Invest Like Billionaires

What are some ways a person can generate passive investment income? There are a number of ideas about it. Everyone has his own ideas about which one can be a passive investment income. We should have our own choice of investment. The wealthy, the marginalized, and the middle class people differ in their own preferences about investing their money. Now, let’s compare ways and opportunities according to some considerations such as safety, profitability, and also liquidity.

Safety means that your investment and the income are stable. The money that you invest could be prone to the changing market condition, economic slowdown, and social unrest. The point is that your passive investment income should always be there. In that case, it is safe to invest.

On the other hand, profitability is what we usually consider when we invest. We are supposed to believe that what is profitable is ideal. That’s right. But is it risky? Is my money stuck? Obviously, everyone would go for whatever gives them profit. Whenever we consider gains, the highest amount is always the best passive investment income. What we should consider here should not have been about the top gainers only. It’s should also be the safer ones.

Another significant factor that must be considered is liquidity. Let us suppose that we earn very attractively from our safe investment. What does that mean to us anyway? When you are ready to use your fund because you really need it and that’s the reason why you invested, is it possible to convert it to cash now? If there is no liquidity, our passive investment income is only an imagination. You would become wealthy only in your dreams. Liquidity is not only about the comfort of making a withdrawal. It is also about how smooth it is to invest.

Now, here are three kinds of investment we may consider whether which passive investment income is better for us. So, let’s talk about three kinds of portfolios such as business, stocks, and real estate.

Business is a personal activity that deals with economic factors that determines future gains. It is the chemistry of work and investment. This means that a businessman does not only wait for passive income, he should also work for it. Therefore, it is an active income and at the same time passive.

In the aspect of safety, business is not that safe. It is exposed to economic cycle. Businesses are under the supply and demand law. If the demand for their goods has been increasing, the price will also increase, and so will the supply. As time goes by, the demand will influence the supply to increase more. So if the supply is much greater, it will then influence the price to decrease. Consequently, businesses are getting more unstable and their future is turning gray. But, businesses may also get more resilient. As this type of investment is a little active, the active control of a businessman can manage a worse situation. Therefore, these two characters of investment regulate the cycle. Because of this, business becomes good. It is definitely a good example of passive investment income when it comes to safety.

In stock market, it’s the other way around. Safety is a very controversial issue here. Obviously, the risk involved here is very high. But the potential return is high, too. Passive investment income is more common in stock trading. Therefore, your income here is not the product of your active participation in the company. It is the product of your decision.

In the area of real estate, the lesser amount you invest, the safer it is. The bigger the investment you have, the riskier it becomes. But land alone is considerably not risky. The reason why real estate becomes a little risky is because the cost of structural materials is getting higher. Structural materials are also subject to the law of supply and demand. So, if we only rely on land for passive investment income by renting it out, our passive income will not be affected by any price fluctuation. Aside from that, structures depreciate over a period of time. Therefore, investing in real estate can be risky or safe depending on the kind.

In terms of profit, it is more attractive in business. In some businesses, you have to spend time before you earn regularly. Usually, the profit is negative especially if they are just beginning to operate. They should promote their brands and strengthen themselves in the market. When the consumers buy their goods, passive investment income begins. On the other hand, other businesses are doing well in the beginning of the operation. During the first stage, their sales shoot up. Subsequently, they grow very early. As time goes by, consumers get sick and tired of their goods. Consequently, these businesses reduce their passive income. Nevertheless, what is nice about business is the resilience to catch up with the competition. In business, the consistency of income is stable. One more advantage in business regarding this is the petty cash. Passive investment income in business need not come after a fixed cycle like that in stocks. There is always readily available petty cash.

On one hand, profit potential in stock investing is definitely high. As the character of stocks is risky, risk appetite causes the value of stocks to go up quickly. On the other hand, risk aversion and profit taking in the intraday trading can cause the value of stocks to go down quickly, too. Risk management in the stock market depends on the traders. Speculators enjoy their passive investment income from the price volatility while non-aggressive traders and investors get their passive investment income from dividends. Therefore, we can’t rule out the risk nature of stocks. When we gauge the balance between the energy we exert and the profit we earn, investing in stocks could be the most attractive one. We must not forget that passive investment income is an income that we could get without extra effort. If stock market really offers this potential, it must be a better option for passive investment income.

In real estate, how can we have a passive investment income? There is no doubt that one may enjoy his passive investment income in real estate without extra effort. The point is whether or not the ratio of profit is balanced with the investment. Surely, we can gain in real estate primarily because the usual investment is big as well. But always remember that you should pay the capital gains tax annually. This might explain why landlords do not solely rely on renting out their lots. Hence, land is usually developed to optimize the gains. Regarding the actual amount of gains, real estate could guarantee a better passive investment income. Therefore, we should really consider the ROI.

