WHY I WON’T HOLD CRYPTO YET…

There are plenty of cases of people getting rich off of crypto currencies but still there is no research available for people to get rich with crypto on purpose. However there are articles out to educate you and keep you up to speed on crypto, but those articles do not explain the dramatic price fluctuations that crypto has. Is crypto a good investment? Well not for me and I’ll tell you why.

First of all lets start this post off by explaining crypto currencies. Crypto currencies are just like trading on the foreign exchange market, when it comes to contrasting foreign currencies and crypto currencies the only thing different with crypto is that it is not backed by anything just yet. Unlike foreign currencies which are normal backed by a government, banks, or goods and services.

NO BACKING

So my number one reason why I wont hold crypto is because there is nothing supporting the currency just yet.

EXTREME FLUCTUATIONS

Also when it comes to crypto currencies there can be major fluctuations in the pricing, on December 7, 2017 bitcoin was being traded at $15,268.98 finishing the year off with a 3,500 percent return. However the for the next year on December 6, 2018 bitcoin was trading at $3,530.06 that is a $11,738.92 loss, which is a 2,600 percent loss.

NOT ENOUGH KNOWLEDGE

Lastly crypto currencies are still fairly new which means there is a lot of risk when dealing with these trades and unlike stocks there is barley anyone who can give you advice on trading crypto currencies. There is simply not enough knowledge on crypto currencies yet.

HOW TO START ACQUIRING CAPITAL

You can acquire capital in multiple ways but in this post I’m going to be sharing what I do to acquire capital, and what my plan is to acquire more.

Well you can use gold, businesses, or you can acquire wealth through stocks like I do. I know that you can just let your 401k or your pension plan do the work for you, but the returns are much higher when you do the work yourself.

For example, my personal rate of return on my 401k for this year is 8.24 percent, while on the other hand my stock portfolio did a 21 percent return this year.

My goal for my finances or plan to acquire wealth is through borrowing from myself. Right now I am focus on stocks, but really I am building for the future.

After I acquire enough capital in my stock portfolio, I plan on taking an equity loan by putting a percentage of my stock portfolio up for colateral. The loan will be for purchasing investment properties, I truly believe that wealth starts by accumulating knowledge.

I took knowledge to the test by reading books, articles, and others forms of content on the stock market. After reading 5 to 8 books I finally started to see my return on investment.

THE MAIN POINT: “Everyone can start building wealth anywhere as long as they acquire knowledge first.”

Thank You for reading

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What is an ETF?

If you are a rather new to investing chances are you probably don’t know what an ETF is and what it can do for you. Well in this post I’m going to breakdown this acronym for you so that you will be able to see if investing in an ETF is right for you.

E – Exchange

ETF’s are a type of security that deals with a number of stocks in a specific index. Investing in an ETF helps diversify your portfolio just like a mutual Fund would. I currently hold an ETF called “JETS” in my portfolio to take advantage of the airlines that dropped during the pandemic. Since I don’t know which airline to purchase specifically, I choose to diversified through this ETF. Its always good to hedge or own each competitor in a struggling sector that has been through difficult times such as the airlines.

T – Traded

If you hold a mutual fund in your 401k you don’t have to pay taxes on it but if you own one outside your 401k or pension plan, you can be paying 15 percent in taxes. A good thing to know about ETF’s, is the fact that ETF’s cost less than Mutual funds because an ETF charges less in brokerage commission than buying individual stocks. Plus as long as you hold on to an ETF, you don’t have to pay a ton of taxes.

F – Fund

the reason an ETF is called an “Exchange Traded Fund” is because ETF’s are traded or exchanged on the stock market, just like any other stock or company.

Some of the biggest ETF’s are known as the NASDAQ, S&P 500, and Dow Jones.

Which are also referred to as index funds. Also, when an news anchor talks about the market he or she is referring to these three index funds or Exchange Traded Funds.

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OPTIONS OR STOCKS

Have you ever wondered if options are better then just holding stocks, well you came to the right place. Before we get to which one is better, let’s learn a little more about options and stocks. Then you will be able to see which one is better for yourself.

OPTIONS

If you want to know the big idea behind options it’s simple. Options are the right to a stock, pretty much a certificate of ownership. Calls and Puts are both classified as options, and can be used for when a stock goes up and down.

Call options

“Calls” are a type of option investors use to make profit for a stock to go up dramatically. Calls are known to make people very rich or loose a lot of money.

Put options

A “Put” is an option investors use in order to make money for a stock to crash and burn or simply go down. Just like Calls, Puts can be very lucrative if dramatic changes occur in your favor.

Cons

Options are super risky and can be addictive. Options are almost, if not equivalent to gambling. A lot of times you see investors promoting options because of the high reward, but they don’t present the fact that they have to pay a large some of money in taxes after those earning. Usually taxes for short term gains are between 15 to 24 percent

STOCKS

Stocks are simply publicly traded companies open for investors. The symbols on the stock market or abbreviation for each company is called the ticker symbol.

