In 1971 the dollar was taken off the gold standared and it was no loner real money. Once this occured the dollar became fiat currency or debt. This was the primary lesson I took away from this video. It is unbelieveable to me that the Fed is that powerful. For every dollar we hold in savings they are able to create 10 dollars and lend it out to others. As a result our dollar gets weaker and weaker.
As I thought about this I felt angry at first. However, I realized that getting angry does no good. Next I asked myself what can I do to protect myself? Mike Malony's suggestion is to buy silver and gold (Commodities).
Plan of action to use this information.
I will continue to sell covered calls each month. I will use the income I received from covered calls to re-invest to create more cash flow and/or buy commodities.
How will will you build your assets? Please leave your comments in the comment box located below.
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 http://www.cashforlifeinvesting.com/, 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.
One day I would love to own a home. However, it is clear that a house is not an asset. It is clearly a Liability. Living here in Arizona where we are consistently ranked among the top places where foreclosures take place, many people can confirm that their house is not an asset.
In this video we learn that a house can be an asset if we are receiving positive cashflow through rental properties. While I am not in Real Estate, I do apply the concept to paper assets , by treating my stocks like rental property. For more information on how this is done please read the free report below which reveals, “How to Treat Stocks like Rental Property”.
As Kim Kiyosaki said, “There are 4 asset classes: Business, Real Estate, Paper Assets, and Commodities. I am currently in 2 of the 4 asset classes. The first is paper assets , and, the second is commodities.
By the end of the year I intend on creating a solid business online for a business, but I do not plan on being in real estate this year.
That is all I have for now. Have a great day. Let’s Eradicate poverty and Build Wealth through Financial Education.
PS. If you like my blog please click the follow button in the right column. If you have any questions or comments please leave them in the comment box below.
Live below your means... I know this one all to well. This describes my current lifestyle perfectly. I also clearly understand what Robert Kiyosaki means when he says that living below your means kills your spirit. Living pay check to pay check just to pay bills, SUCKS.
Another powerful part in the video was when Kim Kiyosaki says that she never grew up around entrepreneurs or had any wealthy role models. I haven't either. I constantly read books from the RichDad series with the goal of understanding how to CREATE WEALTH and EXPAND MY MEANS.
So far I have only found 2 ways to expand my means in the investor quadrant. The first is buying dividend stocks which pay automatically on the stock payout date. And, the second way is to sell covered calls against stock holdings which allows me to rent my stocks out to bring in income. Covered Calls only require about 1 hour of my time a month to choose the one I want to sell, and I look at my account balance at the end of each day.
I have not learned how to turn this into a BIG BUSINESS yet, but I am working on it by increasing my knowledge. If I can put knowledge of money within me, then it is bound to show up in my reality.
Well that does it for now. Have a Great day. Let's Eradicate poverty and Build Wealth through Financial Education.
PS... Please feel free to leave any questions or comments on this post in the comment box below.
I love this documentary put out by Robert Kiyosaki and his Team of Advisors. I think it articulates what many may feel but leave unstated. I often feel like I am on the edge of a financial cliff while in the mist of a Huge brewing storm. In writing the next 11 post I hope to look at each of the Sacred Cow videos and figure out how they apply to life and figure out a way to over come them.
For the last 54 days I have been consitently working on building cash flow from my online activities and buying stocks that either pay dividends or allow for a covered call strategy to be used on them.
Please post any thoughs you have concerning the video in the comment box below.
Have a great day. Let's Eradicate poverty and Build Wealth, through Financial Education.
On Week ago I did my first Covered Call on the Silver EFT. I earned a 1.47% return for the week. I created a report called How to Treat Stocks Like Rental Property. It describes what a covered call is, gives an example, and documents the results.
Since my position was uncalled, I rented the stock out again this week. Unfortunately I only received 5 dollars in rental/premium income this week. I will update this trade in one week.
As of today silver is trading below 35 dollars. I am considering the purchase of a put options as insurance on my position.
Note: I started my OX virtual account with 25,000 dollars. I subtracted 20,000 from the balance, giving me an account balance of 5000 dollars. I will log my trades and make a spread sheet to track my results.
What are your experiences with covered calls? Please share them in the comment box below.
Today I will use a covered call strategy on the Silver ETF (Exchange Traded Fund) weekly options. The trade will be conducted in a Virtual account. I am going to use this as an "Educational Example". I will document the results and create a an E-book/Report called How to Treat Stocks Like Rental Property.
Let's take it step by step.
Step 1. Log in to your Virtual account, and choose the stock that you would like to use the covered call strategy on. In this case, the stock will be the Silver EFT (Ticker symbol: SLV). For a better view of the pictures below, just click on them.
Step 2. Buy 100 shares of SLV and Sell 1 contract. By purchasing 100 shares of the stock, you now have the ability to rent the stock out. When you sell the contract or option it is like the buyer of a property renting out the property.
Step 3. Collect the premium/rental and wait for 1 week. One of two scenarios will occur. Scenario A: the stock will be above the price you rented the stock out at, and you will be paid the price of the stock that you rented the stock out at plus the premium/rental (AKA->being assigned or called away). Or, Scenario B: The stock will be below the price you rented the stock out at. If scenario B occur you will be able to keep the stock and keep the premium/rental (AKA->being unassigned or uncalled).
If you want to see an example please look at the article on Covered Calls.
Review
In this Educational example, I purchased 100 shares of SLV at 35.86 per share plus a 10 dollar commission for a total of 3585.95. Next I rented out a 1 week contract for some to purchase this stock from me at 36 dollars. I received 68 dollars minus a commission of 14.98 for a rental income of 53.02.
If Scenario A occurs, I will receive 3600 dollars in my account and keep the 53.02 dollars in my account in 1 week. If Scenario B occurs, I will keep the stock, the rental, and re-rent the stock out the following week. What's going to happen? Let's follow the trade and check for the results in 1 week (06-13-11)
In this video Anthony Robbins states that a strategy is a specific way to organize resources in order to get a specific result consistently.
One strategy that consistently works for me is to buy stocks with dividends. I buy ARR and it pays me every month on or around the 30th day of the month. While MSFT pays once per quarter.
I am currently learning how to use the covered call strategy in my virtual account. I know that dividends work as a strategy. However, I am not sure about covered calls. This is why I will start testing it in a virtual account tomorrow.
Today I opened up a Virtual Account at OptionsXpress. They start you off with virtual account balance of 25,000 dollars. I recommend opening a Virtual Account because you can learn the basics of trading and investing without risking your real money. It's A great Training Ground or Stock Investing lab if you will.
Starting next week, I will start using the strategy of covered calls on the Silver ETF (ticker symbol: SLV) I am excited about doing the covered calls on the SLV because it will provide an opportunity to earn weekly income through the weekly options. If you do not know what a covered call is please read What are Covered Call. While I am building up the balance in my actual account, I will practice my theories in the virtual account.
Robert Kiyosaki has a board game called Cashflow 101. He says the best way to learn a skill if you can not actually do it is to simulate or practice it through games. We learn by hearing, seeing, and/or doing (or Auditory, Visual, and Kinesthetic learning) Practicing in a Virtual account provides all three types of learning in regard to investing for income.
If you have any questions or comments please post them in the comment box below.
That's all for now. Have a Great Day. Let's eradicate poverty and build wealth through financial education.
Robert Kiyosaki constantly puts out inforamation that empowers people. I am excited about learning how to make money with money. By buying stocks that pay dividends I am making my money make money. I have finally found a way to make my money work for me. While my job as a Youth Counselor is my profession, my stocks are currently serving as my business and allowing me to start on the path to wealth.
If I can discipline myself to buy assets consistently, then I can build wealth. Below is a powerpoint I use to share ideas put forth by Robert Kiyosaki. Please download it, if you find it to be of use.