In terms of liquidity, it is somewhat less in business. Of course, liquidity still exists. However, much time is spent to put up a business, to start gaining, and even the time it takes to stop operating. Although the period of time executing all these can be determined according to a business plan, the process is still slower depending on the kind of business. Retail businesses are quite liquid whereas manufacturing industries are not.

Among the common types of investments known to many, investment in stocks is the most liquid one. You can open and close an investment account at your convenience. Moreover, you may select any available stock you wish to invest in. If you wish to have exposure in stock market, to take profit, or to pull out your investment, it won’t take that long. You may do so at any given time wherever you may be.

On the contrary, liquidity is a big problem in real estate. In business, there are still ways to determine it, but hardly in real estate. Usually, it is like a game of chance to sell even a small house and lot. Thus, investing in real estate, earning passive income, and even pulling out your investment will never occur overnight. It won’t matter if it doesn’t affect productivity. For instance, you have found a better opportunity that needs quick decision. Then, you think it best to change your existing investment into such a new one. Perhaps, before you are able to pull out your investment from real estate, your commitment to others will have already been canceled. In similar case, you might get stuck.

An average person can generate passive income in many ways. This means that it is not only the rich that can generate passive income. Everybody can but not in the same way. For an average person, his salary is the only source of income he can generate. Beyond his knowledge, it is also possible to get some extra income even without trying to start big.

Our salary is precious to us. But aside from our salary we can earn a decent amount from what little money we have. The first thing we should do is to save money. Saving money requires discipline. Around us, there are many things that force us to buy what is beyond our immediate need. We must agree that to generate passive income, we need enough capital. We are just confused how enough is enough. Whenever our income increases, we tend to spend more, too. This is the biggest challenge to generate passive income.

We don’t necessarily save all our hard-earned money to raise the needed capital to invest. What we need is to calculate the cost of our daily necessities and identify the priorities. More often than not, we prioritize which we should spend for. To generate passive income has been forgotten by many as the first thing in mind. If we set aside a little every time we receive our salary, such money will become big over time. It is easier said than done. However, that is not a hard thing to do. Our first priority must be to generate passive income.

Usually, we believe that only a big capital is able to generate passive income and it is beyond our limit. Perhaps, it is true. It is true if we continue to believe so. These days, everything is possible. Long time ago, we had to prepare large amount of capital because the required minimum capital for almost all types of investment was also large. Nowadays, the internet offers many options to generate passive income.

In stock market, we can start trading if we have at least $2,000 or even less. If you choose to invest in stock market for a little amount of money, the dividend will not be much attractive no matter how good the company is. However, you can generate passive income through buying and selling of stocks. There is risk involved in trading stocks. But if you are very familiar with the basic tools on how to manage the risk, stock market will be very much exciting and promising.

If you are a conservative type of investors with little amount of money and who are willing to wait for long, you may choose a managed portfolio such as the mutual fund. In mutual fund, you can put your money in and pull out any time you prefer. The minimum capital is not large, either. Your money invested is pooled together with the money invested by many individual investors. This money is the fund being used to invest in different portfolios of investment. You may generate passive income here through stock valuation and through stock dividends of the fund’s portfolios. When the fund grows, you money will, too.

Now, if you are a risk taker who wants to take advantage of the profit potential of a volatile market, you may also trade currencies for as little as $500 or even less. To generate passive income here, you must be a carry trader type of investors who speculate a long-term bull trend and earn from a currency’s roll over rate while enjoying your price margin or floating profit. But this is only true in a very good market condition. In this type of investment, only 5% or so of those who try become professional traders. It doesn’t mean that it is impossible to earn here. In fact, currency trading has the highest profit potential due to high leverage. What actually this market requires is a deep understanding of the underlying fundamental and technical reason why a certain currency moves in one direction. In other words, skills are required here. On the other hand, this is the cheapest way to generate passive income. It is also the most liquid market you may invest in. But this is the least passive of all types of passive income. Investment here is neither dependent on the market, nor on a currency. It depends on you and what kind of trader you are. If you choose to generate passive income here, you should try a demo account first in order to test your trading strategy before investing in live account.

However, there are still many of us who resort to the traditional way to generate passive income. One can put up a food cart business, or buy a car to make it a taxi cab. If you already own a small unit of apartment, you can have it rented. You may procure some cheaper sports equipment and put up a gym in your community. Business is by far the most popular source of income. The problem is that most people try the same. Thus, competition gets even tougher.

A food cart business can be a very lucrative option to generate passive income. Inside the malls, a lot of food carts line up. One may think that such a business is not permanent. Surprisingly, these small carts have been growing in numbers. To operate such a business is not really difficult. Since it is small, the operation is simple and the cost is less. But it sells like hot cake.

Operating a taxi cab is as easy as ABC. The ideal circumstance in this is when the taxi unit is 100% owned by you. This alternative source of income is suitable for those who already have at least one fuel-efficient car.

