When you purchase a stock, you usually expect it to go up over time so that at some point you can sell and make a profit or capital gains.  But what if your stock is slow to go up, or trends sideways for a number of months.  Your original investment is stagnant, in essence not growing and making you money.  These types of stocks are ideal to sell covered calls on to make incremental income from month to month.   So what is a covered call?  A covered call is basically selling an option contract against a stock you already own.  When you sell an option contract, the buyer pays you (The seller) a premium.  In turn, they have the right to buy your stock at any point in time up to the option expiration date for the price of the option they paid you the premium for.  Let’s take an example.

1. You own 100 shares of XYZ corporation, and decide you want to “rent” out your stock for some additional income.
2. You decide to sell a covered call option.  The current stock price is $50/share and you own 100 shares of company XYZ.
3. The covered call option for XYZ is currently offering a premium of 0.62 for a March 17th expiration at $55/share.
4. You sell 1 option contract on XYZ corporation (1 contract is equal to 100 shares of the stock).  The buyer pays you (0.62 * 100 shares = $62.00).  You gain $62 on your $5000 investment (100 shares of XYZ), which is 1.24%.  Now if you are selling options each month, that return is a 14.88% return by selling each month.
5. As long as your stock price does not exceed $55/share (which is what you sold the option contract price at), you retain the shares of XYZ Corporation and also keep the option premium of $62.00.
6. If the stock price goes above $55/share, the purchaser of your option will exercise the option forcing you to sell the stock at $55.  This case is also beneficial to you as you gain $5/share on the stock (or $500 total) plus the $62.00 option premium.  The downside is that if the stock continues to go up, you are forced to sell at the lower $55 price on March 17th, or the day the option expires.

As you can see, selling covered call options is a way to make incremental income or “rental income” on stocks you already own.  Of all the option strategies, covered call writing is the lowest risk.

Have you heard of the saying “buying on dips”? This simply means purchasing stocks or investing your hard earned dollars on days that the stock market dips or goes down. It could either mean the market itself goes down, or a specific stock prices goes down due to global or local news not specifically related to your stock of choice. Stocks tend to get impacted when global or economic events occur which worry investors. People in general are hard wired to buy on good news and positive trends, so it’s difficult to change your mindset to purchase on a downtrend. The benefit is that it can payoff significantly.

Take a recent example by looking at Terra Nitrogen Company (TNH). On August 2011, it peaked around $195 per share. By mid September 2011, it dropped to $139 per share in a matter of 5 days while the overall stock market was down significantly. There was no specific company related news that triggered the sell off, but rather overall market sentiment by the every day investor. Within 30 days of the drop. the stock was already back up to over $170 a share. If one were to purchase this stock around the bottom of the drop, and sell today, they would walk away with over a $30 per share gain in just over a month. Another way to look at this is, within 30 days, an individual investor could of gained overall 20% on their investment. This is just one simple case out of many that occur on a weekly and monthly basis. So as you can see, individual investors can benefit in a volatile market just as much as a bull market. One just needs to reverse their natural trend of buying on upswings and positive news, and instead purchase on the negative news resulting in overall market drops. Happy Investing!

Analyze what your monthly phone expenses are.  For example, how much are you paying for  your land line, your individual mobile phone plan or family plan.  Many times telecom companies have packages or bundles that will reduce your overall costs.  Also, determine if you really need a land line phone.  Many families can get away with only having mobile phones instead of land lines, which will reduce overall costs.  (Potential Annual Savings: ~$720.00)

Insurance is usually an overlooked item that people determine is a necessity, fund insurance policies, and forget about them.  Insurance is insurance, meaning you are paying to protect yourself or your tangible items in case of unexpected events.  Families should not waste unnecessary expenses by overpaying for insurance policies.  Hundreds or even thousands of dollars can be saved by simply shopping around and comparing insurance policy prices.  This should be done for home, auto, and life insurance policies.  Grouping policies together with a single insurance agency can also provide lucrative discounts.  (Potential Annual Savings: ~$500)

