Elon Musk, Invest $10,000,000.00 In Me

Mr. Musk,

The time has come to ask for a $10,000,000.00 investment. Not in a business, not in an idea, but in a person. What will you get back for your investment? Well, you won’t be getting cash or any business ideas, but you will be changing the lives of people who you don’t know. Why would anyone invest this kind of money into another individual? Good Question, I’ll answer that below

1) I Will Pass It On

My goal is to turn this $10,000,000.00 investment into $100,000,000.00 or more. Sure, that is a pretty high goal, but I know that this is something that I will be able to achieve. Once I hit my goal I plan on turning around and investing $10,000,000 into someone else who has the ambition, the desire to help, and the drive to do the same for the next person.  No, there is no cash back for me, like there won’t be any cash back for you, but you are investing in something far greater than money, you are investing in life. There is no guarantee that I will achieve my goal, but I am not one who gives up easily. After 30 years, or achieving $10,000,000.00, I will pass on 10% of my net worth to a stranger who has a desire to do great things.

2) What I Will Do With The Money

The first thing I will do is remove debts from my life. I will continue working, and use that to cover most of my family’s living expenses for a while. The rest of the money I will be diversifying into different investment mediums. Some of the money will go directly into a high yield savings account, some of the money will go to a professional who will manage it for me and grow it. I will use a smaller portion of the money in a stock portfolio that I manage myself. I will be on the lookout to invest into a business that has the potential to succeed. I will use my experience in both marketing and IT to help this business give me a great return on my investment.

Do I plan on enjoying life? You better believe it. But that’s not the only thing that I want to do with the money. I want to help others achieve a life that is better than the one that they currently have. I want to keep this going and pass the money along to someone else, and the faster I make it to $100,000,000.00 the sooner I can pass on the $10,000,000.00 to the next individual.

3) Why Choose Me?

Because I asked. No, that may not be the best reason in the world, but this is something that I want to do, not just so that I can have a lot of cash, but so that I can turn around and invest that cash into someone else.  I won’t blow through the cash like a lottery winner, this isn’t a gift, this is an investment. Invest in me to see your investment be passed down beyond just me. Invest in a person and see what that person can do. No, you won’t get any ownership of me, but that’s where the beauty of this lies. If I am able to pass down the cash to someone else to help them build a bigger and better life for not just them but the people around them, and they are able to do the same, then your investment just keeps on building.

Another reason to choose me is because my passions are different than your passions and the passions of the next person will most likely differ from mine as well. The people that I want to reach out and help are going to be different than those that you are reaching out to. In this way you are diversifying the people you are touching, because anyone that I am able to help financially will be due to your investment in me.

Conclusion

I kept this short and sweet. I don’t want to take up a lot of your time.  I know you are a busy person, so I will end it with this. If you would like to get in touch with me you will find a way.  I thank you for your time and consideration.

— Justin

Why Do Stock Prices Fall Every Time I Buy

Charts

I have been trading stocks for about 3 years now. I am not the greatest expert ever, nor do I know everything about trading stocks, but I have learned a great deal in those 3 years. I will continue to learn more, but as I learn I share what I learn with whomever happens to stumble upon my blog. One question I see a lot of new traders ask is “Why Do Stock Prices Fall Every Time I Buy”.  The reason is you are buying wrong.

When I first started trading stocks, I also felt as if every time I purchased a stock it would fall. It didn’t matter what price I purchased it at, the price would fall as soon as I bought it. On top of that, the stock’s history would show it had risen 100% + over the last year, but the price would do nothing but fall for days after I made my purchase. I tried to find answers on line as to what I was doing wrong, ways I could change so that I could improve my trading, and I found nothing at all that helped me. So I started looking back on my trades and seeing how I was trading and I found a massive mistake in my strategy. I started looking at other traders and talking to other traders and I started seeing a massive problem with their strategy as well.

The Problem

As I stated earlier, the problem is how you are buying. Stock prices are constantly moving up and down. It’s never a straight path up, they are volatile. But how do we typically buy a stock? Let’s say you have a small account and you have $15,000 of cash ready to invest in a specific stock. You decide you want to buy a stock trading at $100.00 and you can afford 150 shares. (There will be trading fees and brokerage rules that may not allow you to do this trade, but this is for instructional purposes). What most people do is they buy 150 shares at once and use up their investment. Look at the chart below and tell me why this may be a bad strategy. This is a 1 year chart of Apple Inc.  Each one of the lines represents a single day. There are times that if you bought a stock and sold within 30 days you would have lost money. But if you had waited even longer you most likely would have gained. You hold too long and the price goes back down. We look at these charts and we see “Oh, it’s going up” and so we get excited and we make our investment. Then we see no signs of profits and lose money. How can we fix this?

Generated Via TradingView.com

The Fix, The Solution, The Plan

We have to come up with a plan. Instead of buying all 150 shares at once, spread out your buys. Sure, if the price were to sky rocket after your first buy you may miss out on some quick profits, but most likely the price will take time to go up. So buy a few here, a few there, and keep buying as you see new lows in the price. If the price just continues to go up keep buying it up. Your average price will go up, but you have still lowered your risk.  This takes more time to do, but it does prevent you from gambling on 1 second of a stocks life. If you buy all of your shares at one time, you are literally buying the stock at its price for a fraction of a second. If you spread out your buys you are increasing the time period of when you purchase a stock and will most likely make more money. Make sure that you don’t just automate your buys without watching the charts though. You don’t want to be buying at the high of the day every time you purchase your shares.

Will This Guarantee Me Profit?

Nothing is a guarantee when it comes to stocks, but it does limit your risk.  Lower risk can mean lower reward, but a positive ROI is what we are seeking.  You may end up paying more in the long run by purchasing stocks this way, especially if you have a small account and you are paying commissions on each trade. So make sure you do your research and ensure that your investments are worth it. For example, if you pay $5.99 / trade, don’t buy a single share of stock for $100. That means you would have to make $11.98 just to break even or 11.98% . Buy 30 shares at a time and you are only having to make ~0.4% back on your investment to make money.

