How to Prosper

How to Prosper Financially.

1. Give control of your life over to God. This is accomplished by saying a prayer, and choosing to believe that God heard you.

The prayer would sound like this..."Father, in the name of Jesus, I give control of my life over to you, what you say, I will say and where you go I will go. I ask you to come into my life and I confess that Jesus is the Son of God and Lord of my life. In the name of Jesus I pray, amen."

2. In order to prosper financially, your soul must prosper first. (3 John 1:2). Prosperity of your soul is accomplished by you controlling your soul. Your soul consists of your 1. Will 2. Mind 3. Emotions.

Learn to control what you think on (think on what the Bible tells you to think on (Philippians 4:8)), where you allow your emotions to go and by submitting your will to the will of God, your soul will be prospering.

3. Put the Kingdom of God first (Matthew 6:33). Instead of building your kingdom, your bank account, your house, always putting your stuff first, put the plan and works that God has told you to do, first place, a place of priority in your life.

4. Begin to sow. The law of planting and harvesting is paramount and must be used in order to prosper in God. This is accomplished in several ways, but the most prominent way this is done is by investing in the Gospel. When you give money into a ministry that is making progress in building the Kingdom of God, you become partnered with that ministry and part of the return for that investment comes on you. (Mark 4)

5. When this is accomplished, God is able to bless you abundantly and He will bless you abundantly because He loves you so much and it pleases Him to bless His children.

Books to learn more about this subject that I would highly recommend:

The Laws of Prosperity, by Kenneth Copeland

Managing God's Mutual Funds; Yours and His, Understanding True Prosperity, by Kenneth Copeland

Free Downloads from Keith Moore, check out the "Week of Increase" series. He hosts one every year at his church. You can download the entire series off his website.

Make Your Decisions

The decision to be wealthy and prosperous can be made right now. If your reading this text, chances are you are prosperous when compared to the poorest people in the word. Some people have absolutely nothing. No food, no shelter, no family; this is true poverty. when compared to your wealth, you are most likely infinitely more wealthy then the person who has nothing, yet so many people are unhappy with what they have and strive to get more stuff in order to be happy. I would hypothesize that people aren't really after nice cars, money and houses, if you dig deeper you can see people just want to be happy and they figure that if they obtain more physical possessions it will make them more happy. History tells us this is not true. There are many examples of people with great wealth who no matter what they accumulated or possessed, remained bitter and upset. These people have made a decision to remain discontent and unhappy. The poor can make the same decision but in the opposite direction. They can decide to be happy despite their lack.

Make a decision today to be content with what you have, this should help to increase your general happiness, which is in my opinion, the best measure of wealth.

Building A Stock Investing Strategy

My friend Adrian over at Shareyournumber.com asked me to write a post on how to build a strategy to invest in stocks.

To check out the post and comment click here. Enjoy!

Letting The Winners Run

Fear is a dominant player in the markets. Stocks drop, people get scared, and the stock drops more because people are selling...because their scared. Good companies selling at depressed values make excellent opportunities, if you can ignore the fear.

The same applies to stocks increasing in value while you hold a position in it (always a good thing). As the shares increase in value, some people become more and more afraid, especially in these market conditions (April 16, 2009), the questions pass through the mind... is this a true rally, or is this stock about to slide back down, erasing all profits earned.

It is important to ignore fear in both examples. This is accomplished by committing to an entry price and exit price BEFORE taking on a stock position. Before entry, you are thinking clearly, unaffected by the bombardment of emotions as the share value fluctuates. The key to allowing your winners to run is to stay the course and allow the value to raise to the predetermined price...then sell.

A principle I recently acquired and have taken as my own is the 7% rule (found in Jack D. Schwagers' book "Market Wizards"). If you have a working theory about a stock, based on fundamentals and sound reason, take the position, but set a limit order to sell or cover after a 7% loss. This will keep you from losing your shirt on any one trade.

Market Timing

I left this comment on 7million7years.com and thought I might expound on it.

