Multi-Timeframe Goals Are Necessary

One of the keys to success in building wealth is having multi-timeframe goals. That is to say you should start out with a long term plan (say 5 years) and work your way towards your short term goals (maybe weekly). Having this style of structure allows the individual to continue to work and tweak at the goals in the short term while keeping an eye on the long term. Some of the benefits that come with this type of structure are quantifiable, while others are not.  

There are some benefits of having a structured goal orientated timeline that you cannot quantify. For example, having longer term goals keeps the focus on achieving your shorter term goals. It gives some perspective and motivation for why you are accomplishing that short term goal. And almost like a present, the accomplishment of the short term goal acts as a motivation for you to continue working towards that long term goal. Having the journey to wealth cataloged in this way gives the person a real gauge as to how the work was done. Doing this also allows for the individual to pass the experience on to others who are desirous of how to build wealth.

Reaching that long term goal of wealth is a major quantifiable result. It allows for the person to see how the hard work, and persistence paid off monetary wise. There will also be smaller amounts (growing as the wealth builds) received along the way which helps keep the hard work and persistence going. Reaching a long term level of wealth due to a particular focus or profession regularly leads to wealth building in other areas which were not open to the person before hand.  

Happy Wealth Building!

Trading ETF Options To Wealth

One great way to increase your wealth is through trading options on ETF's. They provide access to indices and commodities that otherwise would be too expensive or not available. Traders with less capital can still participate and profit from moves in that particular asset class. Because moves happen every day, opportunities come up all the time. A few examples are shown below.

SPY - SPY is an ETF that covers the S and P 500 stock index. In this most recent rise in price of the S and P 500, SPY has risen at a similar level. Since mid November of 2012, SPY has moved from the $135 range to the $155 range. Purchasing 100 shares of SPY would have cost over $13500. The profit if sold now would be somewhere in the range of $2000 or 15%. Purchasing an April $135 call option in November would have cost somewhere near $400 - $500. The call option is now worth $2275. That is a profit of $750 or 150%.

FXY - FXY is an ETF that covers the Japanese Yen. In mid - November, it was trading in the $122 range. A news barrage about how the Yen would be devalued if Abe was elected prime minister in December (which has happened) has caused the price to fall to the $100 range. Shorting 100 shares of the ETF would have brought a profit of $2000.00. Purchasing an April $120 Put would have cost around $1 -$2 range. The April $120 put is now worth $21.00. That profit would have been about $1800 or 900%!

GLD - GLD is the main ETF for Gold. Just in the last couple of months, Gold showed a negative trend. It then ran up against some strong support at the $150.00 level. But on Friday it broke through and today it is trading in the low $130's. Put Options in the $140's late last week are now 5-10 dollars richer.

The ability to trade in all three markets exist because of ETF's. In these three trades, the stock market, currency market, and commodity market are all covered. Because of options, the profits can be very large.

***Disclaimer - Trading Futures ETF Options did have trades (closed now) in SPY and FXY options and has written about GLD as recently as last week. Always do your own Due Diligence before trading.

Wealth Through Paying Taxes

The tax deadline is today in the United States of America. For most people, the government takes an estimated amount out of each paycheck earned. Some people are left with all the responsibility in paying their taxes on a quarterly or annual basis. Others get paid in cash. The question is do you pay or not? 

One opinion is that you should pay the least amount as possible. If you get paid in cash, that means you have the opportunity to pay $0.00 in taxes. While this might look like a great thing, the stress attached to this style might be worth more than the taxes not paid. Having to worry about the IRS can take away your focus from building wealth. The consequences can be disastrous. Maybe you get by. But if you don't, you will not only have to pay the consequences, but family and friends around you will too.   

Another opinion is that you just follow the tax code and pay what the IRS says is owed. It is not necessarily stress free (especially when going through all the paperwork), but in the long run, it will allow you to focus on building wealth, and not on avoiding and stressing whether or not the IRS is going to knock on your door later in life. 

When building wealth, remembering that money alone doesn't build wealth is important. Receiving services like defense, infrastructure, and others given to you and those around you knowing you haven't paid enough in taxes can also get in the way of building wealth. These organizations also spend that money back into the community and might be a customer or revenue generator for you. Paying your share of taxes eliminates that worry and is worth it. 

Wealth Creation by Adsense

When I created this blog, the intent was to have a space to express ideas about wealth. So far, the blog has been a great resource. I not only get to publish current ideas flowing through my head, I get to look back at previous posts to see what my mind set was on a certain topic. Also, with the help of Google Adsense, I have been able to make money doing it.

Google Adsense allows you to manage what ads end up on your site. It has an excellent account section that gives all the analytical tools you might need. If you are starting a blog, and qualify for the service, I would highly recommend using Google Adsense if possible.

Knowing When To Sell

Knowing when to sell an asset is extremely important for building wealth. In trading, it can be argued that it is the king of the jungle. Selling too early or too late can haunt wealth builders. Getting the best price for an asset is almost impossible. But if you can get a price near the high, you can consider yourself lucky. Whether it is the stock market, the real estate market, or any business market, selling at the right price at the right time can mean the difference in the ability to become wealthy.

The stock market is a fantastic example of how knowing when to sell can create or prevent wealth. Recently, the trading blog Trading Futures ETF Options wrote about a trade in the S&P 500 ETF SPY and the Japanese Yen ETF FXY. Both trades had good entries. The plan for when to sell was another matter for both. Had the exit plans on both trades been executed properly, the trader would have made in excess of 3000%. A quick synopsis is below.

The goal for SPY trade was changed due to the mindset of the trader when it should not have. Profits were cut short. The profit was 10% when it could have been as high as 500% had the trader waited another couple weeks to let it work out.

The FXY trade was deja vu. The trade had a great entry. The initial goal of the trade was actually reached. But instead of letting the trade run, the trader sold at first blush. The trade made 100% but missed out on an additional 700% had the trader waited another couple weeks to let the trade work out.

Remember to understand your business plan before the need for a decision needs to come up. That way emotions will be kept at bay and the business can succeed at a higher level.