How Do I Do This On A Small Account?

If you have a small account commissions will eat up your profits quickly. I suggest Robinhood App for your phone. You can trade commission free there and break up your buys down to a single share of stock and not have to worry about paying commissions. I highly recommend seeking out a different broker once you have enough money to invest larger sums of cash, but for smaller accounts Robinhood works just fine.

How To Get A Job The Right Way

A lot of people need help looking for a new job, but you feel trapped, unqualified, or you never hear back no matter how much you modify your resume. You were taught in school to build the perfect resume and to trust in your resume to land you a job. I’ll be honest, my resume has NEVER landed me a job, and it never will. As a matter of fact, some jobs I have had never even got a resume from me until after I was hired to do the job.  What inspired me to write this post is that I am assisting a friend in his hunt for new employment. He fell into the same traps that everyone else does. He built his resume, submitted it to dozens of jobs, and never heard back from most of the jobs. The one he did hear back from offered him the gig, but he told them he would take the lowest possible salary and somehow they managed to hire someone else. I’m going to tell you what you need to know to get the next job you are wanting. Stop wasting your time with websites where you will be 1 of 1,000 and instead start competing against yourself.

1) DO Use Sites Like Indeed.com

Wait a minute, you might be asking. You just said not to use Indeed.com. Yes and no. It is a great place to start looking for positions and if you want you can apply for them there as well, but your job search doesn’t end when you submit your resume through a job board like this. That’s just the beginning. You need to separate yourself from the hundreds or thousands of people who are applying for the same positions you are. You need to find a way to get connected to the people who are making the hiring decisions for the job. The best way to do this is in my next point….

2) Create a LinkedIn Profile

Creating a linkedin profile will help you look more professional, give you a space where potential employers can look and find your social media presence, and a place where you can network with others in your field online. I do not like any other social media platform for networking, but I know some people use facebook and twitter for this as well. The benefit to Linkedin is that you know the people you are connecting with are business people and you know what they do for a living. This gives you a competitive advantage when looking for a job. Start by looking for people you know and connecting with them, all of them. They may have a connection that can help you land a job in your field or with the company that you are wanting to work for. Post a professional, dress in working attire, photo of yourself on your profile. Fill in as much information as possible and make sure that you keep your information current. Nothing turns off a potential employer like an outdated profile.

3) Add Value To Conversations On LinkedIn

Follow topics and add valuable input to conversations on LinkedIn with news and articles related to your field. You want to show people you are an expert at what you do. This is a great way to connect with people you haven’t met in person, but also a great way to show you have interest in your career and it isn’t just a job for you.

4) Contrary To Most Advice, Accept Recruiter’s Invites

One of the ways I have found a lot of connections on my linkedin account is through recruiters. Sure, I get an email about once a week telling me that they have the perfect position for me, but I have met so many people through their connections that it is definitely worth it. Also, I have met people in person who know the recruiter and has helped me network in person as well. It’s always great to get to know as many people as possible. You can never know too many people! Yes, it does take time and effort to get out there and meet people, but it is vital to you finding your next, and maybe even the job after your next, job.

Now, make sure you don’t waste this person’s time. I am upfront with these people and let them know that I am currently not in the market for a job, but in the future when I am I want them on my side. I also feed them leads, and they will sometimes send you a bonus check if the lead works out, to keep the relationship alive. Typically the leads I send them are friends who have not read this post and are telling me that there are no jobs in my field… After I bombard them with hundreds of jobs in a matter of a week, they typically feel stupid that they didn’t know about these jobs.

5) Go Directly To A Company’s Careers Page

If there is a specific company you want to work for then hit up their careers page. Just because you don’t see a job opening that matches your skills, it doesn’t mean that they don’t have an opening available. Dig through your connections and see if anyone has an in with the company. If they don’t directly, see if there are any indirect connections that may know who would be the person responsible for hiring your position and ask if they can submit your resume to this person. A recommendation from a co-worker goes a lot further than a resume submitted by someone with no connections to the company.

6) Be Nice To Friends & Current Co-Workers

You absolutely never know when a friend or an old co-worker will be the deciding factor in whether or not you get the job you want. I can tell you that in a city of over 1.5 million people, I have never had a job that I have gone to where someone at my last company didn’t know an executive of my new company. It’s a small world. Take care to treat people well, but also talk to the people you work with. Get to know them. They may leave for a new company and you may want to go to that same company a few years down the road. You want them to smile when they remember you, not frown or scratch their head trying to remember you.

7) Apply For Jobs You Are Qualified For

This is one of those that just makes me wonder sometimes. A lot of people with less than 10 years of experience as a computer programmer will apply for senior level positions, team-lead positions, or even management positions. They almost always get thrown out of the pile and laughed at. Sure, they may have applied for the programmer job as well, but don’t waste their time or yours.

Sometimes job postings have really long lists of requirements that you may not meet all of them. Most of the time applying for jobs like this are ok, especially if you are currently doing the same job at your current company. It’s not a problem to apply for jobs that you should be able to do, it’s just a problem to apply for unrealistic jobs like senior level positions and team lead positions when you don’t have any experience in those positions at all.

8) Seek A Raise Before Looking For Other Jobs

Some people will tell you that this is unethical, but in my opinion what is unethical is that your current salary can determine your salary at your next company. If you are planning on finding a new job solely based on money, then you may get the raise you need to stay at your current position.

Do NOT go in asking for a raise or threatening to quit. Instead, schedule a meeting with your superior and let them know that you wish to discuss your compensation. In the meeting, tell him / her how you desire a salary at $X and that you feel that you have earned the raise because you have gone above and beyond your job requirements.

If you are planning on staying at the company, tell them you are looking for more responsibilities and would consider a move up to justify the raise (as long as you really are).

