Trading Mistake #2

Here's a mistake that a lot of people think. "I am in my 40s now, my kids are becoming teenagers, and I wonder how I will be able to put them through college. How can I save?" Well, call me selfish, but if I had to choose between my retirement and my kid's education, I think of myself first. Plus, I believe my kids would understand this and I would work to help them with scholarships, grants, and loans if I had to. There are enough of these out there in the world to go after. My parents never gave me a dime for college. It was my choice and I had to pay for it.

Let me get off my soapbox and tell you what I would do. First, if you haven't done it already, get into your company's investment plan. There are several available, and they could be one or more of the following:

ESOP (Employee Stock Ownership Plan) would be a great first choice. A lot of fortune 500 companies offer their employees the ability to purchase stock through the company through payroll deduction. They typically offer stock below the market price. I have seen several offer a 15% deduction on the day the plan starts, and you get to fork away up to 15% of your paycheck to pay for it. These plans usually last a year before the next one is set in place. Now if you take the average stock in the SP500, which increases on average of 10% each year, you can expect to get a 25% return per year on this. Add the level of compounding and you got yourself a winning investment plan.

ISOs (Incentive Stock Options) are for the lucky few. If you happen to be in a growing company, then you might get offered this for your loyalty and services. This is given to key employees on a yearly basis, and is also priced at a discount to the stock price. ISOs, however, do not come out of your paycheck because they are options. Options that are very much like publicly traded options, but with a longer expiration date attached to them. They are also restricted, meaning you have to vest them in order to take control of them. My suggestion if you happen to fall in this category" First remember these could be golden handcuffs, so prepare to stick around a while before you capture the profits. Second, talk to your CPA or tax attorney, because there are several ways to offset the gains you will likely get (and be taxed heavily on). This could mean a difference between getting taxed at 40-50% or getting taxed at 15% or perhaps deferring the tax to a later date.

401k plans, IRAs, and other retirement accounts" regardless of what you decide to do when it comes to retirement, there is one more thing to do to help you stay ahead of the benchmark. The first way is to once again recognize patterns in the marketplace and use these patterns to determine where the best place and best sector to put your money to work is at any time. Profit Strategies teaches several methods to help you determine the best probabilities that the market is in an upswing or a downswing. These methods include fundamental analysis, technical analysis, and even how to beat the market using nothing but a calendar. The second thing we do is teach you how to protect your mutual funds in the event of a drop in the markets. This includes finding the market patterns that tell us when not to be invested as well as when to be. We also teach alternative strategies that help protect profits and minimize losses, in stocks, indexes, and of course mutual funds.

More big mistakes a lot of people make next week!

Tom Gentile
Chief Strategist
Profit Strategies Group, Inc.