The term "market timing" reminds me of double dutch. With the jumper waiting on the outside of the ropes, waiting until they believe they have the rhythm of the ropes, and can predict them.
I tried this a few times in grade school and got whacked in the face.

This is the type of trading you don't want to participate in. It may turn out well a few times, but for the long term, you will inevitably lose money.

While double dutch is the sport I liken "market timing" to, consistent, successful investing is more like surfing. The surfer waits patiently for the perfect wave, there is no rhythm or signal to tell him the wave is coming, it just arrives (there is a rhythm to ocean waves, but to catch the perfect wave takes patience). He can either take advantage of it without hesitation, or let it pass him by.
When observing a market inefficiency, I know its time to invest, and the opportunity won't be around for long. This has nothing to do with "timing" and more to do with fundamentals and anticipating the emotions of the market.

Discipline Is Imperative

Discipline is the characteristic needed to:

• push yourself past the point most others stop at
• Resist the urge to spend more then you should
• Pull second shift working on your part time business after getting home from your day job
• See the potential in that stock, ignoring the fear
• Continue to learn, grow and risk

...succeed in whatever you want to succeed in.

I'll leave you with some motivational quotes.

"Discipline is choosing between what you want now and what you want the most."
"Discipline is the bridge between goals and accomplishments."

How to Determine the Market Bottom

This is an obvious question because if you can determine it correctly, just about any investment you make will be profitable.

The bottom is... when you think the economic world as we know it will end, very soon there will be no stock market and your prediction of the future economic structure of the United States is a hunter - gatherer society.
That is the bottom and it is now time to buy. This is based on the assumption that because you are experiencing this fear, everyone else is as well. During this time only the logical can stand back and notice everyone has lost their minds and the deals of the decade are being presented.

The individual who can pull the trigger at this point, manifests discipline and courage. Basically a complete absence of fear while maintaining faith that people will continue to be people and buy goods and services, hence lifting the economy, spurring optimism which only spurs more buying, turbocharging the profits of good companies as well as their shareholders.

Just be mindful of the flipside...when people are too greedy. This marks the top of the market and the perfect time to sell.

How To Motivate Yourself To Make Money

This is something I struggle with often. Motivation is the fuel needed to launch those projects and ideas you have that need sweat equity before any profits come out on the other end. Usually the source for long term motivation is clear (i.e., infinite freedom, time with family, etc), but what about short term motivation. What is going to put the fire under your ass when all you want to do is sit on the couch and watch a night of T.V. pass you by (while you should be working on your business for example).

I believe I have a solution: DEBT

For someone who has strong, basic financial principals down (saving, no consumer debt, etc) debt can be an excellent motivating factor for making money.

If I can't pay my bills one month, and I have to carry over a balance on my credit card (after paying the minimum), or I'm carrying a balance on my checking plus account with my bank, these facts role around in my head all the time, 24 hours a day, I'm even dreaming about where I'm going to get the money to pay for these expenses. This acts as a fuel to think of new ways of coming into some money. Now that extra "motivation" pushes me into coming up with new ideas, working on previously abandoned projects and forces me to put down the remote control, and find new/old ways to make some cash.

As for how to get into debt, there IS a certain way to do this: Instead of paying off all your monthly expenses, let the non-urgent expenses wait, and deposit those extra funds into some sort of investment vehicle. I believe this strategy is also called "paying yourself first".

What strategies do you use to motivate yourself?

Negotiate With Patience

As I learn more and more about making money, I see several patterns which seem to emulate over and over. One of them is the importance of buying low and selling high (obviously). And in order to do this effectively, having patience on hand will always give you the edge needed to buy low, thus giving you the ability to sell higher.
An example of this could be buying a used car. If you have the luxury of time and the ability to use patience, a quality used vehicle can be purchased for significantly less then if you were in a rush and needed to buy immediately.
Another example could be the purchase of stock, and using a limit order instead of a market order. Using limit orders effectively allows you to negotiate the stock price instead of simply purchasing whatever is for sale at that moment, although a little patience may be needed.
So if you happen to be in the market for a car, or shares of XYZ, don't only exercise good judgement, but also take a moment to exercise patience.