An average person who has inherited a small house and lot or an apartment unit may rent it out to generate passive income. The proceeds from renting out your apartment can be used to pay another housing loan. Such a system is for a long-term investment. Using our properties to generate passive income for longer investment is a wise decision we can make. Using them to earn a living can be short-lived because our property depreciates overtime. Though the value of land is appreciating, structural maintenance is costly. Aside from that, tenants may come and go. So, you have to be more creative in utilizing your possessions.

You can also convert your property to a fitness gym. Sports equipment depreciates very slowly. Nowadays, many people are crazy about health and fitness. There is a big market for that and this industry has been growing consistently. As our society becomes more and more stressful, people give more and more emphasis on coping up stress. Such a growing demand is a good opportunity to generate passive income. While your customers pay for the energy they consume, you are paid for the less effort you exert.

Now, there is also an alternative to traditional business. This business is known as online business. You may create and sell digital products. All such transactions are now done online. There are wide varieties of online businesses you can choose from. What online business requires is your creativity. Everybody here is doing everything to drive the traffic to their sites and that will force us to think of better strategies. Though the competition is tough, the room for growth is big. What is important is that you can start here any time with less capital and less risk.

In the past, it was beyond the imagination of everyone to make money without exerting some energy or effort. As far as we believe, fortune lies on our hand. So whenever we hear that it is now possible to earn some money online, we might surely hesitate to believe. Some people must have tried to check it out themselves recently. Not long ago, one of the most popular trends to earn some money through the internet was online foreign exchange trading. Many have tried it and I have become apprehensive because they must have learned about the activities of some fake brokers. But if we carefully search the internet, we could find more credible sites where we could trade and make money. So there are really many people who have started to invest even in a small amount of money. Most beginners might have experienced some unavoidable losses. Some of them might have infused more capital and began making some money. Whoever have tried this moneymaking model, they are surely obsessed with online passive income.

It’s amazing that one can earn money through the internet. There are numerous methods of making online passive income. The most popular trend now is through affiliate marketing. The first impression, if we hear these words might be that this is just another online selling scheme if not a scam. This is true but this is more than just selling. This is actually a legitimate business. In the start-up stage of such online business, we must spend our time, our money and our energy. And usually, we have to make several follow through. An affiliate is anyone who can advertise and sell the products of the site owners who are also waiting for anyone who are willing to do such. But, it is different from field work selling. Affiliate marketing does not force anyone to work outside their home. Although it requires the creation of a website or blogs, membership in most forums, and article marketing, this is not permanent because when everything is all set, your sites will do the rest for you like a robot serving its master.

Online passive income is made when a purchase of an online product occurs. Affiliates can make online passive income in a number of ways. One common example is by means of article writing. You may write and submit your articles to various article directories. But keep in mind that you should be submitting one original article only once because any further submission of the copy of the same article to another website is considered as spam. You may write another similar spun article. In our article, we may insert some links that can direct the visitors to your site. The content of your articles won’t have to appear like a sales letter. It should be informative so that it could attract more visitors. Even the content of the articles could determine the traffic. Using some effective key words to optimize the search engine, visitors who may happen to type some similar words in your articles will be able to see your articles in the search results. The objective of article marketing should be to drive the traffic to your site with the help of your articles. The more visitors you drive to your sites, the more probable it will be that some of them could buy the products that are being advertised. For each purchase they make, you will receive a commission.

Another strategy to make online passive income in affiliate marketing is by joining some forums. You should discover your niche and stay on it so whenever you are chatting, you are establishing your credibility in order to get the confidence of your visitors. Yahoo answer is a good step to drive the traffic to your site. If you join their forum, all you need to do is to answer the questions and show to the visitors that you are a specialist in that area. For instance, your niche is about cooking and you are promoting and selling some e-books about it. You must search some questions about the areas of your interest and answer them sincerely. When the visitors who asked the questions suddenly become more interested in you, they might check your profile. Your link will be openly shown to them. In any of your answer, do not put a link. When you make more replies, you may somehow paste a link. But the important thing is that you must give the visitors your reply and the necessary answers they need.

Blog posting is another means to drive visitor’s traffic. Search for more blogs of famous personalities who are respected in their niche and follow them. Don’t forget that it is not the post that matters. The readers should recognize you in your field of expertise. When you establish your credibility, the readers may follow you and your link. Blogging may also help you get the ranking in the search engine results.

Usually, a blog post or an article you make may not rank in the search engine results. Whatever key words you include in your articles to optimize the search engine, it won’t seem to work for you. So, it is recommended that you join some forums in several high-ranking websites. If possible, you should submit some articles to them.

There are various ways you should do to set up an online passive income. You can only begin to earn if your site has some traffic. To make it happen requires time and energy. In the first stage, you are just starting to build your profile that could attract some visitors to learn more about you as well as your products. Therefore, building an online passive income is not an easy job in the beginning because the beginning always takes long. Here are some helpful tips:

1) Do not rely on just 1 article. Whenever it is possible, submit your articles to all the article directories that you are familiar with. Make all your articles almost similar but not identical in order to optimize the search engine.

