retirement account will be treated as income by the IRS and taxed at your income rate, plus hit with an early withdrawal penalty. I really don’t like 35 percent or more of my money going to the IRS.

 

 · Quit Borrowing Money

 

As a young family determined to protect its assets while offsetting some debts, stop digging yourself into a financial hole. Do not mortgage your family assets for short-term financial gains. Avoid credit and insist on paying with cash for both household expenses and income generating assets.

 

 · Pay Off Debt

 

An ideal approach when you are in a lot of debt is to focus your assets on the loans with the lowest balance. Many financial advisors will tell you to prioritize debts with the highest interest rate first, and if you calculated simple math, this would be the correct approach. This is fallacious, however, because this isn’t a math problem – it’s a behavior problem. Harvard Business Review says, “Our research suggests that people are more motivated to get out of debt not only by concentrating on one account but also by beginning with the smallest.” The power of quick wins is a powerful tool for behavior modification.

 

 · Invest Responsibly

 

With debts paid and investments protected with adequate savings and insurance, you are prepared to make your money work for you! Try to invest upwards towards 15% of your monthly income – but make sure you are managing cash wisely so you don’t end up in a pinch. If available at your income level, try to max out ROTH IRA’s and 401K’s, as these 4 little letters (R-O-T-H) could represent literally hundreds of thousands of dollars in tax savings, depending on how long between now and retirement and how aggressively you invest.

 

Investing can be an extremely intimidating prospect for the uninitiated. There are so many different kinds of investments with diverse strategies, gain potentials, risk and volatility measurements, and fee structures. Don’t let paralysis of the analysis stop you from taking advantage of the blessings of compound interest. Contact me today and I’ll help you walk through a comprehensive strategy to get the most of your investments.

 




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Posted by Guest September 28, 2017
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Building a Strong Retirement Plan That Works


Retirement Planning

Photo Credit: aag_photos via Compfight cc

Everyone should be prepared for retirement, yet only few are actually aware of how they should go about it. Based on the recent Retirement Income Strategies and Expectations (RISE) survey, 93% of Americans are anticipating their retirement, but only 52% of them are concerned about managing their retirement income. Although they look forward to retiring, most of them would rather invest their money in traveling (59%), spending time with their families (56%), and pursuing their hobbies (46%), or neglecting other expenses that might drain their retirement money.

But, how can we manage our retirement finances properly? The answer is by creating a retirement plan that works for your specific needs. Here’s a post to help you out in building your retirement plan effectively:

 · Maximize 401 (k) contributions

If your current employer offers a traditional 401 (k) scheme, then leverage it for your retirement. This plan allows you to contribute your pre-tax money for your retirement income, which drops your take-home money by only $85. Thus, you are investing more of your income without feeling the burden of it on your monthly budget. Some employers offer a Roth 401 (k) plan. Compared to the traditional option, it uses the amount of income after tax deduction. But, we suggest that you first know your retirement income tax bracket to assist you in deciding the best option for you.

 · Choose the best investment plan

The best way to ensure that your retirement money is still earning like a regular income is through investments. But, there are various investment opportunities available on the market, which can be overwhelming for first-timers. Mitchell Tuchman wrote in a Forbes article some highly recommended investments that retirees can take advantage of including annuities, mix of stocks and bonds, forex trading with long term goals, and a balanced portfolio of six to eight investment types.

But, as an investor, you have to know the smart way to invest. This means understanding the industry and market you are dealing with, building realistic goals and expectations, taking calculated risks and preparing for loss, as well as knowing the elements that can affect your investment and asset’s value. To be more effective, FXCM suggests ‘moving averages’ by evaluating price history to interpret price fluctuations and trends. You will only be able to do all of these if you are equipped with the right knowledge and background about the investment you are about to consider.

 · Set an asset mix

There is plenty of information available for retirees regarding investing; often it’s overwhelming and it can discourage people instead of instilling them with confidence. New comers can easily get the impression that the best way to go about it is to pull out their stocks or investments when the chance of loss is high. But experts at CNN actually suggest that the best approach is to diversify your portfolio by mixing stock and bond funds.

