Make Your Money Work For You

Leverage Money And Buy Time

Leverage Money And Buy Time

Aug 5, 2011

I was always taught that time is money and you should learn how to manage time efficiently; and how to properly manage and budget your money.  I made it a point to always be aware of what time it was and how much time I was spending on a particular activity, but I did not learn how to properly manage time until I had to fend for myself and did not always have the support of mom and dad, in other words, an always ready money source.

Unfortunately, not everyone has that epiphany, note our elected officials who believe they have an endless supply of money and they use the money to buy votes in order to buy more time for themselves in office.  You can buy more time by properly learning how to leverage money – respectfully and responsibly.

Would you pay $300 for an item when you can have and use that item for $5?  If you said yes then I have a bridge for sale, if you said no then keep reading.  I have met many people who want to enter the stock market and take advantage of the money which could very well be made there and is made on a daily basis.

Let us use an example from the stock market on April 30, 2012.  Amazon stock was selling for $226.05 at 11:13 AM EST and if you wanted to control 100 shares you would have paid $22,605.  At 12:47 AM EST you could have sold the 100 shares you bought at a price of $233.40 per share or $23,340, for a gross profit of $23,340 – $22,605 = $735.00.  The Return on Investment (ROI) would be $735 ÷ 22,605 = 3.25%.  Not a great return, especially when you consider the risk ($22,605) you had to take to make that return.

However, if you wanted to leverage money and control the same 100 shares you could have purchased the $225 Call option for $5.30 and only paid $530.  If you exit the Call option at the same time you could have sold the 100 shares for $9.70 per share, or a gross profit of $970 – $530 = $440.  The ROI would be $440 ÷ $530 = 83%.  A very impressive return, especially when you consider the risk ($970) you had to take to make that return.

Let’s jump forward to September 27, 2016. Amazon is now trading at $803.95 at 9:40 AM EST and you invest $80,395 and you own 100 shares of Amazon.  At 10:07 AM EST you exit the trade for a price of $810.55 for a per share profit of $6.60 or $6.60 x 100 = $660. The ROI would be $660 ÷ $80,395.00 = .008%.  A terrible return, especially when you consider the risk ($80,395) you had to take to make that return.

During the same time you could have controlled 100 shares of the 805 Call option for $6.30 and only paid $630.  You exit the Call option at 10:07 AM EST for $10.90, a profit of $4.30 per share, or a profit total of $430.  The ROI would be $440 ÷ $630 = 70%.  A very impressive return, especially when you consider the risk ($630) you had to take to make that return.

Learn to Leverage Your Age.  Let us assume that you are 25 years old and you want to plan your retirement schedule.  You have $10,000 saved up so far and you want to know when you can retire.  You approach a financial planner and they advise you about 401K, Roth, Mutual Funds, and a multitude of other investment vehicles.  You decide you do not want to add money to the account every year, you just want the money and returns to roll over and compound until you retire.  Keep in mind that with only $10,000 you will not be able to participate in those investment vehicles which pay an annual return of 12%+, therefore you must settle for something paying around 3-6%, if you are lucky.  You find a plan which will provide you with a yearly return of 6% and you decide to sink your $10,000 and not touch it until you turn 65 and you retire.  The financial planner presents you with a schedule of your annual balance and you see that by the time you turn 65 you will have amassed a total of $102,857.18 – wow a return around 1,000% for the 40 years of compounding return.

Rex, also 25 years old and also has saved up $10,000 decides to manage his retirement funds by trading options and leveraging the $10,000. He decides to manage his own money and to take charge of his own retirement account.  If Rex only makes a return of $150 per month or 1.5% per month (18% per year) he will generate the same amount of return which your money did, but Rex will accomplish it in 14 years.  Rex will have reached the same goal 26 years sooner than you did.

I am not sure what you think of the above scenario, but I call it buying time.  Rex bought himself 26 years of extra retirement time, assuming $102,000 is enough to retire.  Rex decides he wants to retire at the age of 50 and he continues managing his money and only makes the 18% per year, he will have a retirement balance of $626,686.27 and he reached that goal in 25 years, whereas you will not be able to retire at your current rate.  In order for your $10,000 to generate the same return which Rex enjoys at the age of 50 you will have to wait until you are 97 years old.

You may think this is a far fetched scenario when in reality this can happen to you just as it is happening to Rex or any other trader managing his/her own money.  Realistically your goal is a 1.5% return per month which is an 18% annual return.  At 18% return on the original $10,000 you will generate a profit of $616,686.27 ($626,686.27) by the age of 50 – or within 25 years.

Well if it is that easy why doesn’t everyone manage their own money and retire early.  It is not easy, but it is simple.  Simple will require work and discipline to accomplish and just about anyone can accomplish it.  I say just about anyone because most people have been trained to believe that such returns are not possible, are wrong somehow, there must be some special trick or talent involved, or it is illegal somehow. The reality is all you need is the appropriate information, proper guidance, some dedication and action, and the rest is financial freedom.

If you would like to retire in 16 years then you generate a return rate of 24% per year ($200 per month for the first year) on the original $10,000 you will have $312,425.  If you work the same $10,000 for the same 15 years and generate a return of 36% per year you will have a balance of $1,369,690 for retirement. Here is the best part about either scenario, since you now know how to Create Your Own Economy and how to apply the CARDINAL RULE of money you can keep doing this while you are retired and never miss a beat off your retirement days.

You may be wondering what type of retirement is this if I need to keep working the money?  The program only calls for you to trade for 1 to 1.5 hours every morning and then you are finished.  If you cannot dedicate 1 to 1.5 hours in the morning while you drink your coffee and enjoy the waves on the beach then I doubt you will have the drive to trade it now and build it up in the first place.  Let me tell you a secret, making money is very addicting and very enjoyable, especially when you can do it in the span of 1 hour of work in the morning.  You will have to tear yourself away from the computer it is so addicting.

Take a look at the attached table and enjoy what you can have when you learn how to Create Your Own Economy.

By:  Louis Monsour

The best way to make money in any environment is to follow the CARDINAL RULE and make your money work for you.

God Bless and remember…
                   Prosperity is the name of the game…
                                      Get started… Create Your Own Economy…
                                                          MAKE IT AND KEEP IT!!!!

age

ROI Account ROI Account ROI Account
  per yr Balance per yr Balance per yr Balance
$10,000
1 6% $10,600 24% $12,400 36% $13,600
2 6% $11,236 24% $15,376 36% $18,496
3 6% $11,910 24% $19,066 36% $25,155
4 6% $12,625 24% $23,642 36% $34,210
5 6% $13,382 24% $29,316 36% $46,526
6 6% $14,185 24% $36,352 36% $63,275
7 6% $15,036 24% $45,077 36% $86,054
8 6% $15,938 24% $55,895 36% $117,034
9 6% $16,895 24% $69,310 36% $159,166
10 6% $17,908 24% $85,944 36% $216,466
11 6% $18,983 24% $106,571 36% $294,393
12 6% $20,122 24% $132,148 36% $400,375
13 6% $21,329 24% $163,863 36% $544,510
14 6% $22,609 24% $203,191 36% $740,534
15 6% $23,966 24% $251,956 36% $1,007,126
16 6% $25,404 24% $312,426 36% $1,369,691
                6% per year equals .05 (1/2%) return per month
                24% per year equals 2% return per month
               36% per year equals 3% return per month
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