23.3% return in less than 20 days

Tonight is an exciting night for me! I make my first profit in trading option! I make an awesome 23.3% return in less than 20 days by holding this ETF EWH. 2 months ago, I met a friend who is a option trading guru, he told me once I understand how the option trading work, I will never go back to trade stock. After briefly listening to his wisdom, I decide to dig in more the subject and learn by just doing it. The result was very rewarding. For those who has never trade option before, let me give you a few ideas to get started.
1) Talk with your friends who has experience on this subject and ask how he/she did it (Remember, your network determine your networth. It's time to build your network and get to know more people with experties in trading option)
2) Go to http://www.888options.com/ for great online option education. Most of the class there are free and very informative. You should gain a solid foundation after taking class over there.
3) Keep it simple. Focus on 1 to 2 strategy to do your first option trading to gain some experience how it works. I'd recommend buying call at a lower price with longer expiration date, and sell it at a later higher price as your first trade. Once you understand the mechanism, you may consider more advanced method like writing call or buying put.
4) With tremendous amount of information online and offline (books) on this option topic, you really don't need to spend huge amount of money to just get started and understand how it works. Learn as much as you can without spending too much money on some ebook or get rich quick program. It's not something you need to have a degree in order to make money out of it.
5) Talk to your broker and apply an account to trade option. I gain tremendous information from my broker when I took the time to visit his office. He give me useful advice and a little booklet that I can read and learn. They're very willing to teach you, because they want you to trade as often and as successful as possible.
6) Just do it. Start small, (keep it less than 500 bucks) just to test water and observe.
Good luck in your learning curve in option trading. It could be a powerful way to leverage your way to wealth!

Increase your net worth by increase your network

There is an old saying "your net worth is the average of 5 people you hang out with every single day" One of the critical factor to increase your net worth is to increase your network. I work in a traditional company where most people around me are employee type and has not much interest to create extraordinary financial success. Therefore, I like to go to seminar to meet with people, who has the similar desire like I do to get ahead financial life. Every weekend, I like to go on http://www.craigslist.com/ under event section, I search for real estate, stock, Internet business opportunity, networking group to attend. Most of the event are during weekday 529pm. I make a habit of going to event at least once a month (although I should have gone more often) to meet and network with more people. Some of the people I met become my good friend. It is fun, educational, and could be a rewarding way to spend your 529pm to develop relationship and expand your circle of friends who may give you a helping hand to build wealth. You may consider doing this activity at your 529pm.

power of LEVERAGE

Leverage is probably the most important word in investment and business world. With the proper use of Leverage, one can achieve success and come out miles ahead compared to others who don't. It's just critical to understand the power of Leverage.
Leverage: the use of small initial capital to gain a very high return in relation to its capital by using other people's_____ (use your imaginations to fill in the blank)
In real estate investment world, we can use leverage by using other people's money to complete a transaction that would otherwise be impossible. EX: We borrow 90% from the bank and put in 10% down pay to acquire the property. It is a 9 to 1 leverage.
In business world, boss use leverage by using other people's time to complete job that produce reward more than the salary paid out. EX: we get paid by 50,000 annual salary and we help the company bring in 100,000 revenue. It is a 2 to 1 leverage.
Of course, leverage work both ways. It has negative effect if not used properly. In pervious example, if an employee produce instead only 10,000 revenue to his boss, the business is actually lossing more money by hiring more people. We have to manage the leverage closely to make sure it's always in full force working for us.

Assest protection tips

Tonight, I went to a real estate seminar which taught the subject on assets protection. I thought it was an excellent information and want to share all of you what I learnt tonight

1. Sole, Joint Venture, Teannet In common are bad way to hold title
2. General partnership is the worst way to hold title. You may lose your personal assets if your partner get sued! Double liability!
3. Land trust offer no assets protection
4. LLC or LP is the most recommended way to hold title.
5. Two kinds of attack: A) Tenant fell in your property and sue you B) You had bad car accident and get sued
6. LLC can protect you from attack B, but not attack A!
7. LLC is most recommended to be formed in Nevada or Wyoming. These two states has the best state law in the property owner's interest.
8. You should buy a Umbrella insurance policy to cover your personal liability.
9. Consider putting your brokerage account under LLC instead of your own name to shield against potential lawsuit
10. After transferring your title from personal to a LLC, don't forget to inform the insurance company for the change
11. Use 1 LLC to hold 1 property in the state, and have a central LLC manage each individual LLC. You're the ultimate manager of this one central LLC
12. Debt is good way to discourage creditors.

For more information, I'll recommend you to visit the speaker for tonight's seminar www.sutlaw.com Garrtt Sutton is very knowledgble real estate attroney.

Don't wait to buy real estate, buy real estate and wait.