Don’t say you deserve the raise… You don’t. If you agree to do a job for $5 a day, and you do that job you deserve $5 a day. Saying that you deserve $6 a day for the same job you agreed to do for $5 a day is just wrong. Instead, show why you are worth more than $5 a day and show that you are eager to give even more value to your employer. Things like you are able to do quality work faster, you are more productive, you are innovative, you can bring your team together and are a leader (even when you aren’t paid to be a leader). If you have found ways to save the company money, make the company money, doing something that is not really tied to your job.

9) Consider Salary Last

There are a LOT of things that go into a job, and while money is important, it should be the least of your worries. Most people focus on salary more than any other aspect of a job, but there are a lot more important things than just salary.

What is the health plan being offered a the companies? How much does the company contribute to those health plans. Are there 401ks, pension plans, bonuses, stock options, etc… These benefits can increase or decrease your overall salary from a company. Once you have these all figured out, then you add your salary to the mix to see what your total package is. This is your compensation package.

Other than compensation though, is it going to be a good working environment for you? Do you like the people who will be on your team? Is it close enough to home or will the commute be too long? What are the hours for the position? How often do you have to work weekends if at all?

These are all questions, and not an exhaustive list, that you need to know the answers to before making a final decision about the job you will accept.

10) Give Yourself Positive Reinforcement

You are valuable. You are intelligent. You can do this. We sometimes get into a bad position and need to find a new place to work. When we get here we feel stuck. How will the company survive without me (Not your problem if you aren’t an owner but 99.9% of the time they will and it will be ok). I don’t feel qualified for that position (you probably are). There aren’t any jobs in my field (Maybe, but most likely you don’t know where to find them). These are all questions, thoughts, and doubts we place in our minds because we as humans really don’t like change. We like to know that we have a job on Monday morning. We don’t want to take a chance. You can do this. You are capable, and you can be the person who leaves the bad job, or the great job, for another company that will be better for you, or for your family.

11) There’s More To Life Than Money

Remember that your happiness and the well being of your family is more important than cash. Don’t leave a job you love for one you hate for more cash. Your kids don’t need the latest gadget, they need time with you.

I hope this was helpful and encouraging for those that are working to find a new position. I know it can be overwhelming so take a deep breath and focus on why you are doing this. Make sure that you can’t get what you need from your current company first, and then look to take the leap if they can’t offer what you are looking for. I left my last company not because I didn’t love the company, but there was no path upwards. I left for a company that had more vertical room for me to grow and for me to better my career. It was something that they couldn’t offer me, and it was something that I needed for my family and myself.

Paying Down Debt Faster – A Guide To Becoming Debt Free

Time till we are out of debt

We all say we would love to be debt free, but are we really willing to put in the time to do it? It’s the same attitude we have about losing weight. We all WANT to lose weight, but we aren’t willing to sacrifice in order to achieve our goal. Other wants get in our way. But there is a way we can achieve a debt-free life.  One of the problems when trying to get out of debt for many people is the large number they are chipping away at. You pay down the debt but after a few months you still see a massive amount of debt and feel that you are stuck.  You aren’t stuck, it’s just something that is going to take time to pay it down. Instead of focusing on how much debt you have left, think of how much debt you have paid off. That is one thing that gets me excited, to know that I am no longer in debt for x number of dollars.

1) Pay Off Small Debts

This is advice that a lot of people will give. Others will tell you to pay off your highest interest accounts, but I disagree with those if you have some small debts that you can get rid of in less than 6 months of saving. These debts should be under $3,000 and with your saving you should be able to get these paid off quickly. Once these are paid off, you will have more money per month to apply to your higher interest rate debts to get those paid off faster. This results in you paying less interest overall which saves you money. It also has the added benefit of getting you out of debt faster.  In order to pay off these small debts, first figure out how much you owe on the debt. Let’s say you owe $2,500.00 . You want to pay off this debt in 6 months, so you divide $2,500 / 6 and that gives you $416.67 per month that you need to save up to pay off the debt. Now you need to add interest to the payment in order to get the true payment.

2) Pay Off High Interest Loans / Consolidate Loans

When you have a high interest loan you are paying a lot of money in interest every month that you won’t get back. That means that steak that you bought 3 months ago for $24.99 is now probably going to cost you $28.99 or more. We don’t want to pay more than price listed. Do we not spend time shopping for the lowest price? My wife and I started off our marriage trying to keep up with the lifestyles that we enjoyed as being single. We soon realized 2 years and $40,000 in debt that we had to do something differently. We kept saying we would be ok. We had a budget. But every month something went horribly awry and we ended up having $500 – 600 in once non expected expenses. We decided to start up a new credit card that had an introductory rate of 0% interest for 18 months. We started loading up all of our new purchases on that and paying down the old credit cards. We ended up paying down our loans to about $16,000 by the end of the 18 month interest free period. We then had to take out a personal loan. The personal loan had a much lower rate than the credit card had, and it saved us a lot of money. We were able to pay off the personal loan in less than 2 years time.

The key is, to pay down the rate as fast as possible, and consider taking out a loan with a lower interest rate to save you money over time. Also, when paying down a high interest rate loan or credit card debt, DON’T get yourself into more debt. Don’t swap one debt for the other, the goal is to get out of debt.

3) Change Your Spending Habits

This is one of the most difficult things to do. We all say that we are being as cheap as we possibly can, but then we have a photo that shows that we aren’t. The first way to change your spending habits is to track what you are spending your money on. Sure, that $2 soda doesn’t sound like a lot of money, but if you drink 3 a week before you know it you have spent $24 on soda. Finding ways to cut your spending can be fun, and it doesn’t have to be all at once. For example, my wife and I stopped buying drinks at restaurants. We dined out about 3 nights a week and each drink averaged $3.00 after figuring in tax and tip. That’s $3.00 * 3 (drinks) * 2 (people) * 4.2 (number of weeks in a month)  = $75.60 we were drinking away. That’s a lot of money for a little soda. So to make that hit home, we were spending around $900 a year on soda’s at restaurants. Now, we could have started buying soda in cans and drink it at the house, but that stuff isn’t good for you. So now we only have it as a treat, so saving money has made us healthier too.

