Considering Dividend Income as the Fed Lowers Rates

If you are in retirement, or even semi-retirement, having a dividend rich portfolio is quite a necessary thing. The dividends you receive serve as a significant source of replacement income, filling the gap left by regular W-2 wages.

It's a delicate balancing act. I mean, just because you leave the workforce doesn't mean you no longer want to still grow your portfolio while covering your living expenses—who doesn't always want more money if you can have it? Avoiding having to dive into the principal is a big consideration as well. Especially in the beginning years. And of course, even when inflation is low, it's still a factor to keep in mind. That $100 you have today will not be worth the same $100 tomorrow because inflation will eat away at some of the value.

You need to have a reliable source of income to pay your bills while continuing to build your wealth as much as possible, and that means making things so that the dividend income you are receiving exceeds what you are using to fill the gaps.

That means sensibly managing dividend yields to ensure you can get the best bang for your invested dollars. But, in all fairness, that can be a bit tricky with so many variables to consider.

When we had the massive decades high inflation, courtesy of poor economic policy by the Biden administration, it came with at least one silver lining, and that was higher yields on basic savings from banks as the Fed raised rates in an attempt to slow down the economy.

In other words, being able to get a 5% yield on "safe" money was an advantage, and offered a bigger incentive to be cash heavy during that time. The thing is that when you are relying more heavily on dividend income as a major source of your income in retirement and semi-retirement, you want to keep your money as close as possible. You don't want an enormous amount of risk because the bulk of your growth opportunities have come to pass.

Chasing massive yields from monthly payers, such as can be found with many ETFs, can be very risky. Seeing yields surpassing 10% is not uncommon but share valuations can fluctuate wildly. So, finding more sure investments become crucial to maintain as much of your portfolio balances as possible.

Ideally, anything between 4%-8% is considered a good yield as an average to shoot for.

Now that interest rates are falling, it becomes less desirable to hold money in a high yield savings account and it becomes more important to start looking back to the markets to increase your dividend income.

The rate on my Ally savings account, for example, has fallen to 3.8%, and will likely drop further as the Fed continues to lower the benchmark rate. A $100,000 balance which offered $5,000 a year will now only offer $3,800 a year. I don't want to simply lose the $1,200 difference. But rather, I want to adjust my cash position to bring it back around.

One ETF I like is BXMX which offers a 7% yield and happens to be rather stable. While a 7% yield is always more attractive than a 5% yield, because the cash position was "safe," it offered a desirable compromise at the time. Now it offers a better opportunity to earn higher dividend income even if my principal will not have the same benefits of safety that my savings account did.

The key takeaway here is something I have always said that no matter whether you are still working or retired, your money should never be left in a set it and forget it mode. You have to be constantly aware of what's happening with your money, and what's in the best interest of maximizing its value, both in terms of growth and income.

The balancing act part comes in as you try to mitigate risk and offer all of the things you wish to get from it. Growth, income and relative safety.

Even finding something that offers 4% is better than making spending adjustments from the 1.2% you no longer will realize and is a decision that recoups at least $200 worth of potential lost income. It's still important to keep enough cash handy to deal with emergencies and keeping that money safe and accessible is essential. The rest of it should be maximized to offer the best return and income possible.

Currently I am only moving the dividends from the high yield savings to higher yielding stocks and ETFs. But as interest rates continue to fall, more of that cash position will be moved to higher ground.

Balancing growth and income while managing inflation and avoiding principal depletion can be a daunting task, but it's well worth being one to take on. Sensibly managing dividend yields and staying aware of market conditions, even when you no longer have a more reliable source of income, maximizes the value of your wealth and ensures more financial stability, even when things become more complicated or difficult.

It's more important to consider levels of safety in retirement and semi-retirement. Of course. But being too safe can cost you more money than a carefully considered level of added risk would.

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© 2024 Jim Bauer

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The Biden Inflation Catalyst
Certainly, there are myriad factors as to what causes inflation to occur. Do presidents have a role? Most certainly they do, although they do not necessarily directly impact inflation, fiscal and other policies absolutely do. So, how can we tell Biden is the man behind the inflation we have now?

Harsh Words for the 99%

I know it seems like a harsh thing to say but it also happens to be the truth a lot of the time. When it comes to money, most of the time people's financial troubles come from making excuses. Because the reality is that even though money, to some people, seems scarce—it is actually rather quite abundant.

I don't write these things to preach. I write about money and ways to achieve wealth to help people have a different perspective about money.

The thing is, there's always someone to blame if you don't have enough. It's the greedy rich exploiting people. It's the evil employers holding back wages. It's a rigged system. The reality is that it's none of these things.

