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Options riches? Not easy.
One favorite question during the Your Money Helpline yesterday was from a nurse.
Who had gone to a seminar.
To learn how to trade options and invest in commodities.
She wanted to put $10,000 into this effort.
She wanted to earn $5,000 to $10,000 more.
And she thought she could.
(She was also considering paying $2,000 to a "coach" to guide her in this effort.)
Let me say it directly: Making 100 percent on your money isn't easy. Especially with investments you don't understand.
"Options trading is extremely speculative. Even seasoned professionals don't do that. You're going to lose your money," Certified Financial Planner Mike Lynch of Money Matters of America in Plantation told her.
Clear enough?
More questions and answers below. Look at our live chat, too.
Harriet Johnson Brackey, the personal finance writer for the Sun-Sentinel, has been an award-winning business...
Comments
I hate that people such as your nurse get trapped by those who hype options as a get rich quick scheme.
I don't like your CFP's response either.
The truth is that options are risk-reducing investment tools, but most people learn to use options as instruments with which to gamble.
If you LEARN and UNDERSTAND how options work, you can invest in the stock market with less risk. LESS RISK.
That means a reduced chance of losing money and it also means any losses are smaller (than without using options).
Options are a fascinating tool, if used judiciously.
Posted by: Mark Wolfinger | October 7, 2009 2:09 PM
Buying options can be risky but selling options on stock you own can get you an extra 10% per year return.
Posted by: JBR | October 7, 2009 4:34 PM