I HATE reading, or hearing about getting rid of your daily Starbucks. If you just skip your Starbucks 2 days a week… Let’s me honest, not everyone has a Starbucks every day, and those that do probably need that quick instant caffeine  laced sugar boost so that they can be happy people. So if you are drinking 1 a day, you might want to consider cutting back to save some cash, but I know there are a lot of other places you can cut back.

Restaurants will cost you a lot of money. Paying a tip is expensive. My rule when I go out to eat is if I can’t afford to give a good tip then I can’t afford that restaurant. If someone sucks at their job, I will give them a 15% tip, if they are good I will give them a 20% tip, and if they show me something special, I may give them more than 100% tip. It really just depends on what I ordered, how long we were there for, how much of their time we took,  and what I feel they deserve.

One night, my wife and I had this plan to go to 3 different restaurants. We went to 1 for an appetizer, 1 for the meal, and the last one for dessert. We get there and order an appetizer to split and 2 waters. The guy came back and asked us if we were ready to order and we informed him that we wouldn’t be ordering any food. He was extremely rude. So rude, that I tipped him $20 for a  $8 appetizer. Why? Because I understand what made him upset. We were taking up a table and 15% on $8.00 is only $1.20 . But, we were there for 15 minutes and he ended up making $20.00 . When I handed him the exact change plus $20 he looked shocked and apologized to me for his attitude. I told him I understood completely and I would have probably acted the same way.  Kill them with kindness, it is so much better to be kind then rude. In other words, don’t try and save money by cheating these hard working people. Instead, try going to a fast food restaurant or order something inexpensive when going with friends.

4) Sell Things You Don’t Need

Find things you don’t need and start selling them. Turning trash into cash will help you get out of debt faster and make you less cluttered. We all have things in our house that we haven’t touched for years, so why not turn it into cash. Sure, you may have paid $200 for it years ago, but sitting in your attic getting ruined isn’t doing you or it any good. Sell it. Even if you only get a small percent of what you paid for it originally, sell it. Take the cash and use that to get out of debt faster.

5) Sell Things For Your Friends Online

A lot of people don’t want to go through the trouble of listing and selling things online. They would rather just pick up their stuff and donate it to a charity. First off, I am fully supportive of donating to charity. Secondly, a lot of them could use the cash. If they need cash and don’t want to handle the frustration of selling online, offer to sell their goods for them. All they will have to do is give you the items and you try and sell them. Then, either charge a set fee or % of the price of the object. I typically will charge 50% for anything that we make. Everyone seems to think this is a fair price so far, so I may be undercharging people, but I think if I am doing the work I deserve half. Use this money to pay off debt.

6) Take A 2nd Job

Take on a seasonal or contract job (limited time) to help pay down your debts. An influx of cash can help you get out of debt. I’m not saying to keep this going forever, you can if you want. What I am saying is invest some time in getting yourself out of debt so you don’t have to work 2 jobs just to make sure you can put food on the table. Family always comes first, and kids would rather have you there than your money.

When taking on a 2nd job I always recommend you finding something that has the same skill set as your current job. It helps you get even better at your current job and can help you learn new tricks. These things can allow you to have a higher contract rate in the short term, but can also lead to you getting a promotion at your current job or finding a new job with a higher salary.

7) Celebrate The Victories / Stay Positive

When you pay off a loan, celebrate! Get excited about being closer to financial freedom. When you pay off a car, celebrate! Get excited! Jump up and down, scream, tell all of your friends. Do whatever it takes to keep yourself happy and upbeat. The happier you are about getting out of debt, the easier the road is to get out. Things are going to happen that will cause you to delay getting out of debt on your time frame, but that’s ok. The goal is to get out of debt, it doesn’t have to be a specific day. Delays happen. Things break. Babies are born. Life is short, we need to enjoy every minute of it.

 

Stop Trying To Get Rich In The Stock Market

A lot of people want to get rich, and so many people read about how people have made it rich in the stock market. So they head over and they expect the same thing to happen to them in a day…. STOP IT! The stock market can make you rich, but if you expect to see 1000% gains every day you are going to be sad. It takes time to build up money, and you can make serious money in the stock market, but if you are impatient you can lose money as well. Diversifying your assets goes beyond just investing in stocks in different categories. You should have some money in a high yield savings account, cut your spending, pay off your debt, and even consider putting money into mutual funds, CDs, or find other ways to invest your money. All of these things put together will make you “rich”, but you shouldn’t solely rely on making a million dollars from $1,000 in 1 day on a stock.

What Inspired This Post?

I have read hundreds and maybe even thousands of people complaining that a stock only went up 10% in a day… 10% return on your investment in a single day and you are complaining? Sure, in order to make a million dollars you would have to invest 10 million… but why do you have to make a million dollars in a day? Take the gains that the market gives you and enjoy the profits. You will continually make money and that money compounds. The more you make the more you have to invest.

If you had $1,000 and you made 1% per day that looks like this:

Day 1: $1,010.00
Day 2: $1,020.10
Day 3: $1,030.30
Day 4: $1,040.60
Day 5: $1,051.01
Day 29: $1,321.29
Day 30: $1,334.50

So, in 30 days of gaining 1% you have gained $334.50 or 33.45% gain. This is why you shouldn’t be upset if you see a 1% gain in the stock market. These gains add up, and they add up quickly. Now, you won’t always have gains every day, some days you might have losses… but when you do have gains enjoy them, no matter how big or how small. After all, you have more money :).

So How Do I Make A Million Dollars?

Making a million dollars isn’t all its cracked up to be. Sure, we all want to be millionaires, but the path to making a million is going to be different for everyone. Sure, invest some money into the stock market, take on a 2nd job (if you have the time and aren’t sacrificing time with the family), start up your own side business, sell your skills you use at your current job for small contract jobs, offer to walk the neighbors dogs for a few bucks a week, offer to mow your neighbors lawn for a few extra dollars. There’s a ton of ways to make a little bit of extra cash that can help increase the amount of money you make in a year.