Grocery shopping can easily be a families second most expensive budget item behind housing costs.  By shopping for generic brands, you can save 20-40% off of the price of a similar name brand product. Assuming a typical family grocery budget of $500 per month, that can be a significant reduction in overall yearly expenses.  (Potential Annual Savings: ~$1200)

By using only these simple steps to spending less, you can potentially realize an annual savings of ~$2420.00. Add this up over a 60 year lifetime of just being aware of these three expense items would save you $145,200.00.  Assume you invest that money each year over a 60 year life span with a measly 5% annual return.  Your savings would accumulate to just under $1 million dollars ($943,659.86 to be exact!)  As you can see, building wealth over time can be a function of spending less, instead of the all too typical “need to earn more” mentality.

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Option #1: Wire Transfer Bank to Bank

This option is ideal if you prefer to setup wire transfer instructions well in advance with the bank. Most banks require you to sign wire transfer authorization forms in person to enable wire transfer for your account. Additional, banks generally require you to call in person to initiate wire transfer instructions. Very few banks allow international bank transfers through online interaction. Beware that wire transfers (especially international wire transfers) usually have large fees associated with both the transfer fee and the exchange rate fee. Be advised to check the exchange rate for the bank to bank transfer as you may not always get a competitive exchange rate.

Option #2: Bring Cash with You

This option is rather self explanatory, however there are some cautionary items worth mentioning.  When you travel or visit your home country, withdraw funds and bring cash with you to deposit in your foreign currency account abroad.  You should not deposit directly your home country’s currency type, but instead find local money changers to change over the currency into the local currency.  This will save on currency exchange rates and also get you the best exchange rate possible.  You will need to also check import rules for the amount of cash allowed into a country without declaring on the customs form.  If you don’t mind declaring the cash with customs, you can bring it as much as you desire.  Obviously another downside is that you have to travel back and forth to your home country and host country in order to transfer money, however if the trips are timed with vacation or family visits, this options is most ideal.

Option #3: Use your PayPal Account

If you already have an online PayPal account, you could open another PayPal account in the country your are residing.  PayPal offers both currency exchange options, as well as withdrawal of funds from PayPal accounts to local banks.  For example, if your home country is the U.S. and you are currently residing in Malaysia.  You can open a PayPal Malaysia account that accepts both Malaysian Ringgit (MYR) and US Dollars (USD).  You can then either use your U.S. PayPal account to send USD to your Malaysian PayPal account, or exchange over to MYR and deposit directly in MRY currency.  From your Malaysian PayPal account, you withdraw funds in either MRY or USD to your local Malaysian bank account.   There are fees to be aware of with PayPal, however these fees are comparable or lower than bank to bank wire transfer fees, and money is transfered instantly between the two PayPal accounts.  It is also worth noting that the currency exchange rates offered through PayPal are slightly lower compared to market rates.

An innovative solutions PayPal now offers is the ability to deposit checks directly into your paypal account remotely. This is done through the PayPal iPhone app, which allows you to take a picture of the front and back of a check, which will then get deposited into your account within 3 – 6 days.

Whether you use bank to bank wire transfer, cash deposited or online account funds transfers such as PayPal, you will have research fees and determine which options is the cheapest and most timely for your specific situation.

With the bull market entering its third consecutive year, investors are growing cautious about the returns of the investment market. Higher interest rates, surge in commodity prices and federal budget struggles are more than enough for the investors to remain watchful this year. As the global economic crisis continues to resound through the global investment markets, the financial analysts are of the opinion that tight credit markets, consistent economic uncertainty and reduced tolerance for risk will dominate the investment decisions taken by most investors this year. Here are some top investment trends of 2011 that will help you know the nooks and corners of the investment market and take an informed and measured step.

