Do you want to make money? Part 1

I learned the basics of the investment business when I was growing up. No, they don’t teach this in most public schools or colleges. I hung out at brokerage firms with old retired steelworkers while my friends hung out in the streets. The old Steelworkers thought I was young and funny, a Black novelty among a bunch of old White men. They loved to tell me their investment secrets and I did not mind taking notes.

The trick to making money in the market is to chase dividends and interest. It is not in chasing growth. I talked about that many times before. In the bond market, you want to do the following;

First, pick a brokerage firm that will not charge you a lot of money to buy your investments. That leaves out most full brokerage firms. They charge to hold your hand. If you follow my articles then you know, I don’t believe in hand holding. Two brokerage firms come to mind but they are not the only firms that fit the bill.

1) Zions Direct: https://www.zionsdirect.com/
2) Optionsxpress: http://www.optionsxpress.com/

Second, both these firms allow you to buy and sell stocks and bonds online. They have sections where you can look up investments based on interest (yield to Maturity). With stock, you want to look at the dividend yield. When you are ready to invest, bring up these websites and check them out. Look up bonds by yield or “Yield to Maturity”. Use the “Rule of 72” to figure out when your investment will double.

My investment doubles in (n) years = 72 / original investment yield in percentage.
72 / 8% = 9 years.

“Rule of 115” gives you when your investment will triple.

My investment triples in (n) years = 115 / original investment yield in percentage.
115 / 8% = 14.375 years.

Third, pick your bonds based on the following criteria.

1) The amount of money that you have to invest per transaction.
2) The credit rating of the company from “Standard and Poor’s”(S&P) or Moody’s. That is provided for you in the website. With discounted corporate bonds, I like S&P ratings starting with “BBB” to a low “B”.
3) The amount of “Yield to Maturity” that you want.

I stay away from Real Estate and Gambling Industry bonds. Outside of these two industries, I don’t care what the company does to make money.

This is how I double my money in 6 years and triple my money in 9.6 years. These are the better years, doubling in 3 years. In the bad years doubling in 8 years.

It is this simple. It is not rocket science.