How Do You Do It?

I have a full-time job at a company that I absolutely love. I am a programmer there and spend most of my day working in code. On top of that, I freelance as a programmer for other companies in the evenings and on the weekends. This earns me an additional income and I am able to work as much or as little as I want. So if I go on vacation I can work very little, but if I am having a week where my wife has lots to do I can crank up the amount of work I’m willing to accept. It’s important to find a good work-life balance and family should ALWAYS be your #1 priority. If you are looking for contract work, it’s always best to stay with the skill that you currently use at your day-time job. That will help you learn even faster and become even better. It could also lead to you being offered a higher paying job because of the different people you will meet in the industry. My rule is I NEVER work for competition in any way. So if they are a competitor just say no. You don’t want to risk losing your main source of income.

I also write this blog, trade stocks, and build websites based on ideas I have. The other thing that I do is I sell items that people don’t want online for cash or sell them in yard sales.

There’s More To Life Than Money

Remember, there is sooo much more life has to offer than money. You are on this earth for a limited amount of time, and you don’t want to spend your entire life trying to make money. Instead, invest your time into family, friends, and people in general. Do good for others, help people. If you find a way that you can help someone and make money for yourself, then do that. That’s why this blog exists. I am hoping to help people become better stewards of their money, but I am also hoping to make some cash on the side as well. It’s not that I don’t want to donate my time for free to help people, but it is a way I can do both giving me more time to invest with my family.

How Do You Find What Stocks To Research

A question that I get asked quite often is how do I find stocks to buy. Well, first, I research a company before I buy it, but in order to find a stock to buy I typically look for companies that I know. After trading in the stock market for several years, you will start to know companies. You will know if a $5 stock is suddenly a buy when you have been watching it for years. But how do you know which stocks to watch? That’s the real question.

I typically choose stocks to watch based on 4 things.

1) What Products Do I Own? What Services Do I Use?

It’s easy to research a company that you already know something about. If you have been very satisfied with the service they have offered you, or you really like their products, then it is worth throwing them on your watch list. This doesn’t mean jump in to buy shares the second the market opens, but it is definitely worth watching these stocks and doing your research. I have a tendency to watch stocks for a good while before feeling confident enough to purchase shares. This helps me find a good entry into the stock sometimes, but it also has made me miss out on buying opportunities as well.

2) What Companies Are Pro Traders Trading?

This is hard to find good information on. You want to make sure you are looking at really professional traders and not some dude with a website and a promise. This is really a strategy for long-term trades, but if you find someone that you trust and they have solid reasoning behind their recommendation then it is worth adding to your watch list. I currently haven’t had a lot of success with this route, but I know people who have. You have to make sure you understand the full scope when getting advice from someone who has been doing this for a long time. While you may be looking to turn a quick profit, the other person may be planning on holding for several years.

3) Twitter / Social Media

I absolutely NEVER trade a stock that I get emailed to me, spammed on twitter / facebook, or see advertisements for promising me riches. Almost all of these are what they call “Pump and Dumps” and it is pumping up the stock’s price so that people can sell their shares at a higher price. The price drop will be fast and drastic and will cost you a lot of money. That being said, find some people that you like on twitter or other social media outlets. Follow them and see how their picks go. Sometimes you will find someone who is on a winning streak, other times you find someone who is on a losing streak. It really just depends, but if you do your research on a company before you buy you should be able to weed out some of the potential losers.

4) Stock Screeners

I use a tool that lets me put in things that I think are important and filter down the stocks that match those criteria. I have a risky top 20, highly volatile stocks that have an abnormally high volume, and a conservative top 20, less volatile stocks that have been trending up over the last 24 hours and have at least 1,000,000 shares traded on a daily average. These screeners help me discover companies that I have never heard of before or didn’t think about following.  Remember, not all companies are traded publicly, so you may not be able to trade your favorite company, but there is probably a company who sells a similar product as the company you like.  This also a good way to find companies. If you don’t have a stock screener then try something like finviz and see what you can learn. I use that website every now and then, but typically stick with my brokers screener.

Conclusion

There are many more ways to find stocks to buy and sell. I typically use these 4 strategies myself. Every now and then I will trade stock tips with a friend or colleague, but typically those tips are stale and out of date. I like to do my own research, which was hard at first, but it allows me to do better. Everyone can find great companies to trade, you just have to keep learning. If you can’t find companies to trade there are some great websites out there to give you trade advice, but be careful about just taking some advice and making purchasing decisions. You need to research, study, and invest your money wisely.

StockTwits.com Good or Bad?

A lot of people, especially new traders, will stumble upon StockTwits.com and think they have hit a gold mine. A way to beat the stock market. After all, if hundreds or thousands of people think a stock is going green then it must be… right? Nope. Let my first warning be that you never know what the true intention of the person posting is. They may be saying buy buy buy, but they may just be pumping the stock in hopes of a price getting too high so they can safely short it and ride it back down. Today I’m going to talk about the good and the bad of StockTwits.com and how to safely use it when making purchasing decisions.

The Good

Stocktwits has a lot of great users on the website. These people are a fun community to talk and discuss a particular company. They also have pricing if you don’t have access to see the current price of the stock. There is a delay in their pricing so be advised if trading penny stocks, but lower volatility stocks their ticker works great. Another great feature is that you can see message volume charts. These charts allow you to see if the amount of people talking about a particular stock have increased or decreased. This is a great feature and along with proper volume charts can be a good indication of movement on a stock.

How To Safely Use StockTwits When Trading. The best way to safely use stocktwits is to ask users for help finding information that you can research yourself. NEVER trust a screenshot. I have seen people post screenshots of news articles that are years old. Always ask for a link. Check the date on the link, and if there is a published date see if you can find that as well. Never trust news without a date.  Then check the validity of the article and make sure that this is something that you yourself believe to be true. If you know that the company is about to file bankruptcy and you get sent a link to a website that looks fraudulent and tells you this company just received a buyout notice, do more research. Sometimes these crappy websites get the information first, other times they make up news.