Don't wait to buy real estate, buy real estate and wait. That's my way to build wealth. Imagine we have the opportunity to buy real estate 10 years ago, how many will you buy? As long as my rental income can cover ALL expense (PITI), I'm going to buy as many as possible. Really! Although it becomes harder and harder to find this kind of deal as price has increased quite dramatic over last several year, I'm still constantly searching for opportunity every single night. My goal is to keep holding, holding, and holding more and more properties in excellent area, and patiently wait for the long term appreciation in 3, 5 or even 10 years.

Turn a 2bed2bath into 3bed2bath

3bed2bath single family house is usually the most desirable type of property in most cities. Married couple who has 1 to 2 kids, or plan to have a kid in future will likely to pick 3bed2bath over other type of floor plan. Therefore, 3bed2bath is always filled with high demand, and hence, the value will be driven up.
I have a friend has a creative idea to make some good money by focusing this niche market. He will consider any smaller property to buy and turn it into 3bed2bath. Because it has less demand, a smaller property 's price range could be significantly lower. In one of his best deal he creates, he locates a property with 2bed2bath that has asking price 100k less than a typical 3bed2bath in the same neighborhood. He finds professionals to submit plan for legal construction permit, and contractors to build an additional bedroom with 100 sqft. (In fact, it's a pretty small bedroom...) The total cost is only 30K. After its completion, he quickly put it on the market advertise it as a 3bed2bath, which is much more desirable now. He make a handsome profit 70K in short period of time by using this simple and obviously working strategy.

Formula of Wealth

As we're in process to build wealth tonight, we should put some thought on what does wealth really means to us? How is it calculated? I put in some thought and want to share this simple formula of wealth which make sense to me.

Wealth= ((Money + Time) * Return) - (Inflation + Tax)

This formula apply both investing and starting a business. As you can see, one must put in either time or money, not necessarily both, as our initial contribution to build our wealth. Without either of these two components, wealth can hardly be built. The money is the amount you willing to set aside to invest or start a business. The time is the amount of time you willing to spend to do things that could help you closer to your financial goal, ex, reading my blog (529pm) :D ! The return could be postive or negative. Different vehicle offer different return, we just have to train ourselves to select the best one match our objective and yield the highest postive return. Inflation is a factor which we can't do much to control. It varies from countries to countires, in U.S, we're sitting around 4% a year. TAX is another big enemy which will erode our wealth. We must always think how to legally and ethically reduce the tax effect from the build wealth formula. There you have it, does it makes sense to you?

Do this before you sell your property to reduce the risk!

In real estate transaction, one of the major tasks buyer need to do is to inspect the property condition completely. The two reports buyer look for are 1) Home inspection and 2) Termite report. If there is any major deficiency reviewed from the reports (ex: toilet sink is leaking), buyer could go back to the seller and ask for a repair or reduction in price to address the issues. As a seller, you would want to make sure the buyer is satisfied with your property's condition, so the buyer can close the transaction on time. This issues found from buyer could negatively hurt seller's asking price position, delay the transaction, or even worst, buyer back out and drop the offer.
How could a seller prevent this type of problem exists? This is what I will do: I hire a professional home inspector and termite inspector to conduct a complete reports on my property before I put it to market. The advantage is that you could fix the problem beforehand within your budget. When buyer ready to inspect my property, I simply provide the reports I already completed and tell them all the major problem is already taken care of. Most of the time, buyer will accept the finding since this is done by professional. The cost for me conducting the report could run as high as $500 dollar. But it's all worth since I eliminate the risk the buyer not satisfied my property's condition and lost interest of my property.

Rule of money. Rule of 72

To become a successful investor, we must be constantly thinking how to compound our money so it can keep growing, growing and growing to create wealth for us. One very very powerful and simple rule to calculate how fast the money compound is called RULE of 72, or I call it rule of money. This rule is invented by the greatest scientist all time. Mr Albert Einstein. I think this rule is even more profound than E=MC^2!

Here's how it works,

Let's say you invest 1000 dollar into a investment account that earn you annual 4% of interest, you wonder how long it will takes for the initial capital to double? Rule of 72 can help you determine it quickly. You use 72 divided by 4, you get 18. This means that after 18 years from the time you invest, your initial capital will double! In our example, after 18 years, your money will become 2000. Please note that we assume we pay no tax and we reinvest our interest each year.
Now, look at the case on the top of this post. Imagine a person have 10,000 to invest at age 30, he put in some kind of tax deferred account which allow money to grow without paying tax until he reach 66 for retirement. Can you see how the small increase of the of annual interest can product A BIG BIG BIG difference over a long period of time? This is the power of compound interest! What if the annual interest is 18%, can you figure how much money will that be at age 66?