Compound Interest

Have you ever heard slow and steady wins the race, this can relate to investing as well. Unlike options, when you hold stock in a company you have the opportunity to take advantage of compounding interest. Companies like Disney or Bank of America, hand out a dividend for their shareholders. When you as an investor reinvest the dividends back into those companies your generating compound interest.

Capital

As you gain a large sum of capital or money over the years in shares, your also able to borrow from yourself by putting your shares up as collateral. Loans can be used as a tax benefit for you but don’t go crazy, you won’t really need to take loans against yourself to avoid paying taxes since you only pay taxes on dividends or when you sell a stock.

Also the only reason you would have to sell a stock is if the P/E ratio has gone over 15 and estimated earning have far exceed actual earnings for a few fiscal quarters, these results usually happen when there are changes occurring in head leadership so beware.

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What’s an IPO?

IPOs are always being listed on the exchange and you can make a considerable amount of money from buying and selling IPOs at the right time, but what are they specifically. Well in this post I am going to break down this acronym, and tell you whether or not you should invest in an IPO.

I – INITIAL

Well let’s begin with the first letter of IPO, which stands for initial. When a private company is planning to grow rather quickly, they look for funding in various places. Take “Publix” for an example, they offer their own employees an opportunity to buy a share of a company. With that money reinvested in Publix the company is able to acquire more assets to grow in profitability.

P – PUBLIC

The “P” in IPO stands for public. After massive expansion, a company like Publix is able to go public with their stock. This means a non-employee of Publix can become a shareholder in the company now.

O – OFFERING

I stands for Initial, P was for Public, and O is for Offering. As an Initial Public Offering, a private company is able to become a public company. The benefits of this transitions helps the company go from a couple hundred thousand in funding, to millions or even billions in funding.

BUT…

When a company is newly listed the information of its business dealings are very slim to none. Which means many investors do not know much about the company’s Assets, Liability, and the companies performance record (profits).

Even with knowing very little about a newly listed company, investors still gamble and invest in IPO’s. Which result in these investors loosing everything.

So taken it from Benjamin Graham when he states that the more you know the better with stocks; this is my translation of what Ben teaches in his book “The Intelligent Investor.”

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HOW TO PICK A STOCK

If your like me a few years ago, you probably want to invest into the stock market but you don’t even know what to buy. Well, you clicked on the right post, in this post your going to learn how to pick the best stocks and be able to determine what a good stock looks like.

Okay for starters, there are plenty of ways to make money in the stock market, But the best way is by holding on to a stock for five or fifteen years. There are two reasons why this is the best method.

  1. You can build capital
  2. You can receive dividends

CAPITAL

Now to build capital you have to do some research before you pick a stock. You cant just pick a stock based on what you think, or what some else thinks (that is a good way to lose your shirt.)

There is a cool site that helps you gather information about a stock and its called “SEC.GOV.” This website was created by the “U.S Securities and Exchange Commission” to help the individual investor make informed decisions on a stock before investing. Every stock that is listed on the market has to give updated information on the companies balance sheet, income statement, and cashflow statement, plus any executive decision.

I personally use sec.gov every quarter, to get updated information on how my stocks are doing. I suggest you to do the same, because this is a good way to learn more about the company and where its headed financially. You deserve to know if the company is making money or losing money.

DIVIDENDS

Part of deciding whether a stock is good, is by seeing if the stock gives quarterly dividends and has been doing so for more than fives years. This is another piece of information that is provided at sec.gov.

At the bottom of the picture above it shows the dividends per share for this particular stock. It also shows you how much dividends was handed out by the company in 2019 after three months and 2018 after three months.

Dividends gets passed out each fiscal quarter, which is every three months. At the bottom left you can see the dividends given after nine months for 2019 and 2018. I showed you this picture just to give you an idea of what your looking for in a stock, when it comes to dividends.

Just to give you a heads up, the reason why you want to pick a stock that shows more than 5 years of dividend payments, is because the company decides whether or not to give its shareholders dividends.

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WHATS A BOND

Most people will not buy a bond, but after learning what a bond is and what it can do for you, your going to want to purchase some as soon as possible. As a investor you always want to diversify your investments, any 401k manager or financial advisor will tell you that. That is part of the reason why ten percent of your 401k generally includes bonds.

GENERALLY

In general, a bond is issued when a entity (company or government) needs funding for advancement or backed expenses. Just like a certificate of deposit, with a bond you can only redeem your investment at a specific time. Bonds can be redeemable anywhere from 1-30 years. These type of investments are normally considered low risk in comparison to stocks. Typically the interest you gain from bonds are enough to protect you from inflation.

TYPES OF BONDS

Treasury Bonds – Are issued by the government.

Corporate Bonds – Are issued by corporations for profit.

Agency Bonds – Are issued by federal agencies.