The website is run well, and building a watch list for all of your items is great. I absolutely love stocktwits and would recommend it to anyone looking for a community of people who are trading stocks.

The Bad

NEVER, EVER, base your purchase or sell decisions based on StockTwits.com advice. You do not know if the person behind the keyboard is really helping you out or just helping themself out. Take this scenario, a stock jump 40% and you want to get in on the action. You post to Stocktwits “Is this a good entry” and you get 4 people posting back “Yes, this is going to the moon” then they add the “Bullish” tag to make it seem as if they truly believe this stock is going supernova. You buy in, as did a bunch of other people who believed these individuals. But as soon as the stock hits 44% gain for the day it plummets. It goes down so fast that you can’t even sell at break even and you end up losing a good 5 – 10% of your investment. These guys were pumping the stock. They were trying to get people to buy it and bring the price up for 1 of  2 reasons. One, they had bought the stock at a lower price and were trying to get the price as high as possible to sell their shares for profit. Two, they were shorting the stock and trying to get the price of the stock as high as possible before shorting the stock. Either way, they are trying to raise the price just temporarily so that they can make money.

It works the other way around as well. A LOT of bears out there aren’t shorting a stock. In fact, they think the stock price is where it needs to be and that’s bad for them. They want the price to fall down so that they can get a discount on the price of the shares and immediately make some money on their investment. They will try and convince you to sell your shares, the company is a scam, there’s no profits to be made, or you will lose your money. You sell your shares and get out, the price drops and you think “whew, close one. Thanks for the advice guys” and then when the stock continues to fall, you see the same people who were bearish all of the sudden pumping the stock on the bullish side.  They bought in their discounted shares and are ready to see the stock rise.

Don’t Base Your Purchase Decisions On Sentiment %  Charts.  I have seen a lot of people look at the sentiment percentage charts and get excited. If 100% of people on StockTwits.com are posting Bullish then it might be true, but anything less and it could spell disaster for the novice trader. For example, let’s say that I have been trading AMD for a while and my average price per share is $9.30 . The current price is $13.97 / share and I am very bullish on AMD. But, as a new investor, I might not be bullish if my entry price was $13.97. Because, if the price drops to $13.50 / share, I am still making $4.20 / share as the old investor, but the new person is down $0.47 / share. So just because people are bullish doesn’t mean that they think the current stock price is too low. It just means that they think the profits will hold and that eventually in the long term this will go higher. Remember, no chart just goes up or just goes down. It’s a bumpy road on the stock market.

The Number One Question I Get Asked: What Is DD?

DD is used a LOT on stocktwits and it literally means Due Diligence. These are people telling you to do your own research and don’t rely on the “research” being posted by people on StockTwits. There are a few good guys out there who don’t want to see new people burned out because they lose their money quickly. We want to see you be successful. We need more people to get into trading stocks, the more that trade the more we the little guy have power. Institutions generally rule the stock market, but if enough individuals get together we can influence the price of a stock. I really think that is what is currently happening with AMD right now because a lot of institutions are saying that it is a $9.00 stock, but it is currently trading at $13.97 / share. The individuals aren’t letting it go lower.

Conclusion

I love stocktwits.com and I think it is a very good tool in my tool belt. I don’t use it to trade stocks, but I do use it to see if someone has gotten some news that I don’t have in my tools. I really enjoy posting and talking with people about stocks, but I also warn people not to take trading advice from people they don’t know. It is always best to do the research yourself and not rely on someone else. Would you give a complete stranger your money and ask them to hold on to it for you until you return? Because that is what you are doing when you trade solely based off the opinions of others on StockTwits.

Credit Cards Are NOT For Everyone

I’m writing this post because I just had a conversation with two different people who were all excited about their $100 in rewards they just got from spending $2,5000+ in the first 3 months of having their new credit cards. Each of them was talking about opening up even more credit cards to get the free cash.  While this is fine to do every now and then, it is bad for your credit score to have too many inquiries at once. The worth thing though, is are they really making $100? The answer to these two people was a big fat no.

Credit Cards Are Not For You If:

1) You Make Only The Minimum Payment

If you are paying the minimum payment on your credit card, it will take you a long time to pay off your card and that’s only if you never add another charge to the card while paying it off. If you can’t afford more than the minimum payment, then you can’t afford to use a credit card. Cut spending in other places. No more going out to eat, no more coffee, soft-drinks, tea. Stop buying the make-up you think you have to have. If you don’t have the money for items stop purchasing them. We all say we have no room to cut, but in reality we almost all can cut out something.

2) You Buy Things Without Saving Up Money

If you are the kind of person who likes to buy things without having the money saved up for it yet, you definitely should not be using a credit card. Credit cards will cost you more money if you can’t pay off your balance in full. What would you rather buy? A TV that cost you $500 or that same TV that cost you $575? We all would get the TV for $500, so wait until you can afford the tv before buying it with a credit card. The rewards will offer you additional savings if you pay off your balance in full.

3) You Have Too Much Debt Already

Think of a credit card as a loan that is available to you at all times. Do you really need to borrow money when you are already in debt? The answer to this question is no. If you think of it as a loan, then you can clearly see why adding to your debt is just not a good option. It’s best to pay down your current debts and save those credit cards for times when you absolutely have to have them.  Lowering your debts will increase your credit score which will help you in the future.

4) You Have Bad Credit

OK, listen to me carefully. Credit cards can build up credit. They are good for doing so. But if you have bad credit you need to first discover why you have bad credit. Then you need to try and repair that credit. When you have bad credit you get high interest rates since you are a riskier investment. This means that you if you can’t pay off your card in full you can get hit with a lot of interest.

