Monday, September 5, 2011

Sacred Cow 6 of 11 - Invest for the Long Term

Invest for the Long Term in a Diversified Portfolio from Rich Dad on Vimeo.

The primary thought that I took away from this video is that Entrepreneurs want control, and that most people who invest for the long term lose control. The reason I am learning and studying covered calls is that they provide monthly cash flow.

The problem with covered calls is also revealed in the video and that is hedging. Covered calls only provide slight protection against a downturn in the market. If a systemic problem occurs as it did in August of 2008 then your account can be wiped out.

I have heard some experts say the way to protect your assets is to use “Puts” as protection or use a married put strategy to protect you from the downside. Other say that they buy fundamentally sound stocks and value invest in order to protect themselves from the downside. They then use the covered call strategy to reduce their cost basis until the stock is amortized or paid off. The second group says they gain control by managing their position.

Follow the work of Robert Kiyosaki makes me lean more toward the second group. There is a book called Covered Calls and Leaps: A Wealth Option written by Joseph Hooper and Arron Zalewski does a great job describing this concept. Another resource can be found at, where educational webinars are done that show several cash flow techniques with paper assets.

How are you creating cash flow in you life? Please your comments in the comment box below this post.

That is all I have for now. Have a Great Day! Let’s Eradicate poverty and Build Wealth, through Financial Education.