Municipal Bonds – Are issued by cities, states, and countries.

The best bond to invest in, is debatable, but what I prefer is municipal bonds. The reason why I prefer municipal bond is because municipal bonds, are generally exempt from state income tax in the state where the bond is issued. Also municipal bonds are generally moderate risk but can be high, which means this type of bond will give you a pretty good return.

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CD’S OR HIGH-YIELD ACCOUNTS

CD’s and High-yield Accounts are both safe investments, but depending on your investment style you may choose one over another. In this post your going to learn about the differences between CD’s and High-yield Accounts, but before that what is a CD?

CD

A CD is a Certificate of Deposit held by banks, credit unions, and other similar institutions. A certificate of deposit is a timed account which means it matures or you can take out the money only at a specific time. Which can be one month to a year or more depending on the contract of the CD. With a CD you can get a fixed interest rate, which makes it one of the most safest investments because unlike stocks the returns don’t fluctuate.

If you know you dip into your savings account a lot. I would suggest getting a certificate of deposit, mainly because your money will be safe as well as hard to get to. That way you can save more money for larger purchases or bigger investments in the future.

HIGH-YIELD ACCOUNTS

High-Yield accounts are similar to certificate of deposits when it comes to choosing safe investments. All though, the interest rates of a high-yield account are variable (they change.) Unlike certificate of deposits, high-yield accounts are liquid. Which means you can take out the money at any time.

This investment is best for an individual who knows how to save large sums of money, but still needs access to their money for business or larger investments.

I personally use a high-yield savings account so I can still get a return on my money as it sits in my account. I use the money in my high-yield account for other investment opportunities or emergency expenses, such as when my car breaks down. At the end of the day your spending habits should let you know if you should get a cd or high-yield account.

Know yourself and always remember “saving is important.”

GOOD FINANCIAL HABITS

If you want to be the next millionaire in town, build your income, or save for retirement its important to form good financial habits, but what do good financial habits look like? In this post your going to learn about three key strategies that you can implement for 30 days and form as good financial habits.

Well my name is Caleb and just to tell you a little bit about my self, my first job was hell to me. I was working sixty hours a week in a factory and spent most of my money just getting to and from work, until I found these three financial strategies that I now formed as habits. Now I work at a better place, getting paid more for doing less, and now I can say that my job is not my only income.

Mental Budget

So lets jump into the first good financial habit, the Mental Budget. Many millionaire’s can tell you off the top of their head, what they have earned and where they have spent their money on. You can do it too, but on a smaller scale. All you have to do is calculate what you have earned after tax per month, add up all your monthly expenses (earnings – expenses = actual income.) Then you subtract your expenses from your earnings to figure out your monthly actual income. If you divide your monthly actual income by four, you get your weekly spending budget. For me my weekly spending budget is twenty dollars. Now all you have to do now is focus on your weekly spending budget, so each purchase you make each week you substract from that number to stay in budget.

Justify Purchase

Why do you buy the things that you buy. Some people focus on buying name brand products, but ignore the no name brand. Just because you are familiar with a product does not justify the price, don’t buy it if the price makes no sense that’s nonsense. No name brands can be just as good and a better option because the price is justifiable. You shouldn’t pay for a brand, you should pay for a product.

BUY WHAT LASTS

When businesses are purchasing there assets they look for things that last to save on their break down cost. So why not use the same method, when I was in college I started using this method for food. I will focus on purchasing rice and pasta because they had a longer shelf life, then I was able to buy the food that went well with those types of products. You can buy cars that lasts, computers that lasts, shoes, and so on. Focusing on what lasts saves money for the long run and puts it back into your pocket. Have you ever drank a glass bottle coke and kept the glass bottle to see how long the glass will last, Try it.

WHERE IS THE MONEY ?

During COVID-19 individuals have been loosing almost everything including their jobs. So for this post I want to focus on giving you the tips to save money, so that you can work your budget even harder.

Ever since I first started working, I have been practicing different forms of budgeting. For example, I went through apps, reminders, and automated billing.

What surprise me was that even though these methods helped, it did not prevent me from buying unnecessary things.

I had to figure out how to prevent myself from making small purchases that threw my budget out of whack, I needed to make it difficult to purchase things, but readily available for primary expenses.

Like rent, car payments, insurance, and etc.

So I came up with a way to measure and prohibit me from going out of budget, and it was as simple as me starting another account.

A lot of individuals don’t use their savings account and most likely its because they think they don’t have enough to save.

Here’s the catch they don’t look at there savings as temporary storage. What I mean is this, if you put all your money in your savings and only put the money you originally should be saving into your checking. You will not be able to spend more because its not readily available.

With this budgeting plan you can pay your bills through your savings, plus what ever is leftover you leave in your savings.

The only reason why this method worked for me is because of my debit card which is only linked to my checking.

WARNING: each bill that you have to pay must be connected to your savings account, so that your checking will not be over drawn.

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