1. Investors will take a defensive step: Since this is the third year of bull markets, it’s high time that there is a definite transition in the investment market. As 2011 goes on, investors who had invested in stocks that have appreciated sharply are shifting into a more defensive stance, according to the opinion of some investment experts. While the investors are questioning the sustainability of the ever-increasing bull market, they are embracing the sectors where demand is always static. This strategy for 2011 will push a large number of investors towards energy, health care and utilities.
2. Stocks of large companies will be ‘in’: Historically, it has been always seen that when the investors become extra watchful regarding the stocks, the small and mid-sized companies have suffered. Comparatively, the stocks of the large sized companies fare better than them because the investors then prefer to remain with a larger company than tolerate the risks of investing in a small company.
3. Investment strategies will be based on evolving risks: The outlook of inflation is entirely different with the emerging and the developed markets. However, the investment experts are of the opinion that the wage and price inflation may stay in check in the US for the next two years with the continued surplus capacity of the US economy. There is low inflation in Europe and deflation in Japan. However, in China, India, Russia, inflation has risen sharply and the lawmaking authorities have started raising the interest rates to ease off the economic pressures.
4. Investors will review their reliance on equity risk premium: According to the valuable opinion of some investment analysts, the investors will review the role of equities on their investment portfolio since the after-effects of the global financial crisis. Only investing money in stocks of companies that have an exceptionally high growth rate will not be enough in 2011. They also have to concentrate on the diversification of their portfolio and consider whether investing in equity funds may benefit their investment portfolio.
5. Lift in oil company stocks: The price of oil in the last quarter of 2010 has been $90 a barrel. The last time oil finished with a strong value was in the year 2007 with $96 a barrel that skyrocketed to $145 a barrel by the second quarter of 2008. Unfortunately, the stock prices of the oil companies rarely surged in 2008. Since then the rising price of oil was not converted into the rising price of stocks. However, the financial analysts do not see the same thing happening this year. Therefore, the oil company stocks will preferably get a boost with the hike in the price of oil.
6. Investor’s flight to emerging markets: The emerging markets or the nations that are gradually becoming advanced are inviting investors as they’re experiencing rapid growth. India, Russia, China are some of the emerging markets and may also show GDP growth that will be two-times higher than that of USA. Experts predict that investors will look for more opportunities to invest in such markets.

Investors in 2011 will shift slowly from low risk investment to investments with higher yield but due caution has to be maintained within the industry in order to avoid the repetition of the same thing that most investors faced in the late 2000s. Investing in alternative energy and emerging markets will be among the top investment trends this New Year.

Real Estate

You would think that no one is buying real estate in this market, but you’d be wrong. There are plenty of investors looking to buy foreclosed homes because the prices are rock bottom and the market has no where to go but up. They may have to put several thousand back into the place to get it presentable, but they expect to make many tens of thousands when the market recovers.

Skills and Education

Many people are finding the return on their savings account miniscule compared to the investment of retraining in a new field. When old jobs have disappeared, there’s no choice but to get a new skill or a brand new education to be able to compete in the job market. If it literally raises your potential for income too, it can be a very good investment to make in bad times.

Other Investment Types

You can get certificate of deposits that are based on gold or foreign currencies. You can even buy gold and silver coins, as a commodity. You can buy seed and start a home garden. Of course, that takes a bit of investment in skill and gardening know-how. The point is to diversify your investments and always seek to get the best yield for your money so that you can build wealth slowly, but surely, over time.

Real Estate investing here refers to purchasing a home and leasing it out as rental property.  There are multiple benefits to investing in properties this way including cash flow from tenants, appreciation on the home over time, depreciation deductions, and tax benefits.  Also, it is always advisable to purchase investment properites with as minimal down payment as possible in order to maximize leverage.  This is where making your first million dollars comes in.  Leverage is essentially using other peoples money to purchase real estate, allowing the little money you put to grow exponentially.  For example, say you put a 10% down payment on a $150,000  investment home, and mortgages 90% of the value.  You would be putting $15,000 of your own money into the investment.  Now say you hold the home for 10 years, with average appreciation of 5% annually on the home price.  The gross profit in appreciation alone would be $95,000.  So essentially, you would of turned $15,000 into $95,000 over 10 years, but it gets even better.  Your tenants would of paid down your mortgage substantially over those 10 years as well.  This also doesn’t include any cash flow received from tenants over the 10 years, depreciation deductions, and tax benefits either.  So this begs the question again, how do you make your first million in real estate?  How about borrowing a million dollars and having someone else pay off your debt!

