"Recession!" It seems to be the single most popular word on the mind of Americans. News outlets love it. Retailers hate it. The general public -- they fear it. And the rich? Well they manage it. And you can too if you know how. Here's three tips that can help offset your recession fears, preserve your investments and in some cases actually make you some money!
1. Insure your stock.
Did you know you can insure your stock? Sadly most American's do not know this very valuable piece of information. Of course you can't just go out and buy stock insurance from Progressive or AllState, but it is not much more difficult than that.
Insurance for your stocks comes in the form of "stock options". Until recently options (for short) were reserved for a special group of investors who had special connections. But in 1973 Chicago Board of Trade launched a new financial exchange they called Chicago Board Options Exchange. While the name itself may not mean a lot to you what it allows you to do could mean the difference in saving your retirement account, or watching it dwindle away to nothing.
At the core what options allow is for a trader to insure, or "hedge", their position against catastrophic loss. Maybe you've heard of a hedge fund. These highly specialized funds specialize in trading these particular investment vehicles. But investment hedges are not reserved for only the sophisticated investor, everyday individual people like yourself can invest in them as well.
If you have some money in the stock market and would like to protect it call your broker and tell him you would like to talk about some "protective put options" to insure you against loss. If he says he doesn't know what you're talking about ask for a different broker. If they tell you "you don't want to do that" -- ask your broker how much money he made for you in the last three months. If they tell you "here's how you do it" -- now you can protect your portfolio against a major turn in the market
2. Rent your stock
Many Americans rent an extra house or two every year and benefit from the extra income. But did you know you can "rent" your stock as well? Just like you can use stock options to insure your portfolio, you can also use options to make money on a portfolio that is going nowhere.
After a major downward move in the stock market like we saw during 2008 an immediate rebound is not likely. More often what we see is a sideways market. Simply put the market goes "no where". However, just because you are not loosing money in the market it does not mean you are making money. One way you can make some money is by renting your stock out with call options.
What this type of option allows you to do is to create some income from your stock without selling the stock. A lot of investors like to use this strategy to offset losses and to dollar-cost-average down their position. If the market never recovers they are able to recoup their investments. Or better, when the market does recover, they are literally able to catapult their profits to new levels. This is a sure fire strategy to beat the great recession and protect your financial future.
3. Combine insurance with rental
A third way you can beat the recession is by combining the two strategies above. Obviously insurance is not free. But rental provides some income. So a smart investor could choose to buy insurance on his stock, then turn around and rent the stock to pay for the insurance. In fact, if structured properly you can actually bring more money in letting someone else rent your stock than you spend on the insurance position. By combining the two strategies the smart investor manages to insure himself against loss while also providing some extra income during what could be an otherwise devastating economic down turn.
I have shared with you three ways to beat the recession and turn your stock portfolio into a much safer investment. While these three strategies are certainly a great way to beat a struggling economy there are actually over 100 different ways you can use stock options to hedge your investments. With a little education you can not only beat any recession but also create great wealth during tough economic times.
And now I'd like to invite you to sign up for a free copy of my special report How to Retire in One Year With Only $10,000 when you visit this link: http://www.thefinancialpuzzle.com/FPE-courses/sp1signup.html In this special report I show my absolutely favorite retirement strategy and how to use it to create consistent monthly income large enough to retire! Jeremy Whaley is Co-founder of The Financial Puzzle, a company dedicate to helping others understand and achieve financial freedom. He is an avid stock market trader, entrepreneur, and professional musician. Visit the website at http://www.TheFinancialPuzzle.com Article Source: http://EzineArticles.com/?expert=Jeremy_Whaley |
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