The Best Way To Invest $25,000 or More In The Stock Market

One of the reasons my Wealthy Investor students do so well is because I teach them how to set goals, and to keep trading and investing in the stock market simple.

If you want to be successful investing $25,000 or more in stocks you’ll need to understand three simple concepts. They are allocation, risk and covered calls.

Understanding Risk 

As an investor your next goal is to lower risk. That means as a self directed investors you want to stay within the Dow Jones Industrials. 

Dow stocks tend to stay favorites on Wall Street and produce big profits. Banks, insurance companies and Hedge Funds invest in Dow Stock because of their annual earning revenue. Dow stocks that are multinational brands like Verizon, Coke Cola and Apple have a lower likelihood of going out of business over a ten-year period. Their global footprint is enormous.

Asset Allocation

You may have heard financial advisers discussing asset allocation. What does that mean?

Allocation simply refers to how you distribute your investment funds.

The Wealthy Investor approach says the we invest at least one-third of our investment dollars (in this case $8,333) in low risk Dow Companies with five years of consecutive top line revenue growth.

In the Wealthy Investor program we choose to invest one third of our money in Dow stocks because they tend to be stable and they anchor down our portfolio.

Examples of stable Dow stocks are companies like Disney, Nike and Home Depot. These three companies not only have five years of growing topline revenue, but they have a history of increasing their dividends. That means as an investor you win big.

*Take a look at the five-year stocks charts of these companies because a picture is worth a thousand words.

*Important note: if you had invested in these companies over the last five years, your investment would have doubled in value.

*Disney (DIS) 5-Year Chart

*Nike (NKE) 5-Year Chart

*Home Depot (HD) 5-Year Chart

Selling Covered Calls For Income

Once you’ve allocated one third of your investment dollars to stable stocks, and given thought to risk, your next step is to learn how to sell covered call options for income. Selling covered calls is the only trade that allows investors to generate residual income each and every month.*

Here’s how trading covered call options works:

If an investor owns 1,000 shares of XYZ stock at $55 per share and is willing to sell those shares for a profit, that investor can sell the right to a second party to purchase their shares at $56 dollars per share. In Wall Street terms, the investor would be selling the right, but not the obligation, to a second party to buy their XYZ shares at the $56 strike price. The income from selling the rights is referred to as the premium. The premium for selling a thirty-day call option could be as much as one dollar per share.

So what’s the down side of selling covered call options? If XYZ shares should rise to $61, in the above example the investor would be obligated to sell their shares at $56. However, if XYZ shares never cross $56 by the option expiration date, the investor gets to keep both the shares plus the premium income. The key is in knowing which stocks to hold for selling covered calls and which to invest in for the long term.

For decades, covered call option selling has been a well-kept Wall Street secret used largely by savvy Hedge Fund managers. Today, no matter what your background, the online trading software in most brokerage accounts has made it possible for the retail investor to profit right along with the big boys- all you need is a financial education to be on your way!*

Before you invest $10,000 or more in the stock market make sure you continue your financial education and learn how to manage risk.

Order The Wealthy Investors Guide to Stock Market Success or sign up for my FREE Stock Trading and Investing E-Mail List on this page.

In The Wealthy Investors Guide to Stock Market Success, I’ll explain in easy to understand language everything you need to know to get started.

In this original five CD audio series, you will learn the basics of covered call writing and volatility trading and how to use these powerful trading tools in your portfolio.

Yes, you can be a wealthy investor if you get started right now.

Order The Wealthy Investors Guide to Stock Market Success or sign up for our FREE Stock Market Success email list and get free investing news, articles and advice!

* DISCLAIMER:  Stocks and options trading involves risk and is not suitable for every investor. The stocks and options prices vary and, as a result, clients may lose or gain from their original investment.  Stock illustrations posted on TheWealthlyInvestor.net web site are for illustration purposes only. Your personal results as a trader/investor may vary from the WI students listed above.