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The Easy Way to Boost Your Trading Returns 58%By
Friday, August 14, 2015
Today, we're going to show you how to make more money from your trading... with almost no extra work...
You don't have to learn any new skills. You don't need to buy any exotic investments. And you don't need to spend any extra time on your trading.
This simple idea could add tens of thousands, even hundreds of thousands, of dollars to your retirement savings.
Here's the idea: Trade for income in a tax-advantaged account. This could be a traditional IRA or Roth IRA, which you can quickly set up with almost any online brokerage... It could even be a 401(k), if your employer offers self-directed accounts.
You've almost certainly heard this idea before... And you may already invest in an IRA or a 401(k). But if you're not taking full advantage, you'll want to see how much more money you could be making.
Today, we'll use a traditional IRA for our example. Most folks with an income can contribute at least $5,500 a year to an IRA, pre-tax. That's $5,500 less income you'll have to pay taxes on come April... And you can compound that money for years without paying taxes on your gains.
You'll be taxed on your gains only when you start taking money out of your IRA. You'll pay income tax on your distributions depending on your tax bracket at that time.
We'll have to make some assumptions here to keep the math simple... But the benefits will be clear.
Let's say you're in the 25% tax bracket now... and that you'll be in that same bracket when you start taking distributions from your IRA in the future.
Here's how the math works...
If you contribute $5,500 a year to your IRA for six years, that's $33,000. If you had to pay a 25% tax on that income, you'd be left with just $24,750.
Now, let's get to the trading...
In DailyWealth Trader, since our launch in May 2012, our average annualized returns with our trading-for-income strategy of selling puts and covered calls has been 12.4%. But let's say (again, an uncertain assumption) you can use this strategy to earn 10% a year for the next 20 years.
In your IRA, you haven't yet paid taxes... so you start with $33,000. In a standard trading account, you start with $24,750. If you earn 10% a year for 20 years, here's how your account will grow. (Remember, in a standard trading account you'll have to pay 25% income taxes on your short-term trading returns. That turns a 10% annual return into a 7.5% annual return. In an IRA, you build on the full 10% return.)
 At the end of 20 years, you would have $222,007 in your IRA, or $105,134 in a standard trading account. Of course, you won't take the full $222,007 out of your IRA all at once... But to keep things simple, let's apply the 25% income tax to that amount. Your $222,007 comes out to $166,506 after taxes. That's $61,371 more than if you had paid taxes upfront.
By trading in an IRA, you earned 58% more for retirement. It's a huge difference.
What if you only have 10 years? After accounting for taxes, it works out to $64,195 from your IRA trading versus $51,011 in a regular brokerage account. It's still 26% more money.
There's no other way to earn so much extra cash with so little work. If you're not trading in tax-advantaged accounts, don't wait any longer.
Regards,
Brian Hunt and Ben Morris
Further Reading:
Taxes are a silent killer on your returns. Here are three proven ways to lower your tax burden:
This is one of the easiest, simplest ways to increase your ability to build wealth.
This idea will provide you with instant returns that will compound your wealth for many years to come.
You can still take advantage of one of the most powerful tax loopholes available...
Market NotesANOTHER WIN FOR THE "WORLD'S GREATEST BUSINESS" More good news for the insurance sector... W.R. Berkley just struck a new all-time high.
Longtime readers know Porter calls insurance the best business in the world. These companies collect premiums and pay out claims. If they're good at what they do, they collect more than they have to pay out. And in between, they get to invest that money and keep the gains.
W.R. Berkley is one of Porter's favorite companies in the sector. It's a world-class business run by great managers who know how to take care of their shareholders. As Porter says, "This is the kind of stock you will never have to worry about – not even for one day – the entire time you own it."
As you can see from the chart below, shareholders haven't had much to worry about over the past few years. Shares are locked into a long-term uptrend... and hit a new all-time high yesterday. It's a bull market in insurance...
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