At least when it comes to living in the United States. Like I said, and I mean it, money is plentiful. It's not to say it's easy, but that's the point. It's not supposed to be. People who achieve wealth largely don't do it by accident.

It takes know-how. It takes hard work. It takes commitment. It takes understanding how money works. It takes understanding what it really is that holds you back. It's being truthful to yourself rather than finding others and situations to blame.

"But you are going to talk about the stock market, and we all know it's rigged and pretty much gambling," you'll probably say.

Wrong. It's not rigged and it's not gambling at all.

In fact, what it is for a lot of people is a terrible and unfortunate missed opportunity. I can't tell you how many times I hear an employee say, "The company's just cheap and cheating me." Especially if it happens to be a publicly traded company I have to ask, "Are you an owner?"

In other words, if you see profits and the business thriving, and people making money from it, why not own it? Why not buy the stock and share in a piece of the action?

In a nutshell, why wait for the company to pay you more? Why not give yourself a raise? Why not be among the shareholders who benefit from your hard labors? It's not like you are barred from being an owner. You might think you are because you maybe feel you don't make enough.

"It's enough just to pay the bills, let alone buy shares." But the reality is, especially when a dividend is offered, that not buying shares is shooting yourself in the foot. You are literally leaving valuable money on the table.

Because one of the keys to building wealth is not from working alone. It's from owning things. It should be common sense. How did the rich guy get rich? He owned the business you work for. If you can also own it, why aren't you doing it? If the company is sharing its profits with shareholders, why aren't you a shareholder?

There are three things you need to have in order to finally get ahead and be less reliant on others for your financial wellbeing. 

You need vision.

You need to understand that your financial stability is not the responsibility nor the obligation of anyone else but you. Your employer needs to fill a position and they pay what they pay. You accepted the job at the pay offered, and that's that. You need to view your situation as an opportunity and have the vision to believe that wealth is achievable even when all the odds seem stacked against you, because other people do it all the time.

You need goals.

Nothing is ever achieved without a plan and a well thought out one. Realize what's possible and then try to figure out how you can achieve what's possible. More importantly, set realistic goals. Wealth is not about luck. It can be in rare situations. But most of the time it's not about luck at all. It's about vision and having a plan and staying committed to it against all odds.

You need courage.

No one achieved wealth without risk. It's just part of the game. You have to be willing to make certain short-term sacrifices in order to achieve long term gains. You have to be willing to put money on the table to gain from it. You have to trust not in the system, but in your judgement. You have to have faith in yourself. Never, ever sell yourself short. Never, ever give in or give up. Never, ever settle. Have an I can attitude. And never, ever look at someone else's success as having held you back from your own.

The world is full of opportunities. Seize every single one of them and never tell yourself you aren't supposed to be part of it.

Because that's the other part of wealth creation many people fail to understand. It's not about them. It's about you. If you don't know something, learn something. If you don't understand something, seek out people and things that can help you to understand things better. Most importantly, look up to successful rich people rather than look down on them.

Concentrate your time and energy on appreciating that rich people represent what is possible if you mimic what they do.

And as I said early on in this post, don't make excuses. Read, learn and execute. Do it early. Don't wait. Because time is money and the more time you waste not doing it, the harder it will be to reach your goals. 

Make money your friend. Not your enemy. Make the rich and the businesses they own your opportunity.

Okay. There's one other thing here. And it may sound controversial. But I am going to tell you it is some of the best advice I ever got in my own personal financial pursuits. Do not listen to your poor friends. Because it's dumb to listen to poor people talk to you about money. They obviously don't know what they are talking about.

They are the ones telling you the rich are just greedy, evil people out to get you. They are the ones telling you the system is unfair and rigged. They are the ones telling you that the stock market is rigged and gambling. They are the ones telling you that you are being exploited. They are the ones saying you can't get ahead. 

They are the ones fortifying the excuse.

Look, say what you want about the 1%. But if you are listening to the 99%? It's the reason you aren't in the 1%. It's also the reason you don't stand a chance to become the 5%, 10% or even the 50%.

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© 2024 Jim Bauer

The Gig Economy Has a Downside

The "gig economy," as it has become known as, chock-full of various side hustles like Uber Eats, DoorDash and Uber and Lyft have become quite popular among a great many people. Especially those in the younger generation.

Granted, some who are doing it are doing it just to earn additional income alongside traditional employment. Some are using the opportunity to help them pay down student loan debt or even pay their way through college. Others may be stay at home moms or dads who have some spare time while the kids are at school that they can make some extra money from.

