Extra Earnings


I am sure that no matter where you are in your career, you desire to create more income for yourself. For most people, only two options come to mind.

Either they work much harder in their job and hope their boss notices their efforts and gives them a raise of 5-10%, or quit their job and find another company that will pay them 10-20% more.

When I talk about increasing your income, I don’t just mean by a measly 5%, 10% or 20%, I am talking about massively increasing your income by 50%, doubling it or even increasing it by three to five times, within 12 months!

Is this possible? Yes it is! And you can achieve this without quitting your job.

How? By not just focusing on your single, primary source of income. The only way to double or triple your income to create for yourself multiple streams of income. The rich never depend on one stream, but have multiple streams.

What Determines A Person’s Income?

Before you can increase your primary source of income, you must first understand what determines a person’s income.

Why is it that one person is paid $3,000 a month while another person is paid $30,000 a month?
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The Internet is one of the most frequently used tools for communication today. There are over millions of people who log on to the Internet every single day. Besides, with the benefits that the Internet gives, who would not want to be a part of this information superhighway.

With the Internet, you can communicate with your family and friends through emails and instant messengers, you can purchase goods and services without leaving your own home, and the Internet is one of the most promising income generating tools that everyone can use today.

In the past, you needed products or services in order to make money through the Internet. Today however, you can make money through the Internet by using affiliate programs. This program will allow you to make a substantial amount of money out of your website and is a very good home business that you would want to get in to.

First of all, you need to know what an affiliate program is and how it works in order to fully understand how you can make some money out of it. Affiliate programs is like a joint venture where you or your website becomes a partner with another website that have already developed a product or service that they are already selling in the Internet. As a partner, your job is to direct the visitors of your website to your partner website and hope that they will purchase the products or services being offered. Your website will be like the company’s marketing arm, among several.

The company you plan on being affiliated to will be providing all the necessary tools that you need in order to start the affiliate program. They will be providing the links, and some companies will provide free e-books on how you can effectively earn from affiliate programs.

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woman2.gifApproximately eighty percent of our investors are male. But I am willing to bet that eighty percent of the most successful investors are women.I have read many stories and I began to wonder why is it that women tend to be better investors than men. I thought about it over and over, and I could not ignore the facts that women make more successful investors than men.

While this recent research shows that potentially women are naturally talented investors, many are still put off by the macho image of the stock market. Men tend to let their egos make their decisions for them. They hold when they should sell and vice versa. They buy in for fear of missing out on that one big opportunity. They refuse to ask questions or to ask for help in fear of looking silly.

In other words, men are more interested in looking strong, knowledgeable or successful than they are in making money. They invest not to get the best deal out of the market but invest so that they look good.

Women on the other hand, are much more likely to ask questions until they fully understand what they are learning, and they are usually more interested in the goal, (in this case making money) than they are in impressing the people around them.

This quality makes women great investors from all that I have read are that rather than investing according to what will make them look good, women will invest according to a plan—not according to what mood they are in or whether they will be “right” or “wrong”.

Investing is not about being right or wrong. It’s about making money. Women are able to put their egos aside in ways men have trouble doing. This ability to set their ego aside makes women great investors. Need proof?

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2004012800340901.jpgThere seems to be a school of thought around that the stock markets must run in such a way that the so-called retail investor must always make money and if he doesn’t, then there’s something wrong. Either the laws are inadequate or the markets are crooked, or preferably, both. The belief that the retail investor (formerly called the small investor) has a right to make profits no matter what he does is shared by some in the investment community, the media and in the government. There are frequent lamentations about the fact that the retail investor is not participating in the markets and various remedies are suggested (and some implemented) to correct this supposed anomaly.

Am I saying that no individual should invest directly in stocks at all? After all, expert investors too start out as individuals investing for themselves. The way it happens is that a large number of investors try their hand at the markets, usually when the markets are booming. As long as the markets stay strong they all make money, more or less.

This makes them confident so that when the bulls stop running, most of them lose heavily. Some, however, turn out to have the right mental make-up for this activity and go on to become experts. There is nothing wrong with this. Markets are inherently Darwinian by their nature that those who make the wrong choices will lose. For a market to function correctly, those who make the right choices must make money those who make the wrong choices must bear losses. If we see this as a problem and try and fix things, we will actually end up breaking them.

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eggsa.jpgWhen it comes to building your nest egg, the most important strategy is to minimize loss. The best way to minimize this risk is through the power of diversification. By diversifying your portfolio, you are ensuring that your nest egg is spread across different baskets. Diversification helps to strengthen and protect your portfolio.

Your chances are increased that if one area falls another area that you have invested in will remain strong, and your assets will be protected..