5) You Aren’t Good With Money

If you are someone who isn’t good with money then a credit card is not right for you. Instead you need to take your budget and put it into cash. “But I won’t get the rewards that way” you say, “True, but you won’t be paying interest either” I say. Remember, the credit card companies aren’t in business just to be nice, they are there to make money. They will win in the long run. So the most important thing for you is to stick to your budget. I recommend doing it this way:

  • Write a category for spending on envelopes (examples are Groceries, Dining Out, Coffee, Entertainment, Clothing, etc.)
  • In each envelope put the amount of cash that you are planning on using for the month
  • Once you are out of cash for that envelope you can’t spend any more.
  • If at the end of the month you have leftovers, put that money into a savings account or use it to pay off debt.
  • ALWAYS have a reward yourself / vacation saver to reward yourself for staying on budget

6) You Don’t Know How Much Money You Have

You should ALWAYS know how much money you currently have. I’m not talking about what is in your wallet, I’m talking about the amount of money that you have that is not already planned for use. Let’s say you have a bank account with $4,000 in it. You have two credit cards one with $1,250.00 in debts and the other with $750.00. You have to pay utilities which will cost you $225.00 and your house payment is due for $850.00 . How much money do you currently have?

You currently have $925.00 to your name, not $4,000.00 .  The majority of people that I meet who have financial issues would have answered $4,000.00 , but in reality that’s not the right answer. You need to make sure that you don’t spend over that $925.00 for the rest of your month’s expenses or else you have lost money. Sure, you will most likely draw a paycheck, but that’s not how I count my expenses. I’ll tell you more on that later.

7) You Are A Forgetful Person

Credit cards have gotten better and are typically due on the same day of the month now, but some cards still are every 30 days. That means that the date the bill is due will change from month-to-month and it is your responsibility to keep up with that. If you are a forgetful person, try signing up with a credit card that has automatic payments. This will alleviate you ever having to pay a late fee. But before you do that, ensure that you have enough money in your account to cover whatever the charge may be. Have too many bills coming out at the same time each month? A lot of credit card companies will work with you to adjust your payment date so that you can avoid having too much come out at one time.

8) You Don’t Have A Budget

I don’t understand people who don’t have a budget. I have a mobile app, a spreadsheet that I created myself, and I still analyze my budget at least once a week. Why am I so crazy about my money? My wife used to think I was obsessed with money, but it wasn’t the money that I was obsessed with. I was obsessed with finding a way to drag my wife and myself out from a mountain of debt from all of the poor decisions we made financially before.  If you don’t have a budget then you don’t know how much you can spend. If you don’t know how much you can spend then you shouldn’t be spending. Take 30 minutes and work out a budget. Then spend 5 – 10 minutes a week maintaining that budget. Building a budget and sticking with it can make your money go much further than you think.

9) You Think You Are Too Smart To Pay Interest

The people who think that they are too smart to pay interest are always the ones  who end up with a mountain of it. Something happens, the fridge breaks, the ac needs repairs, car needs new tires and they whip out the credit card without thinking. The next thing they know they forget that their insurance was due that month and they don’t have enough to pay off the credit card balance in full. This is where this mindset can get you in trouble. It’s the same mindset as people who say making money in stocks is easy. “Buy Low Sell High” is all it takes to make money in stocks…. You are never too smart to pay interest, things happen. The goal is to be prepared enough not to pay interest by not using your credit card for things that you don’t have cash for. That includes having a slush fund for new tires, broken ACs, or bad refrigerators. And that means creating a fund large enough to cover all three if they happen at once.

10) Your Spouse Doesn’t Know About It

Absolutely in no circumstances should you ever have a credit card that your spouse doesn’t know about. There shouldn’t be any financial secrets that could damage them. They need to be aware of any and all risks that are associated with their well-being. My wife and I share a bank account that I manage. She has full access to all of our money, but I am the one who is responsible for letting her know our budgets. The budgets are things that she and I built, I didn’t build them, I am just responsible for making sure that we stay on budget.  Here me clearly, she and I both came up with the budget, I am just making sure we stick to it. I’m the manager of our finances like she is the manager of our home. That doesn’t mean that she is the one doing the dishes, vacuuming, dusting, cleaning bathrooms, etc… but she is responsible for making sure that it is getting done. So, she will tell me “I need you to get this cleaned by this date” and I will go and do it. It’s important to keep open communication with your spouse when making any financial decisions.

11) You Already Have 4 Or More Credit Cards

You need to ask yourself why do you need another credit card. Are the rewards better on this card than your past cards? Is the interest rate lower? Sometimes there are good reasons for getting new credit cards, other times there are not so good reasons. If you are just signing up for an additional credit card so that you can make the minimum payment on the other 4 and get access to more credit, you are just digging your debt whole deeper. Eventually that will damage either your wallet or your credit score when you file bankruptcy. There’s a better way, and that is to just say no. We spend astronomical amounts of money on things that we really don’t need in America. If you don’t have the money, don’t spend $100+ on a phone bill every month. Sell your Smart phone and go to a phone that just does text + calls. You don’t need all the other extras, those are just wants.

Conclusion

Credit cards can be a great asset to anyone, but you have to be careful with them. Most people are not careful with them and will end up paying for it. Sure there are rewards, but if you don’t pay off the balance in full each month those rewards aren’t saving you any money. Be responsible with your finances and you will be able to achieve a debt-free life.

We Aren’t Paying For Our Kids College

Before everyone starts telling me how it is my responsibility to pay for my child’s college education, I will tell you that both my wife and I had to pay for our own education and we are more successful in life because of it. Our children will have to do the same thing. The only difference is, they won’t have to go into debt to pay for their college even if they have to borrow money. Why? Because we have a plan, one that will teach them responsibility, teach them how valuable each dollar invested into their education is, and one that will reward them for succeeding.  Here’s what we are planning to do, and no my children will never read this blog post…

The Plan

My wife and I are tucking away money every single month for our children, which we don’t have just yet, to have when they are older. They won’t know about the money, but it will be there in it’s own investment account growing steadily. Each month we will be depositing a set amount of money into the account and when they reach a certain age they will be given the account. They can use this money to pay for college, pay for their wedding, buy a car, put a down payment on a house, or even start a business. We know each of our children will have a different desire, and we don’t want to discourage them from whatever they want to achieve in life. This money will be theirs to do with as they wish. If they choose to go to college it will be their responsibility to pay for it with their own money (remember, the account we are growing is their money).

