Defensive Investing School

I recently wrote an article titled defensive investing where I outlined the basics of defensive investing. This article goes more in depth. I’m going to list the defensive and offensive strategies with investing below and then list applicable examples.

Defensive strategies

  • Cash and bonds
  • Index Funds
  • Large Cap Stocks
  • Leverage products to the upside
  • Long call options/Options to the upside
  • Buying 25 to 75% off the all time high
  • Diversified portfolio
  • Dollar cost averaging

Offensive Strategies

  • Call opinions to the upside with a short expiration date
  • Leveraged Products to the downside
  • Put options/Options to the downside
  • Concentrated portfolio
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What is a successful option trade?

Trading options is like fishing. You use your bait in order to catch a fish. Once you catch a fish you have to reel it in. The worse thing that can happen is your fish gets away with your bait. One of the best ways to prevent this from happening is by having a stop loss order. Once you’re positive in your option trade make sure to lock in profits. You must know your entries and your exits and your stop loss is one of your exits.

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How to Make $10K a month

Introduction: Achieving financial independence and generating a monthly income of $10,000 may seem like a lofty goal. However, with careful planning and strategic investment, it is possible to create a diversified portfolio that generates substantial cash flow. In this article, we will explore a comprehensive investment strategy that involves allocating funds into real estate syndications, dividend and interest-paying assets, and appreciating assets to build a solid foundation for financial independence.

Real Estate Syndications: One effective investment option for generating rental income is to invest in real estate syndications. By allocating $100,000 to Cardone Capital, led by Grant Cardone, and another $100,000 to Black Swan Real Estate or Viking Capital, investors can participate in professionally managed real estate projects. These syndications provide consistent rental income and potential appreciation over time. Additionally, investing $100,000 in turnkey short-term rentals can contribute an additional $24,000 annually, or $2,000 per month, to the income stream. These investments offer the benefit of cash flow and the potential for long-term wealth accumulation.

Dividend and Interest-Paying Assets: To further enhance monthly income, allocating $100,000 to Verizon, a stable company with a current 6% dividend yield, can generate $6,000 in annual dividend income. Investing $100,000 in RIO, a company with a high dividend yield of 10.3%, can provide an additional $10,300 in annual dividends. Moreover, allocating $100,000 to I bonds, which currently yield 8% interest, can contribute $8,000 in annual interest income. In total, these investments can generate $21,000 per year, or $1,750 per month, in income from dividends and interest.

Appreciating Assets: Allocating funds to assets with potential for long-term appreciation is crucial for building wealth. Investing $125,000 in an S&P 500 index fund, such as SPY, provides exposure to a diverse range of stocks and captures the overall market performance. Additionally, allocating $25,000 to Bitcoin allows investors to participate in the growth of the cryptocurrency market. Furthermore, investing $100,000 in TSLA and $50,000 in SQ provides opportunities to generate income through selling covered call options and LEAPs. Implementing option trading strategies, such as the wheel strategy and selling cash-secured puts, can yield additional income. Dividends from SPY and income from options trading can provide an estimated annual return of $30,000, or $3,000 per month.

Overall Strategy and Financial Independence: By investing a total of $900,000 across these various avenues, investors can potentially generate a monthly cash flow of $7,000, equivalent to a 9.3% annual return. It is important to note that instead of using the invested capital to pay off bills, utilizing the cash flow from investments and income from a regular job can accelerate the debt repayment process. Adopting a debt snowball pattern, where excess cash flow is used to pay off debts one by one, can effectively lead to financial independence. While the cash flow from the $900,000 investment may fluctuate, real estate syndications and the S&P 500 index fund are expected to provide consistent income, especially with reinvested dividends.

