{"id":962,"date":"2018-06-18T21:12:32","date_gmt":"2018-06-19T01:12:32","guid":{"rendered":"http:\/\/www.adamsmithnow.com\/?p=962"},"modified":"2018-07-07T19:10:21","modified_gmt":"2018-07-07T23:10:21","slug":"investment-primer-part-2-vehicles","status":"publish","type":"post","link":"http:\/\/www.adamsmithnow.com\/index.php\/2018\/06\/18\/investment-primer-part-2-vehicles\/","title":{"rendered":"Investment Primer Part 2: Vehicles"},"content":{"rendered":"<p>By <a href=\"http:\/\/www.adamsmithnow.com\/index.php\/2018\/07\/07\/kevin-judge-bio\/\">Kevin Judge <\/a> | June 18, 2018<br \/>\n<strong>VEHICLES:<\/strong> There are several methods for investing in the above asset types and classes.<\/p>\n<ul>\n<li>Direct Investment: Purchase the investment your self\n<ul>\n<li>In general, safer than options but lacks the diversification available from mutual funds<\/li>\n<li><em>Leveraging<\/em>: You can increase your purchasing power and profits by buying on margin, aka borrowing the money to make the sale. This increases the reward, but also the potential of loss.<\/li>\n<\/ul>\n<\/li>\n<li>Options: Purchase the right to buy or sell an investing\n<ul>\n<li>It is safer to sell options than to buy them and safest to sell them when you hold the investment, aka not naked.<\/li>\n<li>Calls are the right to buy a stock at a fixed price for a limited time.<\/li>\n<li>Selling a covered call means that the seller pockets a premium paid by the buyer who can buy the sellers stock at a price higher than the current price for a limited time.\n<ul>\n<li>The seller always \u201cwin\u201d because if the call is exercised he keeps the premium and a profit compared to current prices. If the call is not exercised he just keeps the premium, still better off than if he had not sold the call.<\/li>\n<\/ul>\n<\/li>\n<li><em>Leveraging:<\/em> Naked options are considered a type of leverage. Buying calls and puts naked significantly leverage the benefit of guessing right on the market direct. For example\n<ul>\n<li>Buy a stock for a dollar and sell it for 1.25 make 25 cents!<\/li>\n<li>Buy 4 options for 25 cents each and it goes to 1.25 you make $1.<\/li>\n<li>Unfortunately, most options expired unexercised and buyer loses all their money.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<\/li>\n<li>Mutual Funds: Purchase a fund that makes the investment.\n<ul>\n<li>Diversification reduces risk<\/li>\n<li>Professional Management<\/li>\n<li>Need to watch for high fees.<\/li>\n<li>Index Funds (Exchange Traded Funds) are believed to best replicate market returns.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>By Kevin Judge | June 18, 2018 VEHICLES: There are several methods for investing in the above asset types and classes. Direct Investment: Purchase the investment your self In general, safer than options but lacks the diversification available from mutual funds Leveraging: You can increase your purchasing power and profits by buying on margin, aka\u2026 <span class=\"read-more\"><a href=\"http:\/\/www.adamsmithnow.com\/index.php\/2018\/06\/18\/investment-primer-part-2-vehicles\/\">Read More &raquo;<\/a><\/span><\/p>\n","protected":false},"author":2,"featured_media":963,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[10,15,5],"tags":[],"_links":{"self":[{"href":"http:\/\/www.adamsmithnow.com\/index.php\/wp-json\/wp\/v2\/posts\/962"}],"collection":[{"href":"http:\/\/www.adamsmithnow.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.adamsmithnow.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.adamsmithnow.com\/index.php\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"http:\/\/www.adamsmithnow.com\/index.php\/wp-json\/wp\/v2\/comments?post=962"}],"version-history":[{"count":3,"href":"http:\/\/www.adamsmithnow.com\/index.php\/wp-json\/wp\/v2\/posts\/962\/revisions"}],"predecessor-version":[{"id":1040,"href":"http:\/\/www.adamsmithnow.com\/index.php\/wp-json\/wp\/v2\/posts\/962\/revisions\/1040"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.adamsmithnow.com\/index.php\/wp-json\/wp\/v2\/media\/963"}],"wp:attachment":[{"href":"http:\/\/www.adamsmithnow.com\/index.php\/wp-json\/wp\/v2\/media?parent=962"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.adamsmithnow.com\/index.php\/wp-json\/wp\/v2\/categories?post=962"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.adamsmithnow.com\/index.php\/wp-json\/wp\/v2\/tags?post=962"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}