When I facilitate groups with my kids at work, one of the concepts that I teach them is called "LAP". This is an acronym which means: Learn, Apply, and Practice. The video above is called An Unfair Advantage, which refers to the advantage that a person has when they have learned, applied, and practiced effective financial education. In an earlier post a projection of a penny compounded was shown over a 30 day period. In this article I want to focus on the first 20 days. I will use the first 20 days as targets to aim at as I write my blog articles.
Targets 1 through 6 seem to have already been achieved based on my current investing. Targets 7 through 13 are so small that I am almost embarrassed to mention them, yet they are necessary steps that need to be taken in order to get to higher levels. Targets 14 through 17 would relieve some financial pressure. And, Targets 18 through 20 would create life style upgrade.
As a youth counselor I have never earned over 30 thousand a year. Targets 19 and 20 would create financial independence and wealth for most people in my peer group. The challenge is to figure out how to bridge the gap between Target 7 and 18.
All I can do at this point is take one step at a time. I currently earn approximately 60 cent a month through dividends. I know this is not a lot of money but it is a start. I will start saving at least 30 dollars a month and invest that money into dividend paying stocks. When I have built up enough money I will move into covered calls. My next target is to raise my 60 cent in income to at least 64 cent.
What are your Financial Targets? Please tell what they are in the comment box below.
In my last blog article I went over the basics of covered calls. I also included a short video from zecco.com. I decided to add one more post showing a video of Jamie McIntyre. While he discusses "Renting Shares" or covered calls from the Australian markets, the information still correlates to the American Market.
In Australia a person must buy 1000 shares in order to use a covered call strategy. Here in the United States, we only have to buy 100 shares. Just make the mental adjustments as you watch the video. I hope you enjoy this video.
Covered calls are a way to generate monthly income and wealth on a stock purchase. In a covered call an investor buys 100 shares of a stock and sells someone else the right but not the obligation to purchase the shares from them (a contract) at a certain price up to a certain date. Another way to look at this is to think about real estate. If a person purchased a property for $100,000 dollars and rented the property to someone for $1000 dollars per month, then they would be earning a 1% return per month on their investment, with a positive income or cashflow of 1000 dollars. The covered call strategy allows the person who buys stock to treat their shares of stock like a property, generating monthly income through cashflow. There are only two possible scenarios that can take place with a Covered Call.
In Scenario #1, the stock will be above the sell price (Assigned/Called). If the stock is above the sell price then the stock will be taken away from the seller and the seller will receive the amount of money they sold the stock for in there account and also keep the premium or rental that they received. This is known as being assigned or having your stock called away.
In Scenario #2 , the stock will be below the sell price (Expire worthless/ Uncalled). If the stock is below the sell price then the seller will keep the stock and keep the premium because the buyers contract has expired worthless or been uncalled. The owner of the stock can then sell another contract or "rent" out the stock again the following month.
I currently own Microsoft (ticker symbol "MSFT"). It pays a quarterly dividend of 16 cent per share or a yearly dividend of 64 cent. That equals a 2.58% return not including commissions. While it is not a huge return, it is a better return that I would receive at a bank.
A second stock I am holding is ARMOUR Residential Reit Inc (ticker symbol "ARR"). It pays a monthly dividend of 12 cent per share or a yearly dividend of 1.44 dollars. That equals a 18.73% return not including commissions.
There is a Chinese proverb that says "The journey of a thousand miles begins with the 1st step." I love receiving dividend income. While the passive income generated from this stock holdings is not significant, Holding them is helping to take steps forward on the path to success.
In my opinion it is the best way to convert earned income into passive income.
That's all I have for now. If you have dividend paying stocks that you like please post them in the comment box.
I will continue to sell covered calls each month. I will use the income I received from covered calls to re-invest to create more cash flow and/or buy commodities.
written by Joseph Hooper and Arron Zalewski does a great job describing this concept. Another resource can be found at 
