TWO-STEPPING YOUR MONEY Wade B. Cook I would like to share an idea with you about a different way of thinking about wealth—from enhancing your assets, generating excess income, all the way down to paying bills. Maybe youve heard this before—two-stepping your wealth. This means using money, cash, assets, or whatever, to solve your financial needs, but in a two-step process. Heres a scenario. Gloria has tremendous needs for money. Shes behind on everything, and some of the creditors are getting forceful. But help is around the corner. She is getting a gift from Aunt Emily of $10,000. Thats enough to make a big dent in her obligations, and definitely will keep the wolf away from the door. However, its not quite enough to pay off everything. She thinks and thinks. Its better to pay some now, even though she cant pay it all. Thats the way most people think. Soon the money will be all gone, and thats it. Its gone. She will feel good for a few weeks. Let us share another way of thinking: using assets, and the cash it can produce to get out of this problem. Its what we call cash-to asset-to cash. We like it because it lets you grow out of your problems. And on the other side of the next couple of weeks, Gloria wont be left with receipts and still a lot of problems. Grow. Do More. Be More. In short, put your money to work for you. I love writing covered calls. It gets assets producing income. You can make cash dollars of about 5% to 12% per month. Yes, per month, and maybe more as you get more skilled. I wont explain the whole process here, as Ive written much elsewhere, especially in my book, STOCK MARKET MONEY MACHINE. Plus I load up these articles with real deals that Gloria can copy. With $10,000 you can buy $20,000 worth of stock. Its called margin investing. The broker puts up the other half and uses the stock as collateral. Gloria doesnt like margin, so shell use it sparingly. She buys 1,000 shares of JCP (A company familiar to all of us). The options are nice. She pays out most of the whole $10,000 as the stock is $$7.40 now. Thats $7,400, plus shell have commissions. Let’s say she does this on margin. This means her $7,400 can buy 2,000 shares. It’s a good form of leverage—getting a little to do a lot. Now she sells the November $7.50 call options, giving someone the right to buy her stock at $7.50, or $7,500. Those options were 60¢ to sell. She has 2,000 shares so she can sell 2,000 options (20 contracts), taking in $1,200. These are real numbers. She now takes out the $1,200—all of it or part of it—and pays the urgent bills. This transaction took about 3 or 4 minutes—and it all happened on the day she received the $10,000 and put it into her account. The option money—that useful amount of $1,200—hit her account the next day. She can pick up a check, have it wired to her account, whatever. Its her money to spend. The other bills? Well the $1,200 went along way to paying the emergencies. In fact she has enough to take her husband and the kids to a nice night out. My advice: Dont spend the principal, spend the profits. She has about 15% of her bills paid and she has an asset, this time a stock, still in to account, ready to go to work next month. She does this with several stocks—many are household names. She made a similar trade on Groupon (GRPN), and netted another $420. That’s a total of $1,620 this month, and more monthly income once she gets more experienced Now what happens? Without explaining the buy-back an all the other great covered call strategies, suffice it to say, she waits until the third Friday of November. She either sells the stock at $7.50 or not. Either way she gets to keep the $1,200 and she has the stock in her account or the $10,000. She does it again. This month, for December and Christmas, she takes in only $1,400 for selling the option. She pays off another $1,400 in bills and lives to fight another day. At this rate, all of her bills will be paid by April. AND SHE WILL STILL HAVE THE $10,000 (maybe more) IN HER ACCOUNT GENERATING MORE MONTHLY INCOME. Grow out of you problems. Spend the profits, not the principle. Get assets producing income. Why dont more people do this? (1) They do not know what is available. This may be the first and only time they have heard of writing covered calls. (2) They only think of traditional bank accounts. Take $10,000 and put it in the bank at 3% and you get $300 for a whole year, NOT $1,640 or so every month. (3) No matter, how safe and good this strategy, many people feel inadequate when it comes to financial things. That is why I teach, trying to help. (4) They have already mentally spent the money before they ever get it. They dont think of using the money to produce immediate, large and consistent profits. (5) The clamor for action is NOW and they grab at straws, not realizing the straws are temporary. They dont think ahead to permanent solutions. Heres your problem, my dear readers. If you dont do something like this the money will be gone. It will not be available to work for you on a continuous basis. It is a wise person who realizes a need for an extra source of cash flow. Imagine what retired people can do with an extra $1,600 coming in every month. Imagine a young married couple, taking all their wedding money gifts and putting it to work this way. Its a way to put financial problems in your rear-view mirror. John Wooden said: Discipline yourselves and others wont have to. Many people lack the discipline to two-step their money, and their lack of knowledge and discipline exacts a very high price. Think of the life changing strategy that makes money for you so you wont have to keep working and stressing. If you think education is expensive, try ignorance. —Derek Bok Is there anything here that piques your interest? Yes, youll have to learn, but you are just three to four hours from understanding the basics. There is help available. We spend a lot of time helping people get through the learning curve. Also, we do not get anything out of what you do. We can teach in an unbiased way. You learn, you earn. We get nothing out of what you do. Youll also soon realize that there are power-strategies to help you make even more. Okay, does this get you interested to learn more? And you do all of this in your pajamas while taking care of the kids. Opportunities come and go. We all need education that gives more than it costs. Many people however hang on to their past so tightly that their arms tire and they fail to grasp these new opportunities. This is your time for your own economic stimulus program, your own economic recovery. Please dont judge this process by your knowledge level now. Judge it by us and what we can teach you. When the student is ready, the teacher appears. Were ready, are you? Henry Ford said: If you think money is your hope for independence you will never have it. The only real hope that a man or woman will have in this world, is an abundance of knowledge, experience and abilities. To us, these translate into skills, and were here to help you develop yours. Our success is not determined by what we put into people, but by what profits they get out of what we teach. Copyright 2014 Wade B. Cook. All Rights Reserved. Click here and get a FREE Money Report: Job Free Income. wadecook.org
Posted on: Mon, 08 Dec 2014 19:02:54 +0000
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