I define risk as the probability of things going wrong. Once things have gone wrong, they cannot go right. Older investors will remember this feeling they have after their losses, of wanting to turn the clock back. It is the same feeling you get after losing a loved one, when you want to reach out and touch the person after she or he is gone.

The preventive part is all about ‘diversification’, almost the only way to manage risk as defined in financial markets. Both risk measurement and diversification lend themselves to mathematical and statistical analysis, giving classical finance its biases. .

Value investors do the opposite. They add to their positions as a scrip goes down, playing to be the ‘last man standing’, i.e. trying to buy the last falling share as sellers depart the stock. The more of these ‘last’ shares they can pick up, the better their returns, provided of course, they have bought a safe, steady business at a great price, and the business recovers subsequently. .

In this strategy, you should try to trade a correlated pair as part of your diversification strategy. Like buying the market leader and short- selling the market laggard. A caution here is that if you are buying at the bottom of the cycle, then the laggards gain more than the market leaders. In a bull market, buying the market leader and short-selling the laggard may be a good trading strategy. Make sure that you don’t make a mistake in reading the market for example, is this a bull market or a bear?. Across the world, the cost of capital will soon start to drop. That would suggest a very shallow bear market, if we see one at all. Even a normally ‘bearish’ person like me is not willing to take a stand.

Statistically one thing is clear – traditional means of diversification won’t save you. Remember one common mistake: mindlessly diversifying into, say, 100-200 stocks, which then go unmonitored for entry and exit points. Since the investor no longer knows enough about these businesses, he is prone to fall prey to rumors. In effect, the act of ‘diversifying’ will actually increase the probability of losses rather than reduce it.

True diversification includes far more investment choices than just stocks and bonds. It includes other non-correlating asset classes that don’t intrinsically involve either speculation or timing. Aggressive investors like the readers of this article must be having more than 50 per cent of their net worth in equities, especially if they are below 40.

With each investment be sure to invest no more than you can afford to lose, so you can sleep at night. And use dollar cost averaging – taking a fixed proportion of your personal savings each month to add to your investment holdings, so that volatility becomes an advantage over a long time horizon. Only then will diversification begin to make statistical sense.

inf017.jpgHere’s an old story that some of us have heard when we were children. A group of blind men want to know what an elephant is like and are taken to an elephant to figure its shape out for themselves. Each one touches a different part and thus gets a completely different idea of what the elephant is like. One touches its side and thinks the elephant is like a wall. Another one touches the trunk and thinks it to be like a snake. The one who touches the tail thinks that the elephant to be like a rope and the ears were like a fan and the tusks like spears and the legs like tree trunks and so on and so forth. The moral of the story is obvious. In some versions of this story the blind men become violent over their differences and beat each other up. The story is used to indicate that reality may be viewed differently depending upon one’s perspective. The problem, of course, is not the blind men are all wrong but they are all correct, but only partially so.

When the stock markets have fall sharply, losing about 5 per cent over five trading days. Newspapers and on TV channels, there are any number of blind men offering opinions about the elephant in the stock markets. Here are some of the more popular reasons. Worried about inflation and under pressure, the government will reduce duties on X and/or forbid the exports of Y and/or ban futures trading in Z and/or increase capital gains tax (either short-term or long-term) and/or an increase in the Securities Trading Tax and lots more.

All of it sounds like reasonable fears and any one could come true. In recent months, generally when I talked to big investors they seemed to be hunting for reasons to justify the rise in stocks. Now, they are desperately hunting for reasons to prove that stocks are going to fall. At the end of the day, the fact remains that after years of booming stock prices, everyone is nervous and knows that there will some kind of a correction and would like it be over and done with as quickly as possible.
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mews_01.jpgOne of the unique things about the state of mind of investors in stocks or mutual funds nowadays is that there is a huge diversity in their happiness levels. Of course, those who chase short term opportunities over days or weeks are always in some part of a manic-depressive cycle but nowadays, even long-term investors’ moods have an impressive diversity.

On the face of it, happy days are here again. Stocks have clearly shaken off the decline the suffered in the middle of last year. The markets are at or near all time highs and so are equity mutual funds. Currently, almost 95 per cent of equity mutual funds are either at an all time high or within five per cent of such a high.

In fact except for a handful of perpetual dullards (whom no one any longer invests in any way), there are no equity funds that haven’t recovered the losses that the markets suffered a year ago. In fact, many funds have done substantially better. In the period from June 14, 2006, which was the lowest point that the major indices touched in recent times, the markets have gained considerably. During this period many equity mutual funds gained more than the markets did.