2) Choose a product that is not yet over exposed in the market. Popular products will always go through tough competition. So the best product does not always need to be a popular one.

3) Build your own blog or website. It is where you will drive the traffic. If your site has a member forum page, you can take advantage of it through email marketing.

4) Be a member of some popular sites. Whether a site offers a forum or not depends on your searching. But most sites do.

5) Look for your niche. Think of anything that is related to your specialization. It is where you should base your product selection. Before deciding on what product to promote and sell, search for some interesting subject matters that you can always connect to.

6) Continue browsing to find more websites. All websites have something to offer.

The tips above are only a reminder. As you go on searching for ways to make online passive income, you will find out various things which might be more beneficial for your online business. Some other ways that could help you in your online business are social media marketing and network marketing.

Online passive income can either be passive or active. In actual situation, it is not easy to look for anything that could give us an income with less effort. We may describe passive income according to the flexibility of time and effort we exert. Usually, we may not notice that the online passive income that we know becomes synonymous to online job. As many people believe, an income that comes from the internet is considered passive because your income is earned without a need to go outside our home. There is nothing wrong with spending so much time setting up everything online. In most cases, you have to be in front of the computer screen for a longer time. We may still call such an income an online passive income though. It is not how long or how much you should do things that determine the essence of online passive income. It’s the flexibility, instead. As long as you are not stuck in a certain job, you could make an online passive income. The only kind of income on the internet which is not considered as passive is a salary for online jobs.

What is residual income? Residual income is a type of income regularly received after a one time investment of money, time, and effort. When an author writes a book, he will spend time working on it. When the book has been written, he will publish it online or offline. During this time, he needs to spend some amount of money in order to publish and advertise it. He might create a website for that purpose, or look for another one where he can post and advertise such a product. At first, it’s all money out. There is no actual income at this point in time. But over a period of time, people start browsing and clicking the websites in which he advertised his book. When visitors get interested in his book and buy it, he will start making money especially when he becomes popular in his niche. Because of this, he receives a regular income even if he does not any more spend his time making another book. This type of income is called residual income.

Common to everybody, we have to work hard to earn some money. We all know that what we earned is commensurate with our work. It’s an income, isn’t it? This type of income is called linear income. Many are already satisfied with this income model because it’s quick and guaranteed. Aside from that, we can control and anticipate the amount of income we can earn for a period of time and that gives us a basis for budgeting. However, it is limited because it is also based on our energy and time. Every day, we are awake for 16 hours. Assuming, we earn $25 per hour. We work 16 hours a day so it gives us a daily income of $400. After a month, we have $12,000. Of course we need to eat and take a shower every day. We change clothes and go to work while being stuck in the middle of the traffic jam. On top of that, this work includes Saturdays and Sundays. Even if we enjoy this busy lifestyle, where can you get any more time to earn more?

Residual income is a better alternative for people who want more. With less effort, you could earn $5k, $10k, or $20k a month depending on how you set it up. Therefore, residual income is a business. But unlike most traditional businesses, residual income business can be set up without having to set aside your linear income. Since residual income business is still a business, you may need to spend a little effort from time to time. But that does not require you to give up your regular work if you still wish to work continuously. In fact, you don’t have to.

What are the types of residual income business? Residual income business is more common with artists such as singers, music composers and movie actors and actresses. They are paid for the work they have accomplished. After a certain period of time when their films or recordings are distributed in the market, they will receive a royalty fee. Every time a single copy of their work is sold, they earn a residual income. The entertainment industry is just one type of residual income business.

If entertainment is a residual income business, creativity is another type. This type of residual income business entails knowledge and intelligence. Inventors, scientist, and designers such as engineers also receive an income based on the agreed amount equivalent to their output. When another institution or any business entity uses the patent of their work, they may earn a huge amount of money. The only challenge here is that nowadays, most companies have their own R&D department that develops their own patent.

Most of us must have forgotten that a franchising business is also an example of a residual income business. This kind of business requires so much time and money. It involves risk during the start-up stage. However, when the business grows and becomes popular, people who want to engage in business would prefer to have the same. Businessmen willing to use the franchise name will benefit from the same market where it is the leader. On the other hand, the owner of the franchise earns a residual income from the franchise fee every after the expiration of a franchise period. Common businesses that may sell a franchise are fast food chains and retail shops.

Online business is the hottest residual income business nowadays. We can earn a residual income from various income models. As a beginner, we spend more time browsing and researching some related information on how to earn money online. By doing so, we become bombarded and loaded with a lot of options to begin with. The most popular one we may notice is the affiliate marketing business. And a person engaged in this business is known as affiliate. An affiliate is someone who looks for a product online not for the purpose of buying it. He sells it online. He gets into a number of websites offering some affiliate programs. This includes advertising the products from the said websites to many different links and web directories. An affiliate earns a commission upon from the sale of the product bought by online visitors. It requires a lot of effort and trials in the beginning stage. When it’s all set, residual income follows.