The idea has been around forever and is nothing new. Although many of the ways we can engage in it are newer. But it really took hold during the pandemic when people in certain professions were literally forced out of work and had no other choice but to find alternative ways to earn an income.

But there is a segment of society, again mostly of the younger generation, who simply have the idea that the old way doesn't work, isn't worth the time, and have simply decided they are not going to work for anyone else in a regular 9 to 5 job and have chosen to do gig work exclusively.

It is their primary source of income.

This comes with a downside, though, that few people who encourage this lifestyle talk about, and frankly that many in the gig economy don't consider.

The future.

It brings me back to a discussion I had with my niece who, during high school, worked under the table for a Thai food restaurant. I was actually happy that she did it, don't get me wrong. I started working when I was 14, and too many kids in the younger generations simply don't have any desire to work at all until much later in life.

My younger cousin was like that. He didn't have a job at all until he got out of college.

W-2 wages are an important thing for a variety of reasons. One big reason being the contributions we all make to Social Security, and the longer we work "under the table" for "unreported wages," the smaller our benefits will be when we retire because our benefits are based largely on what we make in our lifetimes and ultimately pay in FICA taxes throughout our work history.

If we're not contributing, there are less benefits afforded to us.

There is also the idea largely fueling a good many people in the gig economy. That is, they simply want to make money. It's not necessarily about having an extra source of income, such as is best suited for this type of work. It is the income. 

In other words, so long as they make enough money in a day to get through their monthly expenses, they are satisfied and don't work more than they have to.

This is a problem.

Because the future will still happen no matter what, and if there are lower Social Security benefits down the line as well as no contributions ever made to a 401k plan or other retirement accounts, the end of the road is going to be quite a bit of a rougher one.

And I don't think many in the gig economy even think about this.

There is also the consideration that health benefits are non-existent in a gig economy as well. And so, if a major medical event happens, not only can the gigger not afford to deal with it, but it is also going to send them miles behind financially potentially.

I don't think there is anything wrong with side hustles or the gig economy itself. But I do think that those who wish to choose this as their primary source of income need to consider the downside and do things to counter them. I think they need to fully understand what the downsides even are so they can better navigate the course and forge ahead into a better, more productive future for themselves.

Unfortunately, the mindset for many people in the gig economy is that they are "in business for themselves," or otherwise self-employed, when the reality is that they are neither of those things. Businesses operate with the future in mind, and they operate wanting to grow and expand and become bigger and more financially stable. They operate with the understanding that tomorrow is even more important than today, and if they want to have a sustainable future, they need to be constantly focused on ensuring that future is cared for.

The gig economy is not only a good thing overall, I think with all the changing environment around regular work, automation and other things, it is even necessary. But it needs to be conducted in similar ways that any business or self-employed person operates to ensure that it works for those who are working within it.

And so that there is less impact on society as a whole somewhere in the distant future when there are generations of former gig workers who enter into retirement ill-prepared to deal with it, and become dependent on the rest of society to hold them up and take care of them.

I'm now on YouTube as "The Springboard," and like to talk about money, money saving tips, business, investment and other money-related matters. If you like what I have to say and how I say it, come on over to my YouTube page and check me out. I'd love to see you there.

The Walmart Absorption Effect

Let's face it. No matter where you spend your money, there is going to be a rather significant portion that is going to ultimately wind up in the cash register at Walmart. Why is that? Because for all the haters, the fact is that most people actually shop at their stores.

This is why it just makes sense to own Walmart stock.

If you eat out at a restaurant, the waitress will likely spend a portion of her income at Walmart. Same goes for the dishwasher, the bus boy, and even the guy who trucks in the supplies and food for the restaurant.

They will all spend a portion of their money at Walmart.

Go to a gas station for a fill up and a Coke? The cashier will likely be spending a portion of their paycheck at Walmart. Spend at The Dollar Tree or Dollar General? I bet the workers there will spend a portion of their paycheck at Walmart.

The fast-food worker? They are going to spend a portion of their paycheck at Walmart too. From food stamps to social security checks? A large portion of that money will also be spent at Walmart.

Everyone shops at Walmart even if they tell you they don't because let's face it as well, Walmart simply offers everything under the sun at a value that even the die-hard haters can't pass up.

Beyond that, one has to admit that despite Walmart being a retailer in the retail sector, it is as diversified as stocks can be when you really get down to it. Because it carries pretty much anything under the sun. Call it an ETF of sorts that holds some sort of value in Unilever, Proctor & Gamble, Georgia-Pacific, Colgate-Palmolive, Kraft Foods, and any number of other companies both public and private.

