Options Income Strategies For Monthly Cash Flow

Trading options is a risky business. You have to learn the basics, take note of stock movements and rely on your instincts. While these ideas may prevent you from buying stock options in the market, it is still best to gauge whether you can survive or have the guts for this type of trading. Options income strategies for monthly cash flow abound in the net these days. Not only are you facing a number of online tutorials or methods, you are also challenged by media speculations and tips from pundits.

Business enthusiasts such as the media and brokerage firms, tend to downplay the idea of ​​investing if not trading options as a way of generating money. On the other hand, a rise in the number of market players in the past years, seem to negate the negatives as well. In fact, the year volume of contracts, as well as the number of investors, as shown in annual statistics proves criticisms wrongs. Meaning, many traders and investors still gamble on options income strategies for monthly cash flow

True enough, options trading (specifically, buying ‘call options’) offer prospects with huge benefits and rewards. Imagine possible increments of 100, 200 even 500 percent to possible monthly income. However, trading options may result in losses and failures at hand. Meaning, there is also a big possibility of losing your entire savings in an instant. So, how can we avoid this trap? By understanding the following strategies and principles:

Timing is everything. Remember that stock options are wasting assets and are short-term investments. You have to decide when to make the purchase, what type of stock and when to invest. Time and options are basically foes, in the sense that you have to rely on market and price movements within a shorter period. You may remedy this problem by means of acquiring LEAPS (Long-term Equity Anticipation Securities). However, you have to pay for higher premiums.

Think hard before…

Read More…. by Mitch Greenberg

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How to Make Money Investing in 401K Plans in 2015-2016 and Beyond

Torie, like millions of other people, knows that she needs to make money investing in 401k plans in 2015-2106 and beyond (she has a couple) in order to retire comfortably. What she also needs to know: 401k asset allocation, how to pick and manage her best 401k investment options, and the outlook for 2015 and 2016. Let’s take a look at how she and you can make money in 2015, 2016 and beyond (or at least make the best of it) if you’re in the same boat.

Although it’s been easy to make money investing in 401k plans in recent years, this is not always the case. The first thing Torie and you need to do is to set a goal (Torie’s is to retire in about the year 2040). Second, be honest about your personal risk tolerance. Torie’s is “moderate” – but definitely not aggressive! Third, review your present 401k asset allocation to determine whether the investment options you hold are in line with your risk tolerance. Are you in the best 401k investment options, and in the right proportion?

Finally, you need to understand that 2015 and 2016 could be a difficult time to make money investing in 401k plans. The reason: weak economic forecasts make yesteryear’s best 401k investment options vulnerable to losses. Stocks are pricey and so are bonds. Assuming your risk profile is similar to Torie’s (she would like to make money but wants to avoid heavy losses) what can you do now to stay on track, make money, and avoid heavy losses if 2015 and beyond turns ugly? We’ll use Torie as our example.

A number of years ago Torie decided that she wanted to make money investing in 401k plans, but wanted to keep things simple. She had changed jobs once and was planning on another change in the future. With both employers she had set her plan up with 50% going to a safe stable account and 50% to a Target 2040 fund. She was busy and pretty much ignored her statements over the years. After all, her goal was to make money investing, and she could see at a glance…

Read More…. by James Leitz

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How to Make Money Investing in 401K Plans in 2015-2016 and Beyond published first on http://www.noteseminars.com/
How to Make Money Investing in 401K Plans in 2015-2016 and Beyond published first on http://www.noteseminars.com/

Promissory Note Valuation Mistake: Fair Market Value Vs. Historical Cost

Overpaying Taxes and Fees Because of Valuation Confusion

Fair Market Value vs. Historical Cost

How you value your investments (promissory notes included) impacts the taxes and fees you pay. In the worlds of finance and accounting, there is a debate about the best methodology for asset valuation. Being a promissory note investor, decide to value at Fair Market Value, not at historical cost.

