måndag 7 januari 2008

The best deal you can make this year

The best deal you can make this year is hidden in two words: "Carry interest".

Carry interest is a simple concept really. What you do is lend out money to countries at a daily interest rate called "carry interest". You don't need to be a trader doing this. You don't even need to be particularly smart to set this up. But it sure is a great deal and the easiest deal you will ever make in your life.

You open up a forex account, fill it with cash and buy a currency giving the highest possible interest rate (carry interest). Then just let the taxameter start rolling. Check it from time to time (say once a month) and see the cash accumulate faster than you would ever be able to make money at your current job. Even if you where to take a second or third job, you would still be able to make more money per hour at carry interest.

If you have $10000 in your account and you accumulate say 0.1% a day then that would mean $10000 X 0.1% = $10/day X 20 working days a month = $200 in accumulated profits each month.

I have a little cash invested on carry interest at the moment myself and I accumulate $1.1 for every pips I hold. At the moment I hold 253 pips making me a daily accumulated profit of $278.3. It all adds up.

The risks? The leverage you will recieve when dealing with a discount broker. The second risk is interest changes (goverments tend to change interest in order to control the influx/outflux of capital into a country. Higher carry interest obviously attract more external investors to invest in a country. The same goes with lower carry interest that drive investors away from a country).

Why not test it yourself? You do yourself a big disservice by not checking it out. I'm not refering to any one discounting broker. That is up to you to find out. See it as your homework.

söndag 6 januari 2008

Cash or Stock?

Cash or Stock is the real money question. And it needs to be thought about carefully. I would rather take stock than pure cash. Why? Simple, you need to invest the money and during the time you are looking for an investment to invest in you will have two big enemies: Taxes and inflation. Take the stock and you will gain a lot.

But, be carefull with taking stock as payment. If the company has bad financials or the company is utterly corrupt with it's financial reports then you will be in a world of shit.

Before accepting stock, do your financial due diligence of the company with the help of your CPA: If everthing shows green lights, then take the stock by all means. Especially if you can gain more by taking the stock than taking the cash. And most of the time you do make more from a stock payment than from a cash payment. Not just because you don't need to pay taxes right now or that you don't need to worry to much about inflation (because hopefully the company will make enough money to cover the loss in purchasing power), but because you will be able to sell your share of the stock payment for at least 5-10 times earnings.

And don't tell me that this is not possible. The right view on it would be that you are a lousy dealmaker. But hopefully you will join my subscribers list and learn the tricks of the trade to get at least 5-10 times earnings in the stock you have accepted.