Owning Walmart stock means you own a piece of every bit of spending happening in their stores. And likely you will shop there as well, meaning every dollar you spend will have a tiny discount attached to it when you get your quarterly dividend check.

Granted, it's not a fantastic yield at 1.47%, or $2.28 per share on an annual basis. But sharing in the profits of the largest retailer in the world that will capture the lion's share of every single paycheck that exists seems to me like a great thing to own, and I think everyone should own at least a few shares.

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Money is What You Make of It, Not How Much You Make

Because I write a lot about money and opine a lot about money, I tend to get all of the usual types of responses that are almost entirely, in my opinion, generic, and all easily debunked or argued against. The rich are all greedy and just want to hoard the money. Workers are exploited with low wages. You can't get ahead in the world if you don't make a lot of money. You can't live on the kinds of wages most companies provide.

My favorite one is, I can't afford to save, therefore how can I invest?

In part I say easily debunked or argued against because, like most people, I started at the bottom. Not the top. Yet despite that it has not stopped me from being financially secure, getting ahead, or being able to take advantage of the myriad wealth building opportunities everyone has no matter where they exist financially.

Yes. There are limits. But what the real limit is, is how little people recognize what the real opportunities are, how accessible they are to everyone, and what opportunities are afforded us by what the rich have created to have a shot at joining their ranks on some level.

I am not going to say it is easy. By no means. But nothing that is worth doing in life ever is. It's hard because it is supposed to be. It is hard because the challenge is what drives us forward despite what limitations we have or what hurdles we have to overcome.

I took my first job working for Dominoes Pizza at 14 years old putting circulars on doorknobs advertising pizzas to potentially hungry customers. They paid me $2.85 an hour. That was in 1987. In 1992 I went into the United States Navy and, according to my Social Security statement, by the time I got out in 1996 I was making $13,418 a year.

I started investing shortly before I left the navy. And granted, my expenses were low because I lived on the ship during the time and most of my food was paid for. I started investing with roughly a few hundred dollars. 

But I had a mindset. Live on 80% of your income and sock away the 20% you don't need. When I left the USS Enterprise (CVN-65) in April of 1996 I had a total savings stash worth only around $3k. That was from money saved as well as money earned from investments.

Even 10 years later, according to my Social Security statement, I was only earning $36,951. But during that time I had real expenses. I bought my first investment property when I was 26 in 1999. Most of the downpayment and my ability to do that was based on proceeds, dividends and gains earned on saved money in the stock market.

I continued to save and invest at rates of 20% or greater, acted frugally, and continued to invest and learn about various strategies in the stock market. 

Never once did I ever think of the rich people I worked for as greedy. Never once did I allow myself to feel exploited. Never once did I complain about low wages, and certainly I was mostly always paid low wages.

I worked for big companies like Quad Graphics, Kraft Foods, Coca-Cola, Smurfit-Stone Container Corporation, and Nestlé. I even did a short stint as a pest control guy for a small company called Batzner Pest Management in New Berlin, Wisconsin.

My best year was at Coca-Cola, working in mid-level management and earned $60k. After Coca-Cola I took pay cuts to take on new challenges, and my last full year at Batzner I only made about $36k. The key here is that no matter how much money I made or didn't make, I never deviated from the plan. I never made an excuse to stop saving or to make changes to my investment goals and strategies.

The one thing that remained static was my thinking that it never matters how much you make, but rather it matters what you do with it.

More importantly, throughout my earning career one thing I never changed was my lifestyle. If I made $60k in my best year at Coca-Cola or $36k in my best year at Batzner Pest Management, I was living the same way, saving the same way, and investing the same way.

I even took time off frequently between jobs. In fact, between Nestlé and Batzner, I took nearly two years off.

Because of my investments, my bottom line changed little. My money was making money for me, and while it may not have been a period where I was necessarily getting ahead at the same rate as before the hiatus, I was still not going backwards.

And because despite the lack of new income coming in from a job, my money was still earning an income, and my lifestyle did not change much.

I will admit I did have to make some adjustments. But not unlike adjustments I had to make after I left Coca-Cola and took major pay cuts to do that. I was always viewing money not as a crutch or a limitation, but rather as an opportunity. 

If I look at my entire lifetime to date W-2 wages, from 1989 to 2022, according to my Social Security statement, my lifetime earnings to date are roughly $975k. Breaking that down that's roughly an average annual earnings of $29,546 a year.

I won't tell you what's in the "bank" now. But I can tell you it is an impressive amount of money considering what I ever had to work with. And that amount that's there now could never have been achieved if I had accepted for myself, the generic responses I get now when I talk about money or opine about it.

