A Brief Primer on Options: Part 3 (Two ways to enhance your dividend growth portfolio with cash-secured puts)

In part one, we discussed what options are and why you might want to use them.  In part two, we discussed how to read an options table as well as how to open and close option positions.  Now that we’ve made it to part 3, we’re going to look at two ways that you can use cash-secured puts to enhance your dividend growth portfolio.  Cash-secured puts are my flavor of options, and after reading this, they might become yours as well.

A Brief Primer on Options: Part 2 (Reading an options table, opening and closing options)

Previously, in part 1 of our options primer we discussed what options are and why you might want to use them.  Now it’s time that we move onto part 2, where we’ll focus on how to read an options listing and how to go about selling cash-secured puts and covered calls.  We’ll also cover how to escape from an option that you no longer want and remind you once again of the risks of dabbling in options.

A Brief Primer on Options: Part 1 (What are options?)

I love options.  I particularly love selling cash-secured put options.  But the best place to start is the beginning.  So for the purposes of this post, I’m going to walk us through the basics of options.  What they are, how do they work, and why you might be interested in them.

A word of caution before we begin.  Options trading can become super complicated.  The more complicated the trades, the more sophisticated you need to be as an investor, the more risk you take on, and the bigger your possible losses become.  And I’m talking portfolio destroyingly big here.  That’s why I keep things simple and avoid crazy spreads and use of margin.  Our objective is to take some small risks and build wealth, not take large risks and wreck all of our hard work.

Savings Rate is the Key to Achieving Financial Independence

Achieving financial independence requires only two things, a high savings rate and a descent rate of return.  But what constitutes a high savings rate?  What if you just want the lowest possible savings rate that will still get you to a comfortable retirement?  Can you really expect to achieve financial freedom faster if you load up on high yield stocks?  Answers to all of these questions are revealed as we explore the magical worlds of compound interest and savings rate below.

Insourcing vs Outsourcing

Outsourcing has been practiced by corporations for years. Outsourcing is also practiced by regular people when they pay others to do things for them.  Best selling author and shyster (*) Tim Ferriss advocated pushing personal outsourcing to the extreme in the 4-Hour Workweek, the idea being that the less grunt work you did, the more time you could spend building a business.(**)  On the flip side, much of the FIRE (financial independence/early retirement) community advocates the opposite, insourcing.  They make the very valid point that you can save lots of money by doing things yourself.  It just so happens that I know quite a bit about both approaches.

A Brief Primer on Dividend Growth Stocks Part 2: Basic stock screening

I thought it would be a good idea to follow up part one of my primer on dividend growth stocks with second part, that is all about some of the basic criteria that can be used to evaluate a dividend growth stock that you’re interested in.  If you are going to evaluate whether to buy an individual stock or not, you need to have some kind of objective criteria established.  If the stock meets your criteria, you consider buying it.  If it doesn’t, you move on and keep looking.  Read on to learn about some of the criteria that should be examined when determining whether or not to consider buying a stock.

A Brief Primer on Dividend Growth Stocks Part 1: What are they and how do they make money?

In the opinion of this humble blogger, dividend growth investing is a great way to build wealth over time.  Dividend growth investing is a branch of value investing, that focuses on buying shares of companies with a consistent history of raising dividends. As I was putting together the initial content for this blog, it dawned on me that readers green to the idea of financial independence, dividend growth investing, or investing in general might be kind of lost by all the terms thrown around.  In this primer, I presume that you know nothing and start at the very beginning.

Automatic Data Processing (ADP) Dividend Stock Analysis

Automatic Data Processing (ADP) is the largest global provider of payroll outsourcing services and has over 570,000 clients worldwide.  ADP also provides outsourcing services for human resources, tax filing, and benefits administration.  ADP is divided into two main business segments, 1) employer services which focuses on payroll, human resource, benefits administration, time and attendance, and tax filing and reporting services.  2) Dealer services which focuses on transaction systems, data products and professional services to automobile and truck dealers and manufacturers.  In 2006 ADP sold off it’s claims processing unit and in 2007 it spun off it’s brokerage services unit in order to focus more on its core business.

Weekend One Off: Thrift Shop

What happened to the link love?  I’m finishing up a week of business travel, so I’m lucky that  I even had time to reply to comments on my own blog, let alone read others.  But fear not!  The love will return next week and may even be supersized if I do get some time to peruse personal finance blogs while getting my science on.

Identifying the Core Psychological Aspects of Your Life

I’ve mentioned in passing that life can be divided into three distinct spheres, the material (needs), the psychological (wants), and the social.  Each sphere contains certain core elements that are central to our ability to live happy productive lives.  I’ve already talked about how to identify the core material aspects (aka: needs) of your life.  Today, I want to focus on the core psychological needs of your life, otherwise known as wants.