How does it work? We may find our niche or a particular specialization based on our talent and skill. Afterward, we can create a niche website or blog and write some articles related to our expertise. In order to draw the visitor’s traffic to our sites, we optimize the search engines using keywords in our article content. This formula is known as SEO or search engine optimizer. Through this, we might gather an optimum number of visitors who may like we say and who, eventually, may want to learn more about we have and what they should buy to go deeper. From there, we can search for some websites selling products related to our expertise. We should apply for a membership and select the niche products which we can promote on our site. Through this, we can lead the visitors to those sites using a link. Once a visitor gets interested to buy the product, he will just click the link and get directed to the sites where he can make a purchase. When a sale is done, an affiliate will earn a commission. This process can happen repeatedly even if an affiliate is offline. Your site and the links in it will do the rest for you. Sometimes, an affiliate must exert his extra effort to sustain and strengthen the traffic. But if an affiliate has started it right, there will only be little effort needed.

On the other hand, you can create your own online products and let the affiliates promote and sell them. Instead of just an article, you may be an author of a book. Make sure that the books, you should make, is related to your niche. At first, you should build your credibility as an expert in your niche. To do so, you should also do what affiliates do.

Residual income business depends on our personality. It does not depend on the amount of capital or on the opportunity available at a particular point in time. Although it is hard to measure the exact result, the potential is limitless. It is true that we can earn with less effort through residual income business. However, there is no easy way to earn higher. We should innovate and learn new ways in order to be competitive. For all kinds of residual income of business, competitiveness is the greatest capital. The competitive are paid competitively.

The basic reason for looking at a price chart is to determine the trend. At a quick glance, we can see whether the market is moving up or down. However, few realize that the real trend is determined by the pattern of rising and declining moves. It is the determination of the ‘real’ trend that provides the information needed in identifying persistant moves.

Why is it important to identify ‘persistant’ moves or trends? Because it is these types of moves that provide the best opportunities for profit. If the trader/investor focused on just the ‘meatier’ parts of market moves, trades would only be taken in the direction of these ‘real’ trends, and the potential for profit would be much higher than opposing the trend.

The basic identifying pattern for trends require the identifying of Swings.

When price bars are formed with higher highs, at some point the last higher high bar will be followed by a bar that does not make a higher high, but makes a lower low. When this happens, the last higher high is referred to as a ‘swing top’.

When price bars are formed with lower lows, at some point the last lower low bar will be followed by a bar that does not make a lower low, but makes a higher high. When this happens, the last lower low is referred to as a ‘swing bottom’.

The basic pattern for a BULL trend is that each price bar is making a higher low. We are not concerned about the highs. If a series of higher lows ends and lower lows begins (Swing Top confirmed), as long as the lower lows do not make a low below the last Swing Bottom low, the trend is still considered to be a BULL trend. With BULL trends, the pattern is one of each Swing Bottom forming its low higher than the last Swing Bottom low. At times, it is possible for a Swing Bottom low to move below the low of the most recent Swing Bottom low, but not below the low of the last two Swing Bottom lows. When a lower low is below the last two swing-bottom lows, this usually signals that the BULL trend has likely ended.

The basic pattern for a BEAR trend is that each price bar is making a lower high AND lower low. Note that there are two indications here rather than just one, as is the case with BULL trends that only looks at the higher lows. When prices make a higher high and higher low in a BEAR trend (Swing Bottom confirmed), it will remain a BEAR trend as long as the high is not higher than the high of the last Swing Top high. BEAR trends have the pattern of lower Swing Tops and lower Swing Bottoms. It is possible for a high to go higher than the last Swing Top high and still be a BEAR trend. However, if the high goes above the high of the last two swing-top highs, then the BEAR trend has likely ended.

Now I stress that these are BASIC trend patterns. Understanding the basics is important as they provide the foundation for more advanced chart studies.

Understanding that the markets tend to move in the direction of the trend much longer than when moving opposite the trend, the trader/investor is in a better position when focusing trades to be executed in the direction of the trend. In addition, but understanding the ‘swing’ patterns that these trends exhibit, the trader/investor will further benefit by entering the trend at the end of these opposing moves.

For example, if the trend is BULLISH, the pattern is one of higher Swing Bottoms. These bottoms mark the end of moves in opposition to the trend. We call these moves ‘corrections’. By entering BULL trends at the end of corrections, that is, at Swing Bottoms, this lowers the risk exposure and increases the potential for profit. Once the Swing Bottom has confirmed, the trader/investor can use the low of the Swing Bottom to place a protective stop-loss (usually one or more ticks below the low).

Basic trend identification, however, is not a stand-alone trading system. In fact, there is no single indication that should be used alone for the purposes of trading. Rather, trend identification is just part of the solution to profitable trading. Other indications should be used along with trend identification to make a success at trading.

