This newsletter provides articles each week that are of interest to traders in the financial markets. As of today, we are also including articles about long-term investing. Our intention is to fill a need for information on building wealth for retirement, with lower risk and higher returns than the conventional methods.

Most investment information available elsewhere comes from the companies looking to induce investors to buy their funds, annuities, or other investment products. Our only product is education, and we have no bias with respect to any particular investment vehicle.

What we do have is decades of experience in both trading and investing, and a straightforward, rule-based investing strategy. Its purpose is to create a program with the combination of protection, growth, and cash flow that is tailored to each investor, at any stage of life – and that includes you!

We call our students Proactive Investors. As the name indicates, our method involves something other than simply buying and holding stocks or mutual funds.

The Proactive method has just a few building blocks. The first one of these is to avoid having your investment funds eaten up by unnecessary fees.

People are often surprised at just how big an issue this is, and even more surprised to learn that there is something that they can do about it.

The first hurdle is sales commissions. If you buy an investment through a provider such as a financial advisor, insurance agent or broker, there is a high likelihood that the provider receives an immediate commission. These can range up to ten percent of your principal for certain products. This is just like starting off your new investment with a 10% loss on the first day. If you bought $100,000 worth of stock on Monday, and by Tuesday the account balance was down to $90,000, you would not be happy. Yet that is the exact situation with many investment products.

Nickel-and-diming is expensive where there a lot of nickels involved. And it doesn’t stop with the sales commission.

Here are some other fees that are routinely charged on various investments. Some of these fees are disclosed in prospectuses if you read the fine print, and some are not:
 

  • Back-end mutual fund sales commissions, where you may pay as you exit, of 1 to 4%
  • Ongoing sales commissions of a fraction of a percent every year, typically ¼%
  • Management fees bled off your account every year, from a fraction of a percent to 2% or more
  • Caps on variable annuity returns that insure that even if the market has a great year, you probably don’t
  • Hidden differences between a fixed annuity payment rate you are quoted and the real ROI
  • And a host of others

What all of these fees have in common is that they sap your returns in return for “services” of dubious value.

One of the first steps any investor should take is to assess the investments they currently have and understand how much they are paying in fees, and for what. If your current investments are in standard mutual funds, hedge funds, fixed or variable annuities, variable life insurance policies, managed accounts or wrap accounts, and many kinds of predefined IRA investments, you will almost certainly be unpleasantly surprised.

The good news is that there are investments, available to everyone, that do not involve these levels of fees, and in fact barely have any fees at all. They allow any investor to participate in the markets for stocks, bonds, precious metals, commodities and foreign exchange, as appropriate for the investor, rather than for an advisor, all at very low cost.

You may have worked out by now that one of the types of investment vehicle I’m describing is the exchange-traded fund, or ETF. Used in combination with other vehicles, and wielded with the right strategy, ETFs can be a key tool for investment success.

The exact selection of ETFs along with other tools to be used, will be individual to every investor, and the Proactive Investor Course teaches this in detail. But this first basic principal is common to all:
 

  • Do use low-fee instruments exclusively.
  • Do not pay investment fees that you don’t have to.


That’s all we have space for today, and that is just step one. More to come in future weeks.

 

 

 


 

 

 

 

Learn to Trade Now

This content is intended to provide educational information only. This information should not be construed as individual or customized legal, tax, financial or investment services. As each individual's situation is unique, a qualified professional should be consulted before making legal, tax, financial and investment decisions. The educational information provided in this article does not comprise any course or a part of any course that may be used as an educational credit for any certification purpose and will not prepare any User to be accredited for any licenses in any industry and will not prepare any User to get a job. Reproduced by permission from OTAcademy.com click here for Terms of Use: https://www.otacademy.com/about/terms

Education feed

Editors’ Picks

EUR/USD battles 1.2150 after disappointing NFP

EUR/USD is trading off the 32-month highs amid bumps in US stimulus and vaccine distribution. Markets await the all-important US Nonfarm Payrolls missed expectations with 245K jobs gained in November. 

EUR/USD News

GBP/USD tumbles from the highest since 2018 on the Brexit impasse

The GBP/USD roller coaster continues with a downfall below 1.35 after the pair hit a 31-month high of 1.3539 earlier. Brexit talks have yet to yield an agreement. Negotiations are set to continue through the weekend.

GBP/USD News

USD/JPY: Modest bounce, still vulnerable

USD/JPY has bounced from weekly lows, but it’s at risk of falling further. US Treasury yields and equities post modest intraday gains ahead of the NFP report. 

 

 

USD/JPY News

Editors’ Picks

EUR/USD battles 1.2150 after disappointing NFP

EUR/USD is trading off the 32-month highs amid bumps in US stimulus and vaccine distribution. Markets await the all-important US Nonfarm Payrolls missed expectations with 245K jobs gained in November. 

EUR/USD News

GBP/USD tumbles from the highest since 2018 on the Brexit impasse

The GBP/USD roller coaster continues with a downfall below 1.35 after the pair hit a 31-month high of 1.3539 earlier. Brexit talks have yet to yield an agreement. Negotiations are set to continue through the weekend.

GBP/USD News

USD/JPY: Modest bounce, still vulnerable

USD/JPY has bounced from weekly lows, but it’s at risk of falling further. US Treasury yields and equities post modest intraday gains ahead of the NFP report. 

 

 

USD/JPY News

Bitcoin price majestically rockets past $18,000 as $20,000 beckons

Bitcoin rally is in full swing as investors anticipate a final leg up to $20,000. The flagship cryptocurrency has in the last couple of weeks broken key barriers to top $18,000 on Wednesday towards the end of the Asian session.

Read more

XAU/USD fails to break $1850 and turns to the downside

Gold peaked after the beginning of the American session at $1848/oz reaching the highest level since November 23 and then turned to the downside. It bottomed at $1829 and is it about to end the week hovering around $1830.

Gold news

RECOMMENDED LESSONS

7 Ways to Avoid Forex Scams

The forex industry is recently seeing more and more scams. Here are 7 ways to avoid losing your money in such scams: Forex scams are becoming frequent. Michael Greenberg reports on luxurious expenses, including a submarine bought from the money taken from forex traders. Here’s another report of a forex fraud. So, how can we avoid falling in such forex scams?

What Are the 10 Fatal Mistakes Traders Make

Trading is exciting. Trading is hard. Trading is extremely hard. Some say that it takes more than 10,000 hours to master. Others believe that trading is the way to quick riches. They might be both wrong. What is important to know that no matter how experienced you are, mistakes will be part of the trading process.

Strategy

Money Management

Psychology