In this scenario, the “someone else” is the tenant or tenants, and you are the one borrowing the million dollars.  For example, you could purchase one home each years over a ten year period in the $150,000 price range.  With each mortgage you would be borrowing greater than $100,000 of the purchase price.   By the 10th year, you would be have borrowed over a million dollars, and your tenants from your first few homes would of paid off a big chunk of those home’s mortgages already.  Taking into account appreciation, cash flow, and tax benefits, you will actually reach a million dollars quicker than you might think.

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Of course there are downsides to peer lending as well.  Default rates are generally higher due to the eagerness of lenders wanting to achieve above average rates of return.  Also, sometimes terms are worse than bank loans or mortgage loans in the aspect of pre-payments and/or fees.  It all depends on how the loan agreement is structured.

There are a few popular peer-to-peer lending sights available on the internet today.  The most popular two are Lending Club and Prosper.   Both sites allow you to become either a lender or a borrower.  Note that lenders are limited to specific states that have been approved.  Advertised rates range from 6% up to 30% depending on the risk a lender is willing to take.  The downside to these peer-to-peer lending sites is that they usually require a credit check, and adjust the rates based on credit score.  Prosper.com works more along the lines of an ebay style site for loans.  So the credit rating is not as critical for Prosper.com.  Lending club rates are completely based on credit score, assets and background information you provide during the sign-up.

Other means of peer lending or private lending is simply to ask friends or family members for loans.  There are sites (Virgin Lending) and documents that exist to make these peer loans more official instead of just taking your friend of family members verbal commitment to pay you back.  These are the best loans to come by and can be structured  to be very flexible depending on the needs of the person loaning the money and the borrower requirements.

Peer loans can be used for real estate purchases, credit card debug consolidation, home remodeling, home rehabbing, or simply to fund  at dream vacation.  Next time you are in the need of money, consider bypassing conventional bank and financial institution loans and consider Peer Lending.

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Social networking sites are more popular than ever.  LinkedIn is a social networking site targeted towards connecting professions with potential opportunities.  The opportunities can range from business ventures and changing jobs to head hunters targeting you.  Make sure your LinkedIn profile is updated with your latest job status and responsibilities.  This gives potentially employers up to date information on you in case they come across your LinkedIn profile.

Another social networking site worth joining is Twitter.  Create an interesting user name or handle, and broadcast messages on your skills, interests, and desires.  By doing this daily (or once you are addicted, it will most likely be hourly), you will build a large network of contacts, some of which might just be your next employer or a referral to one.

An easy way to attract attention to your resume and skills is to build a simple web site where potential employers or head hunters can view your most up to date resume.  Domain names can be purchased for as little as $10, and if you hire someone to do your website, it might cost a $100 – $200.  If you are skilled enough yourself, it should only take a couple hours to get a site up and running.  Advertise your site to the major search engines to attract visits, and make sure to search engine optimize (SEO) your site.  This will enable search engines to find your site and update their relevant links accordingly.  Also, make sure to Twitter about your site and any recently posted information or details.

Above are just a few easy investing ideas to spruce up your chances of finding a job and increasing your income potential.

Most investors use various types of moving averages, including the Simple Moving Average, Exponential Moving Average, Smoothed Moving Average, and Linear Weighted Moving Average. Each moving average calculation has its Pros and Cons. For this article, we will stick with the Simple Moving Average.