Conclusion: Generating a monthly income of $10,000 is attainable through a well-diversified investment strategy. By allocating funds to real estate syndications, dividend and interest-paying assets, and appreciating assets, investors can benefit from multiple income streams and capitalize on market opportunities. It is crucial to closely monitor investments, stay informed about market trends, and make adjustments

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Defensive Investing

I recently wrote a post titled Rule # 1 of investing. The # 1 rule is to never lose money and you accomplish this by investing in assets that have a low probability of losing money. You have to focus on defense first. This can only be done by knowing where the safe investments are. The safe investments have consistent upside potential with limited drawdowns. They are index funds. Total stock market index funds and S&P 500 funds. Some individual stocks like apple and other large cap tech stocks may also fit the bill if you have a higher risk appetite. For example, apple is the main company that is holding up the tech sector by its boot straps. That’s why it’s the #1 holding of VTI, VOO and QQQ. It’s because of the limited drawdowns and high upside potential.

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How To Use Leverage

I am a huge fan of Robert Kiyosaki’s cash flow board and online game. The cashflow game is a wonderful way to learn about investing and cash flow. Realestate investments adds to the income portion of your financial statement by increasing your cashflow. Stocks does not, unless you are receiving dividends, but the dividends from stocks is miniscule compared to passive income from real estate. Stocks are a good tool to leverage into realestate, especially while you are looking and waiting for good realestate deal. It makes it easier to build capital, though it takes time.

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How to become a millionaire with $100 a day

How many different ways can you make at least $100 a day? Making $100 a day on average is making about $3000 a month. In order to make $3000 a month you have to make about $20 an hour. You can make $100 a day/$3000 a month day trading, selling covered calls, working a nine to five or collecting dividend payments from stocks. The best thing is that you can even achieve all of these $100 a day payments in the same day making $400 a day. Now this is easier said than done and I will go over exactly what each of these $100 a day tasks would look like, and if done over 10 years would yield over 1 million dollars.

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It’s Nothing But a Nest Egg

Life is about relationships and time. Time is how we grow and cherish those relationships. Whether it’s our relationship with God, family or friends at the end of it all this is what matters in life. It’s not our career, money or fame. This begs the question how can we get more time to spend with the people that’s important to us when there are only 24 hours in a day. Well the only way to get it back it to buy it back. This is done by spending less time working and trading time for money. There are multiple ways to approach this. You can shoot for complete financial independence and save 25 times your yearly expenses which can seem like a daunting pursuit, but it can be done with tremendous discipline and sacrifice, or you could grow your nest egg slowly and use it as a store of value.

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Where Index funds belong in your portfolio

The core of your portfolio should be a total stock market index fund or S&P 500 fund. This fund is relatively stable and won’t drop as much as some individual stocks. You could include utility stocks and communications stocks in this category as well, but these large cap index funds are composed mostly of large cap growth and value stocks with blue chip stocks contributing as well. These index funds should compose 25 to 75% of your portfolio. This means if your portfolio is composed of over 75% index funds then your portfolio may be too conservative and if your portfolio is composed of over 75% individual stocks and under 25% index funds then your portfolio may be too aggressive. Your risk tolerance of course plays a big factor in your asset allocation. My brother for instance has his portfolio in 100% individual stocks and that fits his risk tolerance. I myself like to stay within the ranges mentioned above and I’m currently in a 50/50 Stock/Index fund mix.

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Rule # 1 of Investing Debunked

Investing is not just about making money. It’s about making more money than you lose. One of Warren Buffet’s famous quote is about rule #1 of investing which states never lose money. This is true under certain conditions and investing strategies, but every one knows that if you invest in 10 individual stocks, 5 may be winners and 5 of them may be losers and in that case you may want to cut your losers short and let the winners ride; but notice that if you cut the losers short then you will have losses. If you’re an option or day trader it’s the same and if you’re a buy and hold investor it’s similar as well. In the buy and hold investing world the loss is a paper loss and you don’t cut the losses. You just continue dollar cost averaging by continuing to buy more of the underlying stock or index fund.

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How to Generate Passive Income

Passive income is indeed real and in this article I want to discuss the differences between active and passive income and how to obtain passive income. Active income is obtained by trading time for money and passive income is achieved by trading minimal to no time for money. I call trading minimal time for money semi passive income and no time for money true passive income.

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