For example, knowing when a Swing Bottom is likely the end of a correction rather than some minor blip on the chart that will see its low taken out a few days later, resulting in a loss. Also, some Swing Bottoms and Swing Tops are more significant in pattern and duration than others. When determining whether a Swing Bottom has moved lower than a previous Swing Bottom, it is important to determine whether the previous Swing Bottom is even signficant enough to warrant consideration. Maybe it was a single bar correction of very small magnitude. When noting whether a Swing Bottom has moved below a previous Swing Bottom, it helps if you use common sense as to whether the two are in a similar league. Moving lower than a recent insignificant Swing Bottom low may not mean anything in the way of the BULL trend possibly ending.

Within the FDates Market Timing Membership, we not only take note of the formation of these Swings, but we note whether they occur during a time precalculated as a Turn Date (FDates). This becomes more important when the Turn Date is based on the weekly time frame price chart. For when a Swing Top or Bottom occurs on a weekly chart or is expected to occur based on the Turn Date, the trend is often changing on the lower daily price chart. Using Turn Dates along with these trend patterns and Swings allows for ‘confirming’ the Swings.

Another important indication to use along with trend patterns, swings and turn dates is to pre-calculate support and resistance levels. For example, when the pattern is of a BULL trend and prices are ‘correcting’ and then forms a bottom swing low, if that low is at some pre-calculated support price level, that would give a strong signal to enter the BULL trend with a buy, and to put the stop-loss below the Swing Bottom low and support level.

So always start by determining what the trend is, and then plan to enter that trend at the end of the trend corrections. Using other indications, such as turn dates, support and resistance levels, or some other method of analysis.

Investors love to imagine their decisions are based on logic and foresight. But by using inconsistent arguments, investors have fooled themselves yet again, and created what I call the “Great Paradox.”

For example, stocks have become the Rodney Dangerfield of investments: They can’t get no respect. Despite corporate earnings increasing 125 percent since 2009, many investors remain skeptical of the outlook for stocks. Bloomberg News reported recently that valuations for U.S. equities have been stuck in a remarkably long-running slump that hasn’t responded to this surge in profits, suggesting that investors don’t trust the growth to continue.

That lack of trust is evident in the low Price-to-Earnings (P/E) ratio of the S&P 500, currently less than 13 times the 2012 earnings forecast. Compare that to the average historical P/E ratio of 16.4 times. If investors valued companies in the S&P 500 according to the historical average P/E, the S&P 500 would be 30 percent higher. But no such luck.

Corporations proved their flexibility and adaptability during the Great Recession. Corporate profits have been very strong, rebounding much faster than GDP. Corporations now run leaner than they did a few years ago and will benefit greatly from any economic tailwind. Yet many remain skeptical that this profit resurgence will be sustained.

On the other hand, bonds have performed extraordinarily well in recent years – so well, in fact, that many (myself included) see limited remaining upside. There’s not much of anywhere for long-term bond prices to go other than down, since those values run directly inverse to interest rates, which are currently nearly as low as they can be. Meanwhile, despite a worsening fiscal government outlook, U.S. Treasury bonds have done so well over the last 30 years that they have outperformed stocks. The last time that happened was prior to the Civil War.

Still, investors have poured billions into bond mutual funds over the last five years, and have removed billions from stock mutual funds. According to data aggregated by TrimTabs, investors have removed money from U.S. stock mutual funds in each of the last five years, including approximately $100 billion last year alone. Meanwhile, investors have added money to bond mutual funds in each of the last six years, including more than $110 billion into bond mutual funds last year. Investors seem to think that bonds will continue to appreciate indefinitely; at the same time, they distrust that current corporate earnings will continue. They have fallen into the Great Paradox.

Call me crazy, but I believe fundamentals matter. As Warren Buffett observed, “In the short term, the market is a popularity contest. In the long term, the market is a weighing machine.”

There’s no reason to think stocks won’t perform well in a slow-growth economic environment and even better in a good environment. And unlike for bonds, being a strong performer isn’t an anomaly for stocks. For those with a sufficiently long-term perspective, clinging to bonds isn’t a position that makes sense. As Jeremy Siegel, finance professor at the University of Pennsylvania’s Wharton School in Philadelphia, told Bloomberg News, “The rally in bonds is a once in a millennium event, but it’s absolutely mathematically impossible for bonds to get any kind of returns like this going forward whereas stock returns can repeat themselves, and are likely to outperform. If you missed the rally in bonds, well, then that’s it.” (1)

Why are so many people tempted to keep favoring bonds and avoiding stocks, ignoring solid reasons to do the reverse? One reason could be herd mentality. As my colleague Benjamin Sullivan observed, many investors follow the crowd, buying overvalued stocks when the financial media and Main Street are optimistic about the market, and shunning stocks when prices ebb, despite the fact that it makes more sense to buy low and sell high.

