Posted by Eric Twitty on October 23, 2008
Welcome back!
If you have ever wanted to start investing some of your hard earned money, the time is now. Stocks have taken a plunge and there is a lot of value in the market right now.
If you are new to the investing world the first thing you should do is open an IRA or Individual Retirement Account. The money earned is tax deferred meaning you don’t pay taxes on capital gains or dividends until the money is withdrawn. There are restrictions on how much you can invest annually but you should do whatever you can to maximize your contributions.
Don’t rely on social security to get you through retirement. Put up as much money as you can to ensure that when you retire you can enjoy your life and do the things you want.
There is a great article over at The Motley Fool that will tell you everything you need to know about IRAs. Here it is:
Fool.com: All About IRAs
Read this article then get out there and get started. Don’t let this opportunity that the stock market is giving you pass you by. Pick up some of these stocks and mutual funds while they are still cheap. Don’t be afraid. If now is a good enough time to buy for Warren Buffet, the richest man in the world, then now is a good time to buy for you.
Posted by Eric Twitty on October 9, 2008
You always hear from people selling trading systems and programs on TV and on the internet that you should take charge of your financial future, don’t let someone else manage your money, you can do just as good a job as they can. This is what they tell you.
Let’s think about that for a minute. You probably have a job. You are probably very good at what you do. Unless you happen to have the same job as me, I probably couldn’t do your job without extensive training. People don’t tell you not to hire an accountant to do your taxes and that you can do it on your own. They usually recommend that you hire an accountant. Why? Preparing your taxes requires specific knowledge that you generally wouldn’t have unless you are an accountant. Doctors, lawyers, pro athletes etc. all go through years of extensive schooling and/or training to become proficient at what they do. The same applies in trading. It takes knowledge and practice. It is a highly specialized profession.
Think about what you do for a living. Can just anyone do what you do? Sure there are other people out there that can but can everyone? I don’t think so. You probably spent considerable time and money learning the skills necessary to do your job. Why is it that you hear that trading for yourself is a good idea?
Anybody that has ever traded can tell you that it is one of the most challenging things they have ever attempted. It takes time, dedication, and specific knowledge of the markets to just break even. Even if you can devote yourself to the markets full time there is no guarantee of success. Trading futures is a zero sum game (excluding commissions and fees). One trader loses money, another trader makes money. It is said that 85-90% of all traders lose money. So that means that 10-15% of traders are taking money from everyone else.
When you trade, you are trading against full-time professionals, who have the knowledge and risk management skills necessary to trade successfully in the markets. Would you put your money on the line against a professional in anything else? Would you put money on the line that you could beat Oscar de la Hoya in the boxing ring, or that you could beat Tiger Woods in a round of golf? Probably not. So why is it people insist on competing with professionals every day in the financial markets?
Don’t get me wrong, you can trade successfully in the markets. Anyone who is willing to put in the time and effort necessary can learn to trade profitably. But, you must be willing to invest years and thousands of dollars into learning how to trade successfully, so possibly one day you can sit in front of a computer screen all day and trade your own account profitably. Otherwise, I suggest letting someone who has already shown to be profitable over time trade your money for you. Trust me it will be less stressful, and give you the time to do what you want to do with your life.
Trading isn’t as easy as some TV commercial or internet ad would have you believe. They are just trying to sell a product. People that buy these products learn very quickly though that it takes much more than what is given in the product to be successful.
Trading success is very dependant on a person’s ability to control his or her own emotions. That is something that can’t be easily taught in a course. They can give you suggestions, but it takes experience to truly become a master of your emotions.
People that trade for themselves often throw money at trading ideas that don’t work out. They have a gambling mentality. Sure, gambling can be fun, but it’s usually not profitable. There are few gamblers that consistently take money from the casinos.
The same is true in trading. Professional traders separate themselves from the general public by taking a methodical, disciplined approach, and using sound money management principles to profit over time. The good news is that these traders are willing to trade for you for a portion of the profits.
I understand why people trade even when they don’t do it successfully. It’s fun and challenging. The dream of financial freedom is a big motivating factor. I’m not saying everyone would be better off letting a professional trade for them. If you enjoy trading, go for it. I do encourage you if you are considering trading for yourself to give serious thought to it before you attempt it. The odds are definitely against you unless you are adequately capitalized and disciplined in your trading approach. There is money to be made in the financial markets and investing is a key to becoming financially independent. But, in my opinion, most people are better suited to leave it to professionals, who have proven they can consistently manage risk and be profitable over a period of time, through a documented track record.
Why try to be in the 10-15% of winning traders when you can let someone who already is a winning trader trade for you? There are plenty of talented money managers out there that want to trade your money. Trading is their business. Their performance is documented. While past performance is not indicative of future results, it does give you some insight into the ability and trading style of the money manager.
There are plenty of managed products out there to choose from. Whether is mutual funds, hedge funds, managed futures, or index funds, there is something out there for you.
