Do you invest like a sheep?
Do you blindly hand over your money to the Wall Street machine?
Do you have any control of your mediocre returns?
3 step guide to Making Big Profits with less Risk
This is about your financial future and no one is going to care more about your goals and your money than YOU! Taking control does not have to be overnight, but it does mean that you put a plan into place for you to be able to manage what you want at some point in the future.
2)Invest with Goals in Mind
Most investors just hand their hard earned money over to a broker and let them invest roughly on their age and risk parameters. If you know that you want to retire with $x amount of money in your account and you have 10 years to reach that goal, then simple math should dictate how much you need to make each year to reach your goal. You can only invest $x amount based on your current situation...salary and expenses. So where is the balance going to come from? To your benefit, there are things like compounding that will help ease the investing curve in the early years. As time goes on the amount that you can invest grows. Invest $1,000 this year and if you make 10% on that $1,000, then next year you should have $1,100. This simple strategy depends on consistent growth which we know by just looking at a chart of the market is not going to happen.
There are several ways to make bigger returns but for the average investor (not trader) there are really only two ways. The first way which we feel is not realistic for someone who does not watch the market 24/7 is to find stocks that are going to explode and only invest in those in a diversified portfolio. The other way is to use leverage. Leverage allows the average investor to become a rock star. Leverage allows an investor to control the same amount of stock with less money. So An investor that buys a $100 stock can control that same stock with only $20. Their risk has been reduced by $80 and their returns jump through the roof! If there was a $10 profit on that $100 stock, then that would be 10% for the stock investor or 50% for the investor using leverage. Common sense says that it is still a $10 profit. But we have an extra $80 sitting there that we can put to use. At minimum we could collect interest on that money but in this low interest environment that is almost worthless...but it is risk free. Maybe the guy using leverage says I will leverage 200 shares which would cost him $40. Now he is making the same $10 return twice or the same 50% so he is making $20 total. He has doubled his return and still kept $60 risk free. What if he goes to 300 shares, costs him $60, returns $30, the same 50% and still has $40 risk free. He has tripled his return with less risk.
Putting it all together
Even if you get a great return you would still have to see how those profits helped the rest of the portfolio. Obviously, an investor is not going to put everything he has into one position, but if he/she did it on several positions then they would be increasing their profits and reducing risks across their portfolio.
Let's say they only average 20% return on those investments. Is that too much to ask? First let's crunch those numbers...for the $100 stock a $4 return is only 4%, but when using leverage of $20 that return is 20%. A simple $4 move. It's not like we have to find the next Google or Amazon stock. So if you returned 20% on average for the average investor with a 60% investment in stocks and they left the other 40% in fixed income(bonds, etc) and get the average 6% yield then that portfolio would earn something around a 14.4% return. That is double what Wall Street averages, with less risk and less fees.
This concept is done every day by millions of everyday investors. Are you curious how some people just seem to get ahead...always go on vacation, have money to pay for new cars. They are making their money to work for them.
It is time for you to take control of your financial future. The sooner you start the sooner the compounding can help you increase your portfolio.
Stop paying high fees and getting average returns from Wall Street.
Get our Free Case Study:
Investment Strategy that Made $2.9 Million in 7.5 Years
We will not sell or rent your personal contact information for any marketing purposes whatsoever.
Disclaimer: This Case Study is for educational purposes only. It is not a solicitation for any financial service. No information contained on this website constitutes tax, legal, insurance or investment advice.