I lived on paltry wages and saved and invested them. I held a long-standing belief that opportunity is there for anyone who wants to take the time to learn about them, understand them, and exploit them as opposed to ever telling myself that I was the one being exploited.

In other words, rather than make excuses, I took action. I never once was able to allow myself to be convinced I was the underdog and doomed to poverty by the system or by circumstances not necessarily in my control.

I instead made my own circumstances and controlled my own fate and dictated my own financial future. I took hard the stance, no one can stop me from achieving what I want, because I have seen others before me do it. I always saw the possibilities. 

In no way was my desire to ever become a victim of circumstance or blame others for financial issues I may have had along the way. My financial existence was mine in the making, and mine to determine. If I took a job that paid a wage I didn't like, it was never once thought to be the responsibility of my employer to kick more money into my paycheck. It was my responsibility to kick more money into my paycheck by making decisions to increase my wages or wealth through finding a better job or making decisions about money I was already making to increase its value or worth.

When I write about or opine about money, I am doing so from a point of view of someone who never made much money but was able to build wealth anyway. It's part of the reason I am so strongly opinionated about it. It's why I get a little hot under the collar when someone says to me, "Yeah, you just say that because you have money."

You're just another rich guy lecturing the poor.

But I wasn't always that guy. I was the other guy. The guy who averaged under $30k a year who got somewhere despite it. Do you want to call $30k a year a decent wage? Hardly. And again, I lost ground several of those years, taking time off between jobs. Living off investments and making no income. And despite low wages and year-long hiatuses, still made my way through it. Still walked away with more money than I left off with.

The bottom line is that if you want to be a victim, that's a choice. If you want to allow yourself to be limited financially by circumstance, that's your choice. If you don't want to participate in the opportunities everyone has to get ahead, that's also your choice.

But it's not the rich guy's fault. It's not the cheap boss' fault. It's not societies fault. It's not the government's fault. It's not wage disparity's fault. It's not rich business owners or shareholder's fault.

It's yours.

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A Couple of Ways to Deal with This Inflation

While it is true that the April 2023 inflation numbers dipped to 4.9%—still relatively high—it's much better than when inflation hit its peak of 9.1% back in June of 2022. So, while the rate hikes that the Fed began a little over a year ago seem to be helping curb consumer costs a bit, we're not out of the woods yet and things still cost more.

Mortgages, for example, jumped from 2.6% to around 6.3% for an average 30-year fixed rate loan, and credit card interest has jumped to a record average of around 21%.

There is also the question of whether or not we may still see a recession. Something we have not seen yet, but most economists would suggest that between inflation and rising interest rates, it may be sure to come despite any effort by anyone to try to avoid it. And while a recession is not good, and it's not the end of the world, it would not come without some additional pain as layoffs would likely occur, further stressing American's bottom lines.

On the flip side of this, as rates have risen, so have offered interest rates on certain bank accounts. Savers are getting the biggest bang for their bucks, benefiting the most from banks that offer so-called high yield savings accounts. So, looking into some of them, especially online, may be worth looking into if you have some money tucked away somewhere not getting the best rates. It would be worth the time to shop around as well since not all high interest banks are good.

Ally Bank for example, offers a 3.75% current rate, and CD offerings are northward of 4.5%. That's quite a bit more than the national average of 0.39% even if 3.75% still doesn't come near to beating inflation, a key factor when determining how to get the best bang for your buck.

Capital One also offers 3.75%. Barclays is giving 4%. And there are several others. You can go online and do a quick search to find the best rates and do some bank comparisons.

Beyond that, you really have to know your prices when you shop, and you have to be quite a bit more vigilant about shopping around, even visiting multiple stores to get the best deals on most things—especially food and common household items.

Make shopping lists, maintain a good inventory, and stock up on good deals as often as possible. This will also help to determine where you shop based on who has the best price so you don't have to visit multiple stores all at once. When inflation is tugging at your purse strings, every penny counts more than ever.

Of course, a money related post from me would never be complete without mentioning investing. Dividends are a great way to create new money—it is literally income. And besides, you should be invested anyway. If you are not familiar with investing, a very valuable book to read, and well worth the time and money, would be The Intelligent Investor by Benjamin Graham. Creating money from money you already earned is a great way to at least hedge against rising costs.

One thing taking a significant bite out of people's pockets is also the cost of gas and diesel. Why not try to earn some cash back on some of that, and the Upside app lets you do just that. Plus, they also offer cash back on certain grocery stores and restaurants. I have used this app for some time and I have to tell you the savings do add up—and again, every penny counts.