Was The New York Yankees a Good Investment?

Watching the all star game on TV, when some sort of "fun fact" comes up on the screen about George Steinbrenner and how much he paid for the Yankees in 1973, which was to the tune on $10,000,000. The relativistic current value of the New York Yankees is $1.3 billion according to Forbes magazine.

So the question is...did old George make a good monetary investment. I say monetary because no one really buys a sports team for monetary reasons, more like for bragging, and simply because you love it, but this example is good to focus on due to the undeniable success of the Yankees ball club and the assumption that he must have made a very healthy profit from his initial $10 million.

How about some math and find out...

The first question we need to ask is, "what annual percentage rate has George been getting while owning The New York Yankees."

In order to answer this I would take out my trusty TI-86 thats been hanging out in my desk draw since I graduated from college and crank out some numbers. (you can also visit many web sites which will do these calculations for you, like right here.)

If your using a graphing calculator like me you would input ((1,300,000,000/10,000,000)^(1/38) -1) x 100 = 13.66% annual rate of return, pretax of course. The formula to go along with this equation is r=(FV/PV)^1/n -1

r=rate

FV=future value

PV=present value

n=number of years

Now if you run the same equation for the S&P500 since 1973 until today (Jan 12, 1973 - July 23, 2008) the annual compounding rate of return is just 6.44% which is nothing to be proud of compared to George's 13.66%. Turns out buying a ball club may be a good monetary decision after all.

Emotion Control

If it were possible to possess the ability to control your emotions, where the individual could at one moment genuinely feel the fear, worry and panic during a stock sell off, then just the next moment experience the sober, calm, rational and reasonable feelings which are more appropriate, this individual would possess an edge capable of earning wonderful returns in the stock market.
With discipline and practice I am attempting to identify the fear brought on from this automatic human response, repress it, and exercise intelligent rational trading behavior. Taking advantage of fearful, irrational and stupid prices available during panic stock sell offs.

Leave a comment and tell me what do you think of this strategy.

Unsecured Credit

I just finished a book called "The No-Nonsense Real Estate Investor's Kit" by Thomas J. Lucier. The book became increasingly more interesting as I neared the end, with part 3, "The Fundamentals of Real Estate Investing" and part 4, "Nine-Step Process for Buying and Selling Real Estate". At the close of part 4, Lucier talked about using low interest credit cards to finance short term real-estate investing. He goes on to say...

In this business, access to readily available sources of cash allows investors to take advantage of opportunities to buy properties at below market prices the moment they are known. I've found that low-interest lines of unsecured credit are the most cost-effective source of short-term financing available today.

In the past I always immediately dismissed and shredded those 0% APR cash advance checks and snarled at the cc companies for their ever creative ways of ensnaring people into cc debt, but after seeing the interest rate charged to me on my Zecco margin account, I would happily take their 0% for a year and earn interest on their money.

But BEWARE. The cc companies still have ways of making their money. They charge fees for cash advances which may out way the benefit of the cash advance. Look for a capped fee of $30-$99, which is a good deal if your withdrawing large amounts. The majority of offers I'm seeing today for 0% cash advances come with a 3% fee, so if you with withdraw $10,000 your already down $300. Look for a capped fee and make sure the interest rate remains 0% after a cash advance is requested.

Taking advantage of your revolving credit and paying on time should increase your "credibility" with your creditors. With time, they will probably increase your limits (which you should request every six months) allowing you to use this new unsecured credit to quickly finance properties with the characteristics of a great investment.

