Date: 7/29/2021
Author: Chris Hood
Be sure to check out new episodes of my video podcast each week, where my ace pupil Brian Jones and I talk the ins and outs of options trading- and give you insights and strategy that you can immediately put to work for you in the markets.
We trade for profits, but what we do with those profits matters for long-term wealth building.
My trading plan is set up to produce a consistent, predetermined income each week. It’s the same method I teach all my subscribers.
But why do you want that income?
Some of you are probably looking at me as if I have two heads right now, but this is an important question.
Do you want to just make a bit of extra money to help defray living expenses or buy a new car?
Are you trying to replace your salary and become a professional trader?
Is your goal to just build lasting wealth for you and your family?
These are important questions because they will determine how you use your trading profits.
Let’s assume, like most, you have a regular full-time job, and trading is something you do on the side. However, you aren’t just dabbling. You want to produce some real wealth for the future.
How should you utilize the profits you generate from your trading account?
Each week or month, take out your profits and use them to reinvest in assets that will make you even more money.
Let me give you an example of what I do with one of my favorite stocks MRNA.
It’s a staple of my watchlist, and I trade it often using many different strategies – bull put spreads, bull call spreads, and long calls.
When I make profits from trades on MRNA, I use it to purchase shares of stock. Thus, I fund my investments with trading gains.
The shares go into what I call my treasury account with other major tickers like AMZN, GOOGL, and NVDA. Each time one of these companies provides a buying opportunity, I pick up a few more shares.
Depending on the stock, I may just buy and hold for the long term or trade these shares for monthly or yearly trends.
And what’s more, I can increase my investment portfolio return by selling covered calls against them.
There’s nothing wrong with building your savings account – it’s always a good idea to have immediate liquidity on hand.
However, cash that sits idly by gaining nearly insignificant interest is lazy money. So, once you have ample savings, consider putting your money to work for you.
The goal is to compound your wealth by putting your trading earnings to work for you through a cycle of trading and investing.
If you aren’t keen on buying shares of individual stocks, buy into a diversified fund for long-term capital growth.
Research these funds on your own or use a financial advisor.
Fit your trading profits into your overall strategy to generate capital that can be used to create even greater returns. Compounding your money this way can literally change your life.
This is just my personal approach.
Yours may involve investing in businesses, real estate, or something else. As long as it’s intended to multiply your assets, then it’s a great choice.
The point of all this is to get you thinking more broadly about the “WHY” behind your trading.
Understand that trading is only one component of your overall wealth-building strategy and create a system to put your earnings to work.
Skill and vision are necessities if you’re going to meet your financial goals.
I’ll help you, but you have to put in the work.
