How to get Filthy Rich
For those who are interested in investing, whether it be to build wealth or for passive income, trading options and investing can be an amazing way to get rich.
A lot of internet grifters and conmen/women will tell you how you can start a trading portfolio and go from zero to filthy rich in no time! They offer guides that includes real world success examples such as Warren Buffet and Charlie Munger. “So if this is your goal, this guide is exactly what you’ve been looking for!” …. Reality is, they don’t know your financial situation and rarely offer any real sound advise that could easily be translated to your specific situation.
How then is the goal of “Getting Filthy Rich!” to be achieved?
The same way you achieve anything of value. Through hard work, diligence and time, there’s no escaping it.
This very brief guide will give you an overview of just some financial apparatus that some of the most successful investors have used to build their own personal fortunes, but this is not and should not be taken as financial advice. Be aware of your own financial circumstances and as always consult a professional financial advisor.
Rather than trying to get rich quick from day trading or penny stocks as so many others do, focus on the opposite, and set yourself up for a long, successful career in trading and investing.
This guide also focuses on other aspects of personal finance such as how to manage your investment portfolio, how to avoid fees and taxes, and much more.
Practical ways of applying strategies such as option trading and asset allocation in such a manner that no matter what happens in the market, your portfolio will always grow and protect your capital.
You do not need to be an expert or have a financial degree, you just need a willingness to learn and apply what you learn. It is important to note that the purpose of any good financial s strategy is NOT to make you rich quickly, but rather build up your portfolio over time to make passive income on a regular basis.
This will allow you the freedom and lifestyle that most people dream about without ever having to worry about your finances again!
Becoming wealthy through stock trading and investing takes time and effort. knowing this will give you the edge over others who try without success or knowledge of what they are doing – it’s simple as that.
So let’s get started.
What are Options?
In short, options are financial derivatives that give you the right, but not the obligation, to buy or sell an underlying asset at a specific price on or before a certain date. This gives the option buyer (you) leverage and additional profit potential outside of the market price.
There are two types of options to choose from: Call & Put . You can do both options trades for free with online brokers like Questrade or TD Direct Investing on stocks (stocks with options is still stocks). These free online trading platforms also provide excellent tools for analyzing these trades and their risks. The detailed descriptions of risks and potential rewards can be found in the next section.
How do Options Work?
An option contract gives you the right to buy an asset at a fixed price before a certain date. These options can also be sold for profit resulting in either profit or loss depending on your assumptions about what will happen during that time period.
As new options become available to the public markets, there are often new terms that need to be defined. These terms are often just names for different types of options, so be sure you understand them. In short, a call option gives you the right to buy an asset at a certain price on or before the expiration date of the option. The most common kind of call option is a stock call – this lets you buy one share of stock (or sometimes several shares).
A put option gives you a right to sell an asset at a certain price on or before the expiration date of the option.
There is no difference in principle between an American option that can be exercised at any time prior to expiration and a European option that can only be exercised on its expiration date. However, in practice, the American style of option is more popular. This is probably because it gives the buyer an additional chance to realize value if the stock price moves against him or her prior to expiry rather than just losing all of the premium already paid for the option.
The expiration date is the last day allowed to exercise the option, which means the last time that you have a right to buy or sell the security at the given price.
For example, if you buy a call option on January 31 with an expiration date of February 14, then you have until February 14 to exercise (use) this call option. This means when you buy this type of option, you are only able to exercise it during that period of time. You cannot exercise it after that time period has passed. If your stock goes up in value during that time period, you will end up making money on your investment. This is because you will be able to purchase your stock at a lower price than what it is currently trading at.
If you buy a put option, it will work in the opposite way. If the stock goes down in value, you’re going to lose money on your investment. If it goes up in value, then of course that’s going to be a gain for you. You can make more money with options than you can with stocks, but there is also more risk involved.
Make sure you keep this in mind when reading this guide.
What is an Expiration Date?
An expiration date is the same thing as a maturity date. It is the last day on which a particular option can be exercised. Some people use these terms interchangeably, so it’s a good idea to familiarize yourself with both terms. In addition, you will sometimes see the phrase ‘due date’ used in place of ‘expiration date’, and vice versa. This means the same thing as expiration date or maturity date.
It is important to note that the expiration date of an option is not necessarily the same as its expiration month. For example, a call option whose expiration date is February might have a maturity month of September. The sooner you buy or sell an option, the more time there will be between its purchase and maturity. This can be very important when considering your options’ risk/reward trade-off.
What are Stocks?
You probably know what a stock (or share) is. It’s a unit of ownership in a corporation that entitles you to some share of the company’s assets and profits. Stocks are considered equity securities because they represent some sort of claim on that particular business’s assets or earnings.
If you’ve ever bought a lottery ticket, you’ve probably heard of “the odds”. For example, if your chance to win the lottery is 1 in 21 million, this means that for every 21 million tickets sold, only one person will win the jackpot.
This is similar to the odds of buying stock. If you buy 100 shares of a company at $10 each, then the probability that you end up getting at least $1 back for your investment is 1 in 100 (or 10%) – assuming you don’t get burned by fraud or poor management.
The risk and reward associated with stock investing is based on the odds and payoff of the stocks you buy. The lower the risk (or odds), and the higher the reward, the better it is to invest in a company. Therefore, all other things being equal, you will want to buy a high-quality company at a relatively low price since you’ll get back more than enough to compensate for your investment.
Stocks are also part of a company’s capital structure. The capital structure is the various forms of long-term debt and equity that a company uses to finance itself. The three main types are bonds, stocks and preferred stocks. If you’re only investing in one type of stock, it’s very important to understand how it will affect your returns since it is the most common form of return from investing in a company.
How much money should I put into an investment?
This is completely dependent on your risk tolerance level and other personal factors such as whether you want to invest alone or have someone else share in the investment responsibility or risk. Some people will only put money into an investment if they believe there is a chance for a reward. Other people will only invest money into an investment if it’s very safe and doesn’t have much risk. It all depends on how comfortable you feel with the investment.
For example, if you’re investing in a business that you know nothing about, then there is more risk involved than if you are investing in a well-known company that everyone has heard of. So it’s very important to understand your level of risk tolerance before investing anything, even as little as $50.
There is no magic number when it comes to how much money you should put into an investment. The key factors here are the amount of research you’ve done on the company and your own comfort level with taking risks versus getting a higher return on your investment.
When it comes to stocks that are relatively new, you will always be able to make a profit if you follow a well-known strategy or if you put in the time and energy to research the company. Unfortunately, there is no guarantee that the future will hold favorable returns for investors. According to some famous investment professionals such as Warren Buffett, most of their profits are made from buying undervalued stocks at good prices and selling them when the time is right (as opposed to overpaying for an undervalued stock if it were trading at fair value).
This means that even though there may be no way to guarantee the future returns associated with any stock, you can still have a positive return on your investments irrespective of what happens in the present. The stock market is a great example of this: Despite the fact that people have lost as much as 80% of their money in some of the worst bear markets ever, there are still investors who have recovered and made an overall profit. It’s all about risk management, and making sure you don’t put all your eggs in one basket.
If you are interested in reading a bit more about how some of the Richest people in the world have made their fortunes why not check out this great read : The Warren Buffet Way by Wiley or prefer a good watch movie how about The Wolf of Wall St
Why not share your experiences in the market below in the comments.