“As you get older, however, you’ll want to take greater care in protecting your savings from severe market downturns, which typically means moving more of your savings into bond funds to dampen your portfolio’s ups and downs,” states Money CNN.

Apart from your retirement plan, soon-to-be retirees must also avoid some common investment mistakes to ensure they are putting their hard-earned cash to good use. Bankrate listed some of the top retirement investment mistakes you should avoid, which include:

 
• Not taking full advantage of tax breaks
• Not saving enough or any at all
• Unknowing the high fees associated with retirement plans or investments
• Focusing on a single risk
• Investing aimlessly without proper goals and expectations
• Retiring immediately without any plan for income
• Keeping a “hoarding mentality”

If you want to pad your bank account during retirement and you own your own home then a reverse loan may be the choice for you. When you take out a reverse mortgage your lender will calculate the percentage of your home equity that you can borrow and establish a timetable for repayment. You must pay the money back during that time, but the advantage is that you can choose when and how you pay, rather than paying it back at regular intervals. Of course, a reverse loan disadvantage is the fact that such loans come with high interest. Also, you may not move out of the home or your entire loan balance will be due right away.

Your retirement should be the best part of your life, where you are rewarding for your many years of hard work. But, splurging it all on traveling and shopping is not the right way to go about it. Retirees must know where to invest their money to cover unanticipated bills while sustaining growth over time – thus investing is the best option. Are you prepared for your retirement?

 · About the Author

ThriftyJ has been guest blogger for several reputable websites online. She specializes in business, financial, and technology. She has been assigned to various country to cover international events. With a wide range of knowledge and specialization, she is the go-to person of various websites. Watch out for her own blog soon!
 




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Posted by Mark Pokorny September 20, 2017
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NEVER Cash Out Retirement! (Unless…)

NEVER Cash Out Retirement! (Unless...)

If you must deal with burdensome debt or a financial crisis, a reserve of ready cash may seem like the perfect solution. In fact, financial experts suggest that you set aside three to three-to-six month’s income as an emergency fund, or you may be tempted to tap your retirement account for cash to cover an unforeseen need. Cashing out early is a bad idea unless it is the only way to avoid a bankruptcy or foreclosure.

Eric Severeno said “Filing for bankruptcy may allow you to keep your home or to at least help you get back on your feet financially,” but “it will have some impact on your long-term credit score and on your ability to buy a home again in the future.” You will be sacrificing long-term financial security for the sake of short-term relief.

 

 · Why People Cash Out Retirement Accounts

 

When someone withdraws money early from a 401(k) or IRA, he usually does so for one of three reasons. First, he may want to pay off a student loan or another large debt. Second, he may be facing a financial crisis. For example, he might have incurred unexpected medical bills. Finally, some people think that they have to cash out a 401(k) if they change employers. This is incorrect. You may roll the retirement account balance over to a traditional IRA or to a 401(k)-plan offered by your new employer. This is called a Direct Transfer Rollover and you need to make triple sure that this is what you’re doing, or taxes and penalties will be due. There are no penalties or tax consequences for doing a rollover of this kind. I can’t stress that enough: make sure your 401(k) provider knows to do a Direct Transfer Rollover!

 

 

Alternatively, you can roll any pre-tax retirement savings into a ROTH IRA, which I definitely recommend you do, as long as you can pay the taxes that come due. ROTH means post-tax, which means you pay the taxes on the initial investment, and then the growth is tax-free. This is important because, if you’re starting retirement early (which we should all do), something like 90% of your retirement savings are going to be growth, not your initial investment. And whether you’re in a ROTH or a traditional, you need to make sure your securities inside of them are selected by an expert.

 

 · The Cost of Cashing Out

 

When you take money from a retirement account before you reach age 59 1/2, the withdrawn funds are usually subject to income taxes and a 10 percent penalty tax. Suppose your marginal tax rate is 25 percent. If you withdraw $10,000, the federal income tax comes to $2,500. You will incur a $1,000 penalty as well, which leaves you with only $6,500. In addition, you lose the future earnings the money you take out would have produced. Let’s say that your retirement account averages a 5 percent annual return. If you leave the $10,000 in the account, it will grow to more than $40,000 after 30 years.