Historical cost is the price paid when the note was acquired. Fair Market Value is the price at which the promissory note would change hands between a willing buyer and seller in an arms-length transaction today. It’s the cash amount you could receive today if you had to find a buyer and sell.

Fair Market Value and Historical Cost Rarely are the Same

The two definitions are completely different and create two very different results. As an example consider publicly traded closed-end funds. The day-to-day trading price of Fair Market Value (FMV) is rarely the same as cost. Publically traded funds trade at prices above, below, and at historical cost. Your promissory note has two distinct values depending on which definition is applied.

A Promissory Notes Fair Market Values are Usually Less than its Cost

Because private notes are relatively illiquid–they do not trade on a public market-they have to be sold individually, one note to one buyer. Because of the extra time and cost to sell a note, its market value is discounted. Notes can be wonderful investments, pay an above-market yield, and yet have a legitimate reason to be discounted if they had to be sold. As an investor, the yield is vital; as a tax payer or a fee payer, the discounted value is vital.

Note investors normally are long-term holders, not frequent traders. Selling is not part of their agenda; holding for income is the usual goal. Investing for the long-term and valuing the investment based on the short-term (FMV) for taxation is a good business practice.

Using the Wrong Value Costs…

Read More…. by Lawrence Tepper

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Promissory Note Frauds and Tricks

I have been actively engaged in the promissory note business for over 40 years. My and my wife’s self-directed IRA accounts have been invested in notes for the same length of time. My note investments have been the foundation of my estate building. Because I believe that promissory notes can be an excellent investment vehicle for the average investor, I try will try explain what they are and how they work. But, I will also point out that notes can be misused and abused by dishonest people and by ignorant people. This article is the first of several articles in which I will attempt to inform the average investor about the benefits and warn the average investor about the detriments of investing in notes. Obviously, there is no perfect investment.

Just as cars do not injure and kill people (bad drivers do), promissory notes do not trick and harm people (dishonest or ignorant sellers of promissory notes do).

What Promissory Notes Are: Generally, promissory notes are a form of debt similar to a loan. Companies and individuals issue these notes to finance a wide variety of endeavors. Bona fide notes are an important means by which companies and individuals raise capital. However, not all notes are legitimate and investors must be mindful of potentially tricks, deception, and exaggerations. Not all notes are created equal.

Promissory Notes Often Are Securities: In many instances, these investments are promoted as not involving the sale of securities, either by the issuers of the notes or by salespersons. The Securities Act of 1933 and the Securities Exchange Act of 1934, however, include “any note” in the definition of a security. From these definitions, a legal presumption has been developed that a note is considered to be a security, although this presumption may be overcome if, based on all facts and circumstances, the instrument is deemed to be a commercial-type loan. In many cases, notes are construed to be securities. In some…

Read More…. by Lawrence Tepper

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Seven Promissory Note Myths and Seven Myth Busters

Myth Defined: A myth is an invented story, idea, concept, or legend that concerns some idea or hero without a basis in fact. There are numerous promissory myths. Here are the main myths.

Myth #1: The value of a promissory note is clear and obvious-it is not debatable.

Myth Buster: A promissory note can have many values. The term “value” means different things to different people. The meaning of “value” is different to when used by the Internal Revenue Service, by an art auction company, by an antique dealer, by a real estate appraiser, or by an investor.

There are at least 15 meanings to “value”: Fair Value, Fair Market Value, Market Value, Book Value, Cost Value, Discounted Cash Flow Value, Quick Sale Value, Liquidation Value, Speculative Value, Intrinsic Value, Investment Value, Personal Value/Owner’s Value, Insider/Family Value, Wholesale Value, and Retail Value.

Myth #2: The cash value of a $50,000 promissory note is $50,000-just like a bank CD.

Myth Buster: Promissory notes are not like cash or bank CDs. They are mere promises to repay cash, not actual cash. There is always uncertainty about debt repayment. Consequently, their value is discounted because they lack marketability, liquidity, enforceability, adequate collateral security, proper documentation, and proper interest rate.

Myth #3: Investing in a promissory note is low-risk investing-just like buying a bank CD.

Myth Buster: Every investment has some degree of risk. Because of the reasons mentioned in #2 above, notes may have a higher risk factor. To compensate the investor for this added risk, their yields are higher than safer investments. This concept is the “Risk-Return Trade-Off”.

Myth #4: Doing a foreclosure to collect on a defaulted promissory note is quick, easy, and inexpensive.

Myth Buster: There are always significant cash expenses and costs related to the foreclosure and repossession of a property. Attorney fees, eviction fees, property insurance premiums,…

Read More…. by Lawrence Tepper

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What Is a Convertible Promissory Note? What Is Convertible Debt?

What are the Risks and Rewards of Investing in Convertible Promissory Notes?

What is a basic promissory note?
A promissory note is a written promise to repay borrowed money within a specified time, using periodic payments, or with one final payment, with interest at a specified rate. In the world of finance, this document is called the “note”. It is often used to finance an existing business or finance a start-up business.

What is a convertible note?

A convertible promissory note is a document that offers an additional option to the holder (lender); rather than being repaid the stated principal and interest, the holder can convert part of the debt (loan) into equity (ownership) in a business venture. Convertible notes (aka convertible debt or convertible loans) are a financing mechanism whereby a company raises debt capital from investors by offering them the ability to convert all or part of the debt investment into the business’s equity at a later date, at a fixed conversion ratio . The conversion terms of each business transaction will vary. Here is a typical scenario: a company raises $ 1 million in convertible debt, which has the right to convert to equity at a 25% discount to the valuation of the next financing round, or to the appraised valuation of the business.

What are the risks and benefits of investing in convertible promissory notes?

Convertible notes are the rage for start-up businesses these days. Investing in them is not a conservative investment; they are a high risk / high reward specific investment. Funds invested in convertible debt should be “surplus money”, “gambling money”, not retirement money or put-the-kids-through-college money. Convertible debt investing is not for the cautious, nervous or new investor.

From the investor’s standpoint, they are providing loans to a new or small business at a very risky stage in a company’s life cycle. The notice that they have the security…

Read More…. by Lawrence Tepper

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What Is a Convertible Promissory Note? What Is Convertible Debt? published first on http://www.noteseminars.com/
What Is a Convertible Promissory Note? What Is Convertible Debt? published first on http://www.noteseminars.com/

Promissory Note Structuring – Part One

How to structure your seller-carry note for maximum value.

Every flaw in your note will come back to haunt you when you try to sell it!

I have been actively engaged in the promissory note business for over 45 years. During that time I have bought, sold, exchanged, brokenered, appraised, and structured hundreds of notes. The lessons that I have learned, through my own mistakes and through the mistakes of others are numerous. I want to help you avoid “learning the hard way”!

If I were to expand and explain every lesson that I have learned the hard way, it would probably amount to writing a book-or two. I will give it to you here “short and sweet”.

In outline form, I will share with you key concepts that will make your seller-carry loan more valuable, more salable, and more collectable. The following guidelines represent over 45 years learning the hard way, and I have the scar tissue to prove it!

Six critical elements needed to structure the note for maximum market value:

1. Get the highest interest rate on the note that you can

2. Get the largest down payment on the transaction that you can

a. Get additional collateral security-other real estate, co-signer, etc.

3. Get an independent third-party appraisal of the collateral assets before the closing

4. Get an agreement from the borrower that you can have permission to get independent third-party appraisals of the collateral assets after the closing, if and when you need them

5. Get all of the borrower’s personal and business credit and financial information before the closing

6. Get an agreement from the borrower to provide updated credit and financial information after the closing, annually, or when you need them

Selling your Note

If you ever sell a private party / seller-carry loan, even if it is paying perfectly, you will be asked for all, or most of the above items. The more of these items you have and the more complete each item is, the…

Read More…. by Lawrence Tepper

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