Ask Doc It's a strategy often associated with risky bets and spending all day glued to your brokerage account...
But its roots trace back to olive harvests in ancient Greece.
Aristotle's Politics shares the story of fellow philosopher Thales of Miletus. Thales believed that there was going to be a huge olive harvest that summer. So he put down a deposit on olive presses in Miletus and Chios, reserving them for the next harvest. According to Aristotle, Thales' scheme was a success...
He managed, in the absence of any higher offer, to secure them at a low rate. When the season came, and there was a sudden and simultaneous demand for a number of presses, he let out the stock he had collected at any rate he chose to fix; and making a considerable fortune he succeeded in proving that it is easy for philosophers to become rich if they so desire.
You may recognize this as something like modern-day stock options.
While Thales' strategy wasn't exactly the way we use options today, the takeaway is the same...
When used correctly, options don't increase risk... They hedge against it while drastically increasing your returns.
As my Retirement Trader subscribers know well, a conservative options strategy can allow you to safely generate double-digit income streams. It's particularly powerful in a tax-advantaged retirement account, but you can do it in your regular portfolio as well.
We do it by collecting the money that others gamble away.
In my opinion, it's the greatest investment income strategy in the world. It can safely and conservatively generate 15% returns or greater. And it has a proven track record of success...
From April 2010 to October 2013, we used this strategy to close 136 consecutive trades for a profit. We suffered no losses. And subscribers made millions of dollars.
In May, we ended another incredible streak with 211 winning trades in a row.
To date, our win rate stands at an incredible 94%.
If you want to see my strategy in action, now is your chance...
I'm a big believer in education. And you can watch on video as I teach my approach to professional golfer Kevin Kisner.
I walked him through the basics of how to make these types of trades. And I even got him to put his money to work with his very first trade.
Kisner can drive the golf ball a mile. You've probably seen him in contention at PGA Tour tournaments. And now, with the tools I gave him, he can collect hundreds – even thousands – of dollars of income each month.
Click here to watch my sit-down with Kevin Kisner.
Moving on, let's dig into the Q&A... As always, keep sending your comments, questions, and topic suggestions to [email protected]. My team and I really do read every e-mail.
Q: I'm just starting out and trying to learn more about my finances. And I'm wondering what kinds of investments can I make with a 401(k) if I open one? – D.S.
A: Congrats on taking the first step on your path to wealth, D.S.
A 401(k) is an employer-sponsored retirement plan. That means you'd start your 401(k) through your employer (if they offer one). If you're self-employed, you can invest with what's called a solo 401(k).
The investment options offered in a 401(k) plan can vary, but most employers offer various mutual funds. Within these funds, you could find options to invest in domestic or foreign stocks, bonds, and real estate. Some 401(k)s even allow for investing in cryptocurrencies. But, again, this depends on your employer and 401(k) provider.
I recommend looking for funds with the lowest possible fees. Fees cut into your gains, and the small haircut every year will compound into a massive hit to your portfolio by the time you're ready to retire. The higher-fee funds are unlikely to do much better than low-cost index funds.
Once you're ready to go out on your own, you can switch to a self-directed 401(k) and use it like a regular brokerage account (if your employer offers this option).
Check with your human resources department to learn more about all your options.
Q: What is your recommended allocation per position? – P.L.
A: Most of the time, I recommend subscribers put no more than 4% to 5% of their portfolio in any one position. This isn't set in stone, as some investments are safer to put more money into than others. But in general, I prefer the 4% to 5% rule.
In the case of funds, they're already diversified within the class they invest in – they give you instant diversification. So depending on the fund you choose, you could be fine putting up to 20% of your portfolio into that one position... knowing that the single fund already holds lots of individual stocks or other investments that you'd happily own anyway.
Q: For Doc Eifrig – vitamin K2 (MK-7) does not interfere with anticoagulants, as other forms of vitamin K (green leafys, etc.) and should definitely be taken with high dose vitamin D. – R.L.
A: Vitamin K and warfarin – the most commonly prescribed anticoagulant – do have an interaction where overdoing the vitamin K pills could lower the effectiveness of that particular blood thinner.
However, not all anticoagulants are affected the same way as warfarin if you take too much of a vitamin K supplement. At the same time, you don't need to ditch vitamin K-rich leafy greens just because you're taking warfarin... You'd be missing out on the other incredible health benefits – like other vitamins, minerals, antioxidants, and fiber – from these plants.
Additionally, research has shown that keeping your vitamin K levels on an even keel is important. If you do take vitamin D supplements, pairing them with vitamin K is a good idea. (Plus, while vitamin K has no known toxicity level, too much vitamin D is a real thing.)
I'm a firm believer in fixing the diet before seeking help from a pill. So keep up with your kale salads and wilted greens – and just check in with your doctor before you enter a broccoli-eating contest.
What We're Reading...
- Did you miss it? It's time to check in on a little investing wisdom.
- Something different: This airport has a forest growing inside.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig and the Health & Wealth Bulletin Research Team
September 6, 2024