Think about it. Should you buy stocks when everyone thinks the world is ending – say in March 2009, when the S&P 500 closed as low as 677 – or when everything is Pollyannaish – say in October 2007, when the S&P 500 closed as high as 1565?

Though the timing is difficult to pinpoint, one should to try to buy near the height of pessimism and sell or reduce close to the height of optimism. As legendary investor Sir John Templeton once said, “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.”

Investors may also be tempted to let past performance overly determine their expectations for future behavior. However, while it’s smart to glance in the rearview mirror from time to time, looking only backwards and ignoring the path ahead will inevitably lead to messy smash-ups.

No one can forecast exactly what the market will do in the short term. But there’s no reason for the excessive pessimism that investors seem to apply only to stocks. This summer, Burton G. Malkiel, a professor of economics at Princeton, wrote in The Wall Street Journal: “We have abundant evidence that the average investor tends to put money into the market at or near the top and tends to sell out during periods of extreme decline or volatility. Over long periods of time, the U.S. equity market has provided generous average annual returns. But the average investor has earned substantially less than the market return, in part from bad timing decisions.” (2)

Uncertainty is frightening, and it isn’t surprising that investors are tempted to cut and run at the first sign of trouble. Investors have clearly lost confidence in stocks in recent years. But post-recession, it seems many investors have gone a step farther than caution. I suppose two bear markets during the same decade are enough to make investors jumpy. Meanwhile, investors pile into a bond market with limited upside and considerable downside.

Warren Buffet made the following analogy: “I’m going to buy hamburgers for the rest of my life. When hamburgers go down in price, we sing the ‘Hallelujah Chorus’ in the Buffett household. When hamburgers go up, we weep. For most people, it’s the same way with everything in life they will be buying – except stocks. When stocks go down, you can get more for your money, but people don’t like them any more. That sort of behavior is especially puzzling.” It’s not only puzzling; it’s costly.

Hockey legend Wayne Gretzsky put it best when he said, “I skate to where the puck is going to be, not where it has been.” The puck has spent the last five-, 10-, and 30-year periods making money for bond investors. I suspect the next five, 10, and 30 years are going to be in stocks’ end of the rink.

Do you wish to have some alternatives to help you prepare for your future and have an early yet worry-free, progressive and stable retirement? Do you see yourself really interested in venturing into many investments and options trading schemes? If yes, you better equip yourself with some useful options trading strategies to get started and remain to the top – welcoming financial freedom with open arms. And I am certain that you really want this, right?

Primarily, a virtual assistant refers to an online support that you do not meet personally but is able to support and guide you all the way. Such may be a group or a team of individuals working together, hand-in-hand, towards the same goals and objectives as yours. Being in a support team that allows you to know how to play the game right is an advantage. As they say, you have to step on the brake before you hit the wall. And with that, it is never too late to seek out for some professional help.

One great way is to go online and seek for some community forums or other online groups which have expertise, skills and experiences on investment and trading. Through this effort, such groups and teams could be able to hand you over some options trading strategies those of which you could start working on and maximizing for your money and funds to work with you at its best. In this workforce, you could be able to meet some other individuals who could share their first-hand experiences and insights on investments, option trading and even about stock markets and option contracts. These actually enable you to learn the parameters and limitations of trading and investment.

Another way is to go and grab some reliable software and applications that can help you out. As we live in a society where technology and innovation seem to rule and change lives, you may consider adopting the most modern and innovative ways of virtual assistance on getting those options trading strategies at hand. These may possibly work through learning how to set up the software or application, install in your computer units, and see how it may work amazingly for you and your funds. Such software offers reliable and easy-to-understand tutorials and coaching programs that would allow you to learn options trading strategies your way at your own pace.

Each investment and trading venture may involve losses, risks and downsides; therefore, you have to learn how to minimize if not totally eradicate it – pushing through with its gains and profits. When you finally learn how to bring the upside of this game and venture, you would be able to move closer to your big dreams: such a worry-free and stress-free retirement, working your way to security and financial freedom.

So, what are you waiting for? Go and grab your own virtual assistant that can hand you those reliable and effective options trading strategies in no time. Think of living your dreams and living life to its extreme made possible by your investment and trading ventures today. Good luck!

When most people have extra money, they tend to purchase things that they don’t really need. While the items they’re buying may be useful, that extra hundred they just dropped on the latest in tech gadgets could be put to better use by investing.

Many people don’t even consider investing because they think they need thousands of dollars to get started. Not true. In fact, you can get started with as little as $25 a month. Any little bit helps and the earlier you get started, the better.

Having a Safety Net

Investing is a risk, even when investing conservatively. It’s not always a huge risk, but any risk is something to consider. For this reason, you should have an emergency fund.

Most experts will recommend that you have at least six months of income in the bank or in low-risk accounts such as CDs (certificates of deposit) and money-market accounts.