On top of that, doing everything you can to reduce debt at a time like this is paramount. As I mentioned earlier, credit card rates are tipping the scales at 21%. Not only should you pay some of that debt off to save pennies, but you should also be less inclined to use credit to offset expenses caused by inflation. Borrowing when rates are higher, and inflation is through the roof is a good way to compound the problem. So, simply don't do it.

While it may be a more difficult thing to accomplish, provided your company is not laying people off or otherwise enduring other struggles financially, this may be a good time to ask your boss for a raise. You'll want to do some analysis so you can present a reasonable proposal, but the fact is that businesses already understand the impact of inflation on their bottom lines and won't hesitate to raise prices to help get through it. You are as much well within your right to ask for more as they are.

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Most People Want More Money But Don't Actually Want More Money

The title, I will admit, seems a bit strange, doesn't it? I mean, one either wants more money or they don't. Doesn't everyone naturally want more money? It would seem like a no-brainer to say, most people want more money.

The thing is, that's just what most people say. The reality is quite a different thing. The reality is that most people don't have more money, and there is actually a simple answer to why they don't.

They don't actually do anything to go after it.

Part of the problem lies in how people think about money. To a lot of people, it's magic. Or it's luck. Or they think that only rich people can actually be rich and get richer because they are already rich.

The fact is that most of the rich people in this world did not start off that way. Many started off quite poor and became rich. And the reason that happened for them is that they did want more money and actually wanted more money.

Perhaps the title is making a bit more sense?

Let's go back to what I said about how people think about money. Beyond magic and luck, people think of money in terms of mainly income. Money that is created through a job, or a second or third job, through side gigs, using certain apps and taking surveys. Perhaps they write online and that's a source of income. Or they decide to sell crafts or something else on eBay or some other similar selling site.

All good things, mind you. And there is nothing wrong with doing any of these things to create more income and have more money. But really, the new money is rarely tied to getting ahead. It's tied to simply continuing to get by.

In other words, the objective for getting more income is to spend all of it. And here's another reality. You cannot spend your way to riches.

When I say more money, I am not just talking about earning more. I am talking about all the ways that are out there to actually grow what you have already made. And that's the part most people overlook. Thus, they don't actually want the real money that's available to them.

Because, that part is not a secret. It's not magic or luck. It's simply knowing where the money is and taking the time to learn how to get it.

It's not the easy way. Not necessarily. I mean, to me it is. But I have been doing it a long time and know my way around. That learning process didn't happen overnight. Nor did growing my stash. And that is also the reason a lot of people avoid it.

The stock market. 

People think of it as a private organization. An exclusive club. A place for the rich to play high stakes games, sometimes at the expense of the little guy with pockets less full.

That can't be farther from the truth. But of course, I will repeat what I said before. You just have to know what you are doing. The question is, if the stock market is one of the best sources of money and one of the best opportunities to actually become rich, why don't more people do it?

Because again, it's no secret. In fact, when you look at the Forbe's Richest list published every year, a good many of the people on that list made their money through investments. Yeah, a lot of them own businesses. Sure. Of course. But owning a business and making a lot of money doesn't necessarily mean running it or even having started it.

Many of the people on the Forbe's list are simply investors.

The stock market can be complicated. I want to be clear about that. I mean, it is not always complicated. Take a guy like Warren Buffet. He takes the easiest approach there is to investing. He simply buys low—and in his case rarely ever sells. He rides on the waves of successful companies and collects dividends as they continue to grow and operate.

That is where and how he had made most of his money.

A great book to read if you want to know how Warren does it is called The Intelligent Investor by Benjamin Graham. To some it is considered to be the Bible of Basic Investing. If you wanted to call it something else, you could call it the nuts and bolts of making money by buying solid businesses.

I am going to tell you that reading Graham's book might be one the most valuable reads you may ever read, aside from maybe the Bible Itself if you happen to be religiously inclined. It is the key that opens the door to the vault of knowledge secured behind it.

It dispels the magic and the luck theories.

Going back to the income thing, think about this for a second. It goes right along with that how people think about money thing. College. For some it's a big deal. If you want to have a good income you need to have a degree that gets you a good job.

But even that, having a good job, does it serve one to really get ahead? The answer is mostly no. No good job really gets anyone ahead. Investing the money they earn does. And again, the people who actually want more money know this. It's why they have money.

Besides the fact that many non-college degree jobs pay more than degreed jobs do. Plumbers and electricians make a lot of money. So do welders and factory workers—depending on the job of course. A guy working in a brewery might make over $80,000 a year easily while someone working in a cereal factory might be closer to about $40,000-$50,000 a year.