 

 · Alternatives to Early Withdrawal

 

Noted financial adviser Dave Ramsey says that using retirement account funds to pay off debt is poor strategy. You will be better off in the long run if you go on a tight budget until you pay off what you owe. Explore alternatives before cashing out your retirement account. You may be able to negotiate reduced payments with creditors. Sell something. Take a second job. Bend over backwards not to cash out a retirement vehicle early. I want you to get out of debt, and I want you to survive a financial emergency, but I don’t want you to be penalized at 35+ percent in order to do it.

 

 · Conclusion

 

Withdrawing money early from a retirement account can make sense to avoid a bankruptcy or foreclosure. In either case, the cost and long-term damage to your credit may mean cashing out is a better choice. Ask for advice from a financial expert or CPA before taking any drastic measures.




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Posted by Martin September 18, 2017
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Strangle 2 STX Sep22 34.00/30.00


UPDATE: September 18, 2017

Today, the trade closed.

Both legs got purchased back for 0.05 debit.
 

ORIGINAL TRADE

Another strangle opened today:
 

STO 2 STX Sep22 34.00 call
STO 2 STX Sep22 30.00 put
@ 0.44 credit limit
 

STX @ 32.19
IV @ 34.92%
EM @ 1.87
DTE @ 15
 

Open trade Premium Trade Status
09/07/2017 $88.00  
09/18/2017 -$20.00  
09/18/2017 $68.00 CLOSED

Acc# 8008
 




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Posted by Martin September 08, 2017
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Strangle: 3 X Sep22 29.00/24.50


STO 3 X Sep22 29.00 call
STO 3 X Sep22 24.50 put
@ 0.34 credit limit
 

X @ 26.74
IV @ 42.36%
EM @ 1.8
DTE @ 14
Margin @ 960.30
 

ETE
 

Trade opened @ 0.36 credit.
 

Open trade Premium Trade Status
09/08/2017 $108.00 OPEN

Acc# 8008
 




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Posted by Martin September 08, 2017
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Strangle: 4 ETE Oct6 19.00/16.50


STO 4 ETE Oct6 19.00 call
STO 4 ETE Oct6 16.50 put
@ 0.28 credit limit
 

ETE @ 17.84
IV @ 28.27%
EM @ 1.14
DTE @ 29
Margin @ 973.60
 

ETE
 

Trade opened @ 0.29 credit.
 

Open trade Premium Trade Status
09/08/2017 $116.00 OPEN

Acc# 8008
 




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Posted by Martin September 07, 2017
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Lending Club screening & investing criteria


In my post “A bitter return to Lending Club” I wrote that I would be returning to investing with Lending Club but this time I would be very conservative in selecting notes to invest in.

Originally, I wanted to invest only a very small amount of money ($25 dollars a month) but later on, I changed my mind a bit and decided to invest more ($100 dollars a month). In this strategy update I would like to write down my strategy for investing in Lending Club:
 

Here are my Lending Club screening & investing criteria:
 

1) deposit $100 per month

2) invest only $25 per note

3) invest only in “A” and “B” notes

4) invest only in 36 months notes

5) invest in notes with loan payment to income less than 10%

6) invest in notes with employment more than 2 years

7) invest in notes with debt-to-income less than 25%

8) invest in notes with no public records

9) invest in notes with credit score more than 700

10) invest in notes asking less than $10,000 dollars

11) if available cash is sitting in the account screen loans daily as long as all free cash is invested.

12) if no loans meeting criteria show on the list, skip that screen and screen next day.

13) reinvest all interest to new loans.

 




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Posted by Martin September 07, 2017
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Strangle 3 TECK Sep22 26.50/22.50


Today, I sold another strangle:
 

STO 3 TECK Sep22 26.50 call
STO 3 TECK Sep22 22.50 put
@ 0.25 credit limit
 

TECK @ 24.56
IV @ 42.96%
EM @ 1.47
DTE @ 15
 

Open trade Premium Trade Status
09/07/2017 $75.00 OPEN

Acc# 8008
 




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