As mentioned previously, the simple moving average is just the average value of the stock price over a designated period of time. Investors and analysts generally use two different plots for the simple moving average. On a chart with the stock price plotted, analysts usually overlay both a short term moving average line and long term moving average line. Typical values for the short term moving average are 10, 20 and 50 day moving average calculations, and long term are generally 100 and 200 day moving averages. The key is to calculate what is know as the crossover point, which is where the moving indicator lines cross. Below is the criteria that move analysts use when analyzing stocks with the simple moving average.

• When the short term moving average (50 day) crosses and continues above the longer term moving average (200 day), it is believed this is a signal to purchase the stock because it will continue on an uptrend.
• When the short term moving average (50 day) crosses and continues below the longer term moving average (200 day), it is believed this is a signal to sell since the stock prices is likely to continue its slide downwards.

The below charts shows an example of a positive crossover point in which the 50 day moving average crossed over the 200 day moving average, and the stock price continued to increase.  This is a chart of Intel’s (INTC) stock performance for 2009.  The green line is the 50 day moving average, and the orange line is the 200 day moving average.

Note that at the crossover point, the stock price was $16.  If the stock price was purchased at the crossover point and held until December 2009, the return would of been greater than 25%.

Simple Moving Averages and crossover point analysis is a very simple and effective method that individuals can integrate into their overall stock analysis approach.

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1. Start with low priced stocks, generally between $2 and $8.  This will allow you to purchase more shares.  Do not sacrifice the quality of a low priced stocks however.  Look for solid companies that have had their stock price either beaten down by economic news, or smaller sized companies with strong earnings growth potential.
2. Split your funds up across multiple stocks at low price points.  For example, buy several stocks below the $5 price point can yield you more diversification.  If you have $1000 to invest, you could purchase 100 shares of 2 stocks priced at $5 or below, or just 100 shares of 1 stock priced at $10.  Immediately you can see the benefit of spreading the risk across two investments verses putting all your funds in one basket per say.
3. Generally, lower prices stocks have larger percent gains.  For example, if a $5 stock goes up just $1, that is a 20% gain.  Whereas a $20 stock would have to go up $4 and a $50 stock would have to go up $10 to achieve the same gain.

Now to cascading your investments.  The beauty of purchasing low priced stocks is that you can purchase them, watch them potentially grow quicker than higher priced stocks, and sell off the gain portion.  For example, say you purchased two $5 stocks.  Let’s say they both go up just $2.  That’s a $4 return, or 40% overall.  You then could sell off enough shares to cover your $4 gain, and purchase an additional low priced $4 stock.  This way you will now be diversified in 3 stocks, and have used the profit from the other stocks to purchase the new stock.  This is a great way to grow your stock portfolio.  Of course it depends on the market conditions and companies you invest in.  However over time, this strategy can be extremely beneficial.

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So how can the individual investor benefit from purchasing stocks during the holiday time frame, which is characterized between Thanksgiving and Christmas? Below are some tips and suggestions.

1. Look for large retail stocks. The retail industry is always at question during this time as consumer spending trends are scrutinized on a daily basis.   Watch for retail stocks that have a slightly negative trend.  This could suggest investors are worried that the retail company may not meet their year end number, however this is rarely the case for big box retailers.
2. Pay attention to hot items, such as that “must have” kids toy, or tech gadget that is flying off the shelf.  Note the company that makes the product and purchase the stock on a dip in price.  Once January roles around, you will be happy you spent the time researching what items are flying off shelves for Christmas time.
3. Check out service industry sectors that have increased revenue during this time of year.  For example, if temperatures are colder than normal for these winter months, you can expect a spike in natural gas, coal, and electric consumption.  Stocks associated with increases in use of these natural resources can provide you a nice healthy return if you can purchase them on a dip before the consumption trends are realized.

Above are just a few simply suggestions of how to purchase solid stocks at reduced prices which can potentially deliver great returns over the years to come.  Sometimes all it takes is a little attention to what consumers are doing and products they are purchasing.

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