Back in the day I worked for a Coca-Cola bottling plant on the factory floor and made over $60,000 a year. And that was more than 20 years ago.

But that's not my point. Just an illustration. I have always worked and continue to work to this day even though I don't really have to. But the second part of that, even if I don't really have to, is because I never spent all of what I made. 

I invested.

Moreover, I took the time to learn how to invest. I learned about the stock market. I even went beyond what Warren Buffet does and learned other aspects of investing such as writing covered call options contracts and that sort of thing.

I actually wanted more money and continue to want more money. To actually want it, achieving it through doing things that actually make it. By not wasting my time seeking out high incomes or time-consuming side gigs exclusively just to chase the next payday and do nothing more than get by.

There is one other thing I did. Rather than lambaste and scold the rich, or even be envious of them, I studied them. I wanted to know what they did to get there. I wanted to know how they did it. 

The bottom line is that simply wanting more money doesn't more money make. Only actions can do that. Only an active interest and participation in things that make money and create wealth will do it. Either you can sit back beneath the table of the rich and wait for crumbs to land on your plate. Or you can sit at the table with them and have your own plate.

The choice is entirely yours. But it is up to you. The opportunity is not lacking. You true desire to get at it is.

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A Lesson In The Value of Covered Call Options 2

READ PART ONE TO THIS

The simple truth is that I took a bit of a risk. When I sold the options contracts the stock was trading only within about 60 cents of the strike price. Being that the stock pushed early on past $15, and closed very close to $15 by the end of the expiration of the covered call options contracts I sold with a $15 strike price, this could have forced me to sell my shares and that would have been the end of it. I still would have enjoyed a profit of $2.17 per share for a profit of $2,821, plus the premiums on contracts sold and dividends received, but now I would be out of the stock, and forced to decide whether or not reinvesting considering my $17 valuation would be as lucrative as being in the stock for just $12.83 per share.

My short term thoughts on that are that it would not be likely that I would reinvest. I was convinced that the stock would not trade higher than $15 by the expiration date of the contracts I sold. A less than $2 profit on future shares purchased would simply not be in line with what I expect out of a stock.

The key here is, though, that no matter where I think the stock will go, and no matter where the stock was when I sold the contracts, I did not believe I was wrong that the stock would not trade higher than $15 by February 20th. Selling the contracts to someone who believed I was wrong is also key. He paid me for the right to buy my shares at $15 because he was convinced the stock would be worth more by February 20th.

Again, this is where a little bit of technical analysis helps, and something you will have to discover on your own. To go into the reasons WHY I was so convinced of this is simply too involved to try to explain here.

What did I sell?

In January, based on my opinion that Cypress Semiconductor (CY) would not close higher than $15 by February 20th, I (wrote) sold 13 covered call options contracts for Cypress Semiconductor (CY) with a $15 strike price and with an expiration date of February 20th. I collected approximately $585 in premiums for this. After expenses I received a total of $564.

Again, I fully intended that these contracts would expire worthless, that the stock would not trade above $15 per share, and that I would get to keep both the premiums paid to me AND keep my stock to boot.

Moreover, now that those contracts indeed expired worthless since we only reached $14.95 per share at the expiration, I now get to decide to sell more contracts for March to collect more premiums.

Remember that I think that the stock is worth $17. But resistance is around $15.48 based on the recent high. That is approximately 52 cents shy of $16. It closed on February 20th at $14.95. That is 53 cents short of the high and $1.05 short of $16. Will it push higher in March past $15? I think it will. But, how much higher will it go past the $15.48 high before experiencing a bit of a pull back due to profit taking? I think it will not see $16 by the March 20th expiration date of the next options cycle. I also expect that seeing a new high of $16 or more 30 days from now is unlikely. We are going to push a bit higher, but breaking the high by 52 cents just seems to me a bit of stretch unless some major news comes our way. I do not anticipate that.

Again, based on analysis I will not get into here, I think the stock will see a NEW high through March, but the trading range will be from $14.95 to $15.75 per share.

With that in mind, selling covered call options contracts with a March 20th expiration date and with a $16 strike price is a safe bet. Based on what I see now I do not believe that Cypress Semiconductor will close above $16 by March 20th. It is highly likely that the stock will close lower, and I will again get to collect my premiums for the contracts (written) sold, AND will continue to be able to hold my stock and receive dividends without being forced to sell my shares.

At this time I have not yet made a decision, but I told you I would provide you a real time example of what I am doing here. When I pull the trigger on a March 20th covered call options contract I will let you know how that went.


