Simple Steps to Financial Freedom and Wealth Building
STEP 3: The Best Escape Vehicle – The Trading Business
Now that we have set our goals in Step 1, and screened through the possible Investment Vehicles in Step 2, we will be looking at the best vehicle that met all criterions in Step 2.
Only 2 vehicles met the criterions in Step 2. These 2 investment vehicles are – stocks and stock options. While stocks just barely made it, stock options comfortably passed the criterions with ease.
Using the stock market for financial gain can result in financial freedom or financial ruin. Without even putting much thought, this is one vehicle that has created more millionaires – multi millionaires – than any other form of investments but has also created more bankrupts than all other investment choices. Of all the market exchanges, including commodities, equities, and currencies, the options market has the greatest potential for unbridled profits because it provides leverage that no other market provides. In most cases, leverage is a double edged sword and is normally associated with some kind of borrowing. Leverage magnifies gains but also losses. In the Stock Options Market, leverage is there for all to use – it magnifies gains but limit losses as there is no borrowing involved.
While the Options Market provides excellent leverage on investment, it remains as the market with the highest chance of losing money for the naïve investor as it is one of the most complex markets – making stock trading child’s play. Almost 85% of options traders lose their investments in the options market. Despite the dangers, options are excellent investment vehicle. Just like fire, it can provide everyone a comfortable life, if used correctly, or it can destroy and kill, if used recklessly. The key is to know how to use it to your advantage.
The uncertainty of options trading is something we could all do without, but it’s a necessary part of the game. The trick is to devise a business strategy where profitable investments are made consistently and replicated month after month. After all, the most successful businesses in the world, replicates their business models for years. If you care about your financial future and realistically expect achieve your goals, you must have the patience to follow through on a working system – for now and for the future. Find a business strategy that works and religiously stick to it.
Now that we have a clear picture, let’s move forward. Tomorrow is the day where we will set up our business.
Keep a look out for STEP 4: The Business Setup
Copyright 2005 William Tan