Savings accounts grow interest slowly. The interest grows so slow, that outside of the benefit of keeping your money in a safe place, the account isn’t doing anything else for you. A CD on the other hand, will grow interest much faster, but the downside is that you can’t withdrawal your money without penalty fees, unless you’re past the maturity date.

Money market accounts are more similar to the traditional savings account, but they provide higher interest. There are only a few limitations. In most cases, you will need to maintain a higher minimum balance in the account. You are also limited to the amount of checks you can write or withdrawals you make per month.

It doesn’t really matter whether you choose a CD, a money market account or a regular savings account, as long as you have money to fall back on. With your safety net in place, you should start investing with money that you can spare.

Creating an Investment Strategy

With investing, it’s important to set goals for where you want to be later in life. If you know where you want to be in 10 years, you can create a plan designed to get you there. Without a plan in place, you’re not likely to get there.

What is that you want your money to do for you in the coming years? Do you want to get married and buy a house in five years? If you have kids, perhaps you want start saving for their college tuition? Use these big time periods in your life to create a plan for investing.

You certainly want to plan ahead for retirement. When do you plan to retire and do you want to retire early? Where do you want to live when you retire?

Consider all of the details, such as the cost of living where you want to live after retiring. If you want to retire early, you might have to start investing 20% or more of every paycheck, if you want to have enough money to live on for the next 30 or more years. If you’re fine with working part-time in your retirement years, you can invest much less.

Types of Investments

Once you have your goals in place, it’s time to start thinking about how you want to invest your money. The three most common options are stocks, bonds and mutual funds.

Mutual funds are great for beginners. Without a lot of money, it’s difficult to invest in a diverse group of investments. A mutual fund makes it possible, by pooling the money of thousands of investors and using it to buy a portfolio of stocks, bonds and other securities. Professional fund managers run mutual funds.

Bonds are another option, and are one of the safest ways to invest, but also have one of the lowest interest rates. With bonds, you are basically loaning money at a fixed interest rate. A treasury bond is a loan to the U.S. government, a municipal bond is a loan to the local government, and a corporate bond is a loan to a business.

Purchasing stocks means to buy partial ownership in a company. When you buy a share, you are entitled to a percentage of the company’s annual profits. Because of the constantly changing prices of shares, stock market investing can be considered aggressive. The general idea is to buy low and sell high, but it’s hard to predict something like that. For long-term investing, it’s safer to invest in companies that you’re sure will grow or companies that are already successful.

There are other types of investment options other than the three mentioned, but mutual funds, bonds and stocks are the most common.

Investing

Finally, it’s time to invest. You’ll need either an individually licensed agent or a brokerage firm to help you buy and sell bonds, stocks and mutual funds. At the most basic level, they can simply help you make the trades, but many professionals will also offer advice and portfolio management.

Brokers earn money from investors by charging commission and collecting fees. Discount brokers might charge as little as $15 or less per trade, but they will only execute the trade and nothing else.

A full service broker is often a professional financial planner or money manager, who will work with you to develop a strategy and maintain your portfolio. Full service brokers will charge anywhere from $100 to $200 per trade.

Always research the broker or brokerage firm before deciding to hire. Some have been accused of encouraging clients to make unnecessary trades in order to make more commissions. It’s not often, but it has been known happen.

Wondering how to invest and where to invest money in mutual funds in 2012 and going forward without paying heavy sales charges, expenses, and fees? Here we spell it out for you so you can put your money to work and invest with confidence.

How much does it cost to invest $10,000 in a typical stock fund? This depends on where you invest your money. In a fund company that charges a 5% load (sales charge) it could cost you $500 up front just to invest your money. Then it could cost $200 a year for fund expenses, increasing as the value of your account grows. For a $100,000 rollover from your 401k you could be looking at $5000 off the top and $2000 a year plus perhaps $1500 a year in management fees for your “advisor” who handles your account. These are examples of how not to invest in 2012 and beyond.

The secret to how to invest money in funds is to put all of your money to work by avoiding sales charges called “loads. The secret to where to invest is to go with a fund company that offers funds that have no sales charges or extra fees; and also has low expenses. The one thing you can control is your cost of investing. The lower your cost the higher your net returns.

Here’s how to invest and really put your money to work in stock funds and bond funds: go with NO-LOAD INDEX FUNDS. Here’s where to invest: with Vanguard or Fidelity, the two biggest fund companies in America. How much will a $10,000 stock fund investment cost you vs. our first example? Zero for sales charges and maybe $25 to $50 per year for expenses. For a $100,000 rollover you could save $5000 up front plus $1750 a year in expenses plus $1500 a year for extra management fees!

Just search for NO-LOAD FUNDS on the internet and you will see names like Fidelity, Vanguard, and T Row Price. If you are not quite sure how to invest with them give them a call. Don’t be afraid to ask questions. All fund companies want you to invest your money with them. That’s how they make a living.

Investing money in 2012 and beyond could get tricky. You can not predict the markets, but you can control your cost of investing if you know where to invest and how to invest to get your money’s worth.