...to be continued
READ THE FINAL INSTALLMENT

The Fun of Paying It Forward

So here we are again with a massive Powerball jackpot just sitting there waiting for someone to claim the winning prize of $450 million on February 11, 2015.

If somebody wins.

Of course I play the lottery. If you have happened to have followed me long enough you are well aware that I am willing to fork over my $2 for a chance at multi-millions. If I took the money I spent on lottery tickets year over year and compared that to what I might spend in casinos year after year, the small amount of money I pay for a chance at multiple millions in a Powerball lottery jackpot pales in comparison.

So I am willing to pay, and willing to play. 'Nuff said.

By my math, which is rough I will admit, of the $450 million Powerball lottery jackpot, I will get to keep roughly $270 million after taxes. I am always firm in saying that I would choose to take the annuity option if I won. So after taxes that gives me somewhere around $9 million a year for the next 30 years.

I would likely first give the household budget a $1 million a year "salary," and would give my wife a $250,000 a year "salary." In addition I would give away $1 million to family members. At least in the first year. The rest of the money, $6.75 million would be invested in various ways.

But the most fun would be contributing to what I call working charity. In other words, tipping waitresses at restaurants we would eat out at the full bill. Handing a $20 bill to the guy or gal bagging my groceries. Handing the delivery guy of my pizza or other delivery food a tip worth the entire bill.

The thing is that all of this money goes into the real economy. It benefits society, it benefits jobs, it benefits the economy, and it is my way of paying it forward. Thanking people for their hard work and putting money in  their pockets that they may not have otherwise had.

This would be gobs of fun.

I look at it this way. When you are raking in $9 million a year, money really is not an object. Moreover, when you are investing $6.75 million a year, the dividends alone can provide for more than you are used to taking in.

I want to be able to spread the wealth. If I get lucky enough to win the lottery, I want that money to funnel into as many pockets as possible.

And I would have loads of fun doing it.

Online Earnings Restructuring

At the start of the new year, many people set goals, or resolutions for the coming year. Things they would like to change, or things they would like to accomplish. I never resort to the making of resolutions mainly because they tend to be words on paper, and usually nothing more. That said, with the recent major issues arising out of Bubblews, which was a primary source of online income, I have decided that going into 2015 some changes need to be made to the way I intend to make money online through the new year.

In other words, I need to get back to what worked well in the past before Bubblews sort of captured my full attention and took over other efforts to make money online. I also need to look at new potential sources of revenue I have found that need a little bit more of my attention in order for the full potential of income to be realized.

You can think of making money online as a business. We all have something we do to make money online, whether it be writing on social media, or revenue sharing sites like WebAnswers, Bubblews, HubPages, or sites like this, or selling a little piece of our talents. Crafts we sell on eBay, for example, or designing things to sell on places like Zazzle. Some of us even write books which we publish through places like CreateSpace or the Kindle publishing program. Some of us also write, record, and distribute original music. Whatever the thing is that we do that makes us money through online efforts combined can be considered our own little business of sorts.

Businesses need effort and time. Businesses need nurturing and promotion. And sometimes businesses need to undergo a little bit of restructuring in order to fully maximize and capitalize on their full potential to succeed.

So, here are some of the goals I intend to follow through on in the restructuring of my own online money making business of sorts.

• Increase the number of posts written for The Springboard.
• Promote my original song "102 Idle Stones" more effectively and more vigorously.
• Release other singles to add to the success of "102 Idle Stones," with a high concentration on international markets.
• Establish a strong presence on sites likes PersonaPaper and Elitevisitors and continue to look for other revenue sharing sites that offer a place to write and share and earn.
• Increase my efforts at WebAnswers which was a major source of online income in the past.
• Revisit HubPages and reestablish relationships there.
• Increase my designs and promotion of products offered through Zazzle.
• Increase my presence in all forms of social media like Facebook, Twitter, and Google Plus in order to maximize any promotional efforts I may wish to accomplish for any facet of my "online business."
• Consider establishing a presence on eBay.
• Increase my promotion of products sold through my affiliation with Amazon and continue to look for any other affiliate programs that offer a good deal of potential to increase earnings opportunities.
• When writing, write more indepth articles, especially through HubPages and The Springboard.

These are just a few of the ideas I have going forward that, done right, should be able to more than make up for, and I even think surpass the earnings that I found possible through a site like Bubblews. The truth is, even though Bubblews earned very well for me, I have to wonder how much I missed out on simply taking that for granted, and letting everything else fall by the wayside in the process?

I think 2015 will not only be a good year for making money online. It will be the best year ever for making money online since I have been forced to return to getting down to business.