Just because my wife and I are the ones who earned the money, doesn’t mean that we are paying for college. Imagine if you received a check for $120,000 and had to use that to pay for your education. Would you succeed or would you fail? Would you spend all of your money partying, or would you save your money for classes? I would have invested the money and worked full-time to pay for as much of my college as I could and use the $120,000 to pay off the rest. Hoping that by the time I graduated I would have as much of the $120,000 left or more. My wife would have gone to school full-time and loaded up on classes to get done as fast as possible. Which one of these is correct? Both. Why? Because everyone is different. We want to see how our kids will treat this money and by making them the decision makers we hope they learn a valuable lesson.

The Reveal

We haven’t decided about how we are going to reveal that we have a secret account for our children. I personally wanted to wait til they were either graduating college, getting married, buying a house, or starting their own business before giving them their money. My wife thinks it would be better to give them the money up-front so that they are able to use it to pay for school if they want to.  We haven’t decided how we are going to tell our children, but we do know that it will vary based on the child. The only rule about the account we will have is that you can’t tell your siblings about it. I HIGHLY doubt that one will be kept. I know I would have told my brothers as soon as I finished promising my dad I wouldn’t tell.

Our Struggle And Success

A lot of my friends in school didn’t have to work while going to college and instead just spent time hanging out and partying. I didn’t either my first year, and I ended up flunking out. After that, I took a year off and then I started working  full-time and went to school part time to graduate without any debt. My wife did the same for a while, but eventually had to borrow money to finish school because of the time requirements of her classes. Her parents couldn’t afford to help her out so when we got married we started off in debt. I remember the first year of our marriage was tough, starting out on a low salary and having to pay off a $40,000 student loan at the same time. Looking back, I am extremely glad that we had that portion of our life. Without struggling, we wouldn’t appreciate where we are today. I wouldn’t have as much job experience nor would I be working for some of the greatest companies in the area. I’ve learned to appreciate things a lot more because of the struggle that I had, but I also learned that anyone can go to college as long as they are willing to work for it. Sure, I had to go to community college and get my associates degree first, but after that I was able to land a good job and pay to complete my 4-year degree. The experience I gained while working AND going to school made it easier for me to understand my field of study – Business Management – and made me a better employee as well.

Why?

We don’t want our kids to struggle like we had to, and sometimes still are, to learn the lesson of appreciating what you have. We want our children to have it better than we had it. So we have come up with a plan that we think will help our children take responsibility. After all, the money that we give them will be theirs to do whatever they want to. If they choose to have an extravagant wedding instead of paying for school, then that is their choice. We hope to have enough saved up for each of them to go to school and have a nice wedding if they desire. But we don’t want to be the ones telling them how to spend their money, because they need to learn how to handle money. We will be preparing them all through their life to handle this situation and those beyond. We will start early teaching them how to save, how to donate, and how to invest their money. Sure, the investment might be in a savings account, but they will learn to master their money so that money isn’t their master.

Don’t Think This Is Right For You?

I personally think this is what is best for my family. I have a lot of experience with managing money and with investing and I am willing to spend the time and effort to teach my children how to be smart with their money. This doesn’t work if you just drop a load of cash on them, it is a process of teaching them how to be prepared when they are the ones responsible for managing their own budget. My goal is that they will be mature enough to handle a sum of money and managing that, most likely with my guidance, to help them get ahead in life.

What It Means To Average Down And When To Do It

This will be a short post today, but still a topic that is important to discuss. When you are holding a stock and the price is falling, you have 3 possible decisions. 1) Do you sell your current shares of stock, 2) Do you hold your current shares of stock, or 3) Do you average down and buy more shares of stock.

Averaging down may be the right decision, but you need to make sure that your new average puts you in a place that you feel is good for the stock. Let’s say you bought 100 shares of a stock that was trading at $75.00 / share. Your equity was $7,500.00 . Today, that same stock is trading at $54.00 / share. You have done your research on the company and have decided that the company is really only worth $68.00 / share and you overpaid at $75.00 / share. You have $10,000.00 worth of assets that you can invest into this company based on your risk assessment. Is it worth investing that $10,000?

The Math

How many shares can you buy? $10,000.00 / $54.00 = 185 shares. You can’t buy partial shares so you are investing $9,990.00.   In order to get your new price / share you take your original equity of the stocks you bought = 100 shares * $75.00 = $7,500.00  and you add that to the cost of purchasing the new stocks $9,990.00 which gives you $17,400.00 total investment.  You then divide that by the total # of shares you will own after you place your order which is 100 original shares + 185 new shares. That gives you 285 shares of stock purchased for $17,400 or $61.05 / share. Since you believe this stock will rise up to $68.00 / share, you are expecting $19,380.00 in return for your $17,400.00 investment. If this seems like a good return on your investment then it is worth averaging down. If you feel this isn’t a good return on your investment then decide if you want to sell for a loss, or hold your current shares for a longer period of time.   When deciding whether you want to sell for a loss or not, remember your taxes. Selling stock for a loss may benefit you on your tax return.

A simple way to calculate your new average:

(Original Investment Amount($) + New Investment Amount ($))
— Divided By —
(Original # Of Shares + New # Of Shares)

You might have more than 1 past purchase of shares. In order to calculate this you will take your current Average Price Per Share and multiply that by your Total sare count to get your Original Investment Amount. After that the math is the same.

I Love Averaging Down

I personally love to average down. When I have spotted a company that I know is worth more than it is currently trading for, I will buy more shares and bring my average cost down. This increases the amount of profit I will make, and its easy to invest in a company that I have already done extensive research in. Make sure to constantly research the companies that you are invested in. Things can change quickly, and they can either go north or south very fast. You don’t want to average down in a company if that average is too high. Sometimes selling may be the best option even if you don’t get a tax break. Know the companies you trade, and you will do fine.