Account Status

Just transfered the funds received through my tax refund to my e*trade account. I'm currently making 3.45% interest on the money which is a whole percent less then e*trade was initially giving out but interest rates are going down and everyone is decreasing their rates so this comes as no surprise.
I've been playing with the funds in my virtual optionsXpress account at the same time as realizing how hard investing in the market is. I'm also learning a ton and loving it. I'm keeping a close eye on Anheuser-Busch at the moment.

Paper Trading

For the past few months I've been attempting to track my performance picking stocks through Yahoo's online portfolio account. The online account is basic at best and leaves much to be desired. Recently I stumbled across optionsXpress online paper trading system which I find to be far superior and provides great practice for a rookie like me. Their web site also provides a plethora of investment training material for those seeking trading enlightenment as well as stocks and options trading services. I haven't used any of their pay services yet and may, depending on their broker fees.
Right now I'm practicing selling covered calls and basically just trying to get my feet wet trading options since I never have. Probably won't put in any real money until I fully understand what it is I'm doing.
If anyone had any advice please leave a comment!

Save

Following the last post about self-investing, I would like to start exploring other areas of investing probably considered more conventional.

I will be researching, writing and calculating how to invest. Assuming you are below the age of thirty (>80% of my investment funds will be in stocks), have some money to invest (meaning, you can afford to lose it) and are willing to accept more then average risk, these posts will apply to you. I have a fairly high level of risk tolerance and will invest accordingly. I understand the average investor will fail to beat the market and most are better off putting a portion of their paycheck every two weeks into an index fund, but this is not where I stand. I believe with the right system, earning quadruple what the S&P500 did this past year is not fantasy. (YTD percentage yield, as of today, the Vanguard Total Stock Index Fund (VTSMX) has lost -7.52%, so even index funds are prone to significant loss).

My plan right now is to save and start investing. I opened an e-trade savings account to help me do this, earning 4.01% interest at the present time. I have right now about $600 and will accumulate until I reach $1,000. At that point I will begin to experiment with different investment vehicles while sharing my gr0wing pains and results with this blog. I will choose stocks based mostly on my own level of confidence with that company's product, while supplementing decisions with a combination of fundamental and technical research.

I will begin investing within the next three weeks using Zecco as my preferred trading tool, chosen based upon it's reputation for free trades.

Investing In Yourself

The first place anyone should begin their investing career is in themselves. This phrase may sound cliche but the rewards are often more concrete.

Ways to invest:

Going back to school

Beginning your undergrad, graduate or even professional degree pays dividends for decades after achieving that success, and once achieved, it is impossible for this investment to be lost. I would also like to state that the rewards of a higher degree are not always monetary, benefits can come in unexpected forms, like respect.

ABL

An acronym for "Always Be Learning." The learning process in your life never ends, so you might as well learn to enjoy the learning experience. Learning anything will improve you and is always a great investment since there is so much to learn and so much of it is free. (Internet, library etc.)

Get Out of Your Shell

"Action may not always bring happiness, but there is no happiness without action"
-Benjamin Disraeli, former British Prime Minister

"Named must your fear be before banish it you can."
-Yoda, from Star Wars: The Empire Strikes Back

I had another quote I really wanted to post which basically stated; one's success can usually be measured by your willingness to step out of your comfort level. I wholeheartedly believe this and are constantly challenging myself to step out in certain situations . I identify these situations simply by identifying discomfort and pushing myself into the situation and using it to not only confront the fear, but also to familiarize myself, so next time I won't hesitate.

Highest Low Yield Investing

Just opened an e-trade savings account yesterday, definitely the highest savings account interest I've seen. Right now at 5.05%, although in the future I expect it to drop due to the fed cut of .75%. Hopefully though e-trade will continue to pay the highest and stay over other online banks like ING. I will continue to feed this account with a large portion of my bi-monthly paycheck until it reaches a level I feel comfortable enough to start playing with covered calls.

On a side note, I'm not sure what the fee is involved in writing covered calls but I continually see ad banners on sites like yahoo finance for a site called TradeKing. Might have to check them out; they claim their fee per contract is 65 cents, although I'm not sure what TDAmeritrades is.