Of course, a larger number, performed worse than the markets. Still, as I pointed out earlier, the fact remains that even these have earned substantial returns over this period and as I said earlier, there aren’t too many funds which aren’t at all time highs.

All in all, there are hardly any investors who are today sitting on losses, no matter when they’ve invested. So that’s that isn’t it? Happy times are here again and everyone should be smiling and congratulating each other?

Not quite. The fact remains that people invest in equity mutual funds to make money, not just to avoid losses. A great deal of money flowed into equity funds in the first half of 2006. Based on the heady atmosphere of those days, I think much of this money was not level-headed long-term investment. Instead, it flowed in expecting quick and substantial returns.

However I think this has been a good experience everyone. This is the way equity investment is. Stocks are volatile and need time to give returns. Most investors who come in at the peak of a bull run actually end up having to make losses in exchange for receiving this valuable educational experience. Those who have learnt it for free should actually consider themselves pretty lucky.

july04_finance_ashok.jpgMoney earned can either be consumed or saved. When money is saved it can either be hoarded or be invested to enhance its value. An investment project requires information about the various avenues available.

Money is often a scary thing to deal with, especially those who have never worked with it in detail before. Investing for the future can be even scarier. Still, even young men and women as well as those preparing to retire need to know the basics of investing to prepare for the future and insure their financial freedom. An understanding of what assets are, what kinds of assets are out there, and specific tricks of the trade will help beginning investors start on their journey to economic security.

The general term used to refer to the investments made is ‘assets’. Assets reflect one’s investment in cash, bonds, stocks or other sources that generate income. Out of the various assets available for investment, the most common one is Stock. Stock refers to the shares of the companies.

Assets are investments in cash, bonds, stocks and much more. They are basically a combination and melding of everything someone owns or is owed. An asset class is basically a general term referring to the wide variety of investments that can be made by today’s investors. Asset classes include things such as stocks, bonds, and cash equities. Before investing, an understanding of assets classes and the pros and cons of each is a definite must.

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…unless the stocks you own ARE beating the market!

2002-10-09-sydney-bear-bull-stock-markets-like-flock-530.JPGThere is no way on earth you could ever beat the market if the stocks you hold are not keeping up with the market. And hopefully, staying ahead of the market.

But yet, that’s what lots of people try to do. They’d rather keep all the dogs in their account and maybe “take a flyer” on one stock, hoping for a miracle. It’s like trying to win a Derby horse race with your Donkey. It just ain’t gonna happen.

But hey, maybe you don’t want to beat the market overall. Maybe you just want to own the BEST semiconductor stocks, or the best retailers, or the best utilities.

Seriously, how would you even KNOW if your stocks or mutual funds are beating the market, or are the best names to own in their group? Well, I can tell you this…the best indicator I’ve ever seen in twenty-plus years in the business has been relative strength. What is relative strength? It is simply the measure of how your mutual fund or stock is doing, compared to a group of other stocks, funds or indexes…or the market overall.

Perhaps you want to compare Intel with other semiconductor stocks. Maybe you want to compare Microsoft with the S&P 500 Index. Maybe you want to compare your mutual fund against the Dow Jones Industrial Average or the Standard & Poor’s 500 Index.

This is a very easy calculation. Here is how you do it: Simply divide the price of your stock or mutual fund against whatever yardstick you choose. You’ll get a fractional number as the result. But slide the decimal over so you can work with whole numbers. Then we begin plotting that result daily on a point & figure chart.

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Gone are the days of mid 50’s and 60’s when a family could survive upon a single income. Today the inflation and economic factors are such that survival on two incomes has become hand to mouth. Going by this trend we can very well imagine what the future holds for us. Two incomes certainly will not be enough. It’s best to prepare for the worst and expect the best instead of vice versa. Its best then to have multiple incomes flows into your finances than to have an insecure future. The concept and importance of extra income becomes all the more apparent.

make-extra-money.jpgPeople who have been well-to-do have always known and taken care of this. If one income dries up, one can always fall back upon the other streams of income, and if all go well you can only get richer, no harm in that. Ordinary and average living people have always been in a dilemma regarding this. Loss of one income really affects them adversely and it would take years of hard work before any normalcy returns. Not to mention, the rippling effects of financial distress that could cause a lot of heartburn and unwanted emotional disturbances.

Having diverse sources of income or extra income gives you a backup to fall back upon. If one source vanishes, you should not feel the difference. One should have enough time to reorganize and regroup, that’s it, and you are back on the happiness highway, safe and sound. The importance of extra income and extra sources of incomes is not lost on anyone today, therefore the want and rush.

Extra Income can be of two kinds – Linear and Residual.

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