RETIREMENT CATCH-UP: 3 TRADING TIPS TO RETIRE ON TIME.
So what were the surveyed answer's people cited for the reason they don't save more:
How Can I Still Retire On Time?
We will go over introductory strategies that will help you not only grow your retirement accounts through active DIY trading, but we will show you the process of doing inside your retirement accounts so you can achieve retirement catch-up.
1. Learn To Generate Returns In Down Markets, Not Just Up
Many people find the idea of shorting and making money when markets fall confusing and somewhat complex. The strategy itself is very simple to understand and many can do it without having to risk substantial capital or be at risk for margin calls from their brokers.
When we talk about shorting markets inside your retirement accounts we're talking about utilizing option put strategies where your risk is very minimal compared to the potential returns if market's sell-off. Let's look at a basic example of making money when markets selloff:
You believe SPY ETF (tracks S&P 500 Index) and the broader stock markets will selloff.
SPY current share price: $262
You purchase a put option: ATM MAY 262 put 1-contract @ 6.00 ($600)
Total Risk: $600 ex. commissions
Price Target: $255
This example is very simplistic and we're not accounting for many variables such as if pricing will reach your profit target before time decay kicks in towards expiration and your contract expires worthless losing all $600. The point of this example is to show what is possible by learning short markets in retirement accounts in order to have retirement catch-up and make money in all market environments.
Options are a great tool especially for those who are still building up smaller retirement accounts and don't have the money to go out and buy thousands of shares in various companies because their stocks are too high. Using options not only allows you to harness leverage but also allows you to profit off of moves really quickly over the buy-and-hold method waiting years for returns.
Here is a basic example of the power of options trading vs. outright purchase of shares for a smaller portion of your retirement proceeds in generating returns.
Purchase 100 shares cost: $29,700 (cash acct) ($14,853 margin acct)
Purchase 1 contract ATM May 297.50 call cost: $1,920 ex commission
Profit If price reaches $305 target
100 Shares: + $765
1 call contract: +$400
(ran through Think or Swim profit analyzer)
So you can see even though the shares yielded more return, the options cost you MUCH less to have and you still had a decent return. Now if you increase those contracts from just 1 to say 5 then the power of large options trades comes into play as well.
See this clip below on a simple options trade in TESLA our team took last week which netted over $3K in less than a few days over buying the physical shares.
Ability to risk A LOT LESS money to bet on price directions in stocks over putting down 10's of thousands of dollars in a few hundred shares of that same company
The risk is limited to the premium paid to the risk of the trade is defined
Profit potential is greater usually in options trading over buying 100 shares of the underlying stock
3. Hedging To Ensure Capital Appreciation In Retirement Accounts
Another reason Americans fail to retire on time is market panics and crashes are becoming more common and severe. This causes people to delay retirement and having to work longer. There is a way to protect portfolios in down markets when someone has an existing basket of stocks while using options for hedging.
This strategy is called using covered calls to protect existing portfolios in down markets. Everyday investors and even financial advisors fail to use basic options strategies because they don't understand them but they're crucial in protecting portfolios when markets are selling off and the investor is not wanting to sell core stock holdings for tax purposes.
Playing retirement catch-up can be easy if the investor goes about it the correct way. By using the power of leverage, having liquidity and taking a few trades a month in a smaller portion of their retirement assets will see their accounts grow regardless if markets are going up or down.
To learn more about how to trade in retirement accounts and the strategies we use, join our next live online workshop: