SHOULD I BUY OR RENT HOUSE?

One of the classic dilemmas haunting lot of people is the issue of buying versus renting the house for accommodation purposes. Some experts feel that buying a house is the better option as it helps you create an asset in the long run, while some believe that renting is better option considering the prohibitive rates realty commands these days. And by renting one can save money by paying rent which will be lower than the home loan EMI and these savings can be invested for long term wealth creation. So both arguments have their own merits and none can be dismissed easily. Both of them have their own benefits and shortcomings. So, before we decide on which way to go ,we need to fully understand the pros and cons of each of these options.
BUYING HOUSE
PROS OF BUYING

- It creates an asset for you in the long run.

- You don't have to pay for your accommodation after you pay off your loan, which is maximum of 20 years, unlike,in renting where you have to pay monthly rent for every month till you continue to stay in the rented premises.

- You also get income tax benefit. Upto Rs1.5 lakhs of your interest component paid in the year on your home loan is deducted from your taxable income and Rs 100000 principal repayment is also tax free. The same benefit is also available to your spouse in case you decide to go for joint loan for the house.So the total tax able income deduction benefit possible on your home loan could be a high as 5 lakhs for both the spouses.

- House may be used for generating income under reverse mortgage post retirement.

- No hassle of changing house every 11 months,unlike in rented accommodation.

- Fulfills the dream of having roti kapda and makaan.


CONS OF BUYING

- The monthly outgo in the form of home loan EMI is generally higher than the rent.

- Demands long commitment towards EMI payment. You have to commit a large portion of your income towards monthly payment of EMI for a relatively long period of time like 10-15 years or even 20 years. This limits your ability to meet exigencies and financial emergencies.

- Once you buy a house , you give up the flexibility of moving to another locality in the same city or to another city. You are stuck with that locality for ever,unless you decide to sell it off ,which is long and cumbersome process.

- Ownership of house also comes with high bills like society maintenance charges etc which have to be paid monthly/quarterly etc. This can feel like paying rent after buying a house and be very annoying for few.


RENTING HOUSE

PROS OF RENTING

- Lesser financial strain as monthly outflow is lesser.The rent paid for a house is generally much lesser than the home loan EMI paid to buy a similar house.

- Offers flexibility of choosing neighbourhood as and when desired,unlike with self owned house.

- No long term commitment of paying EMI.In case of any financial stress one can always stop paying rent ,if its higher, and move to a smaller place which has lesser rent. This is not possible with self owned house as the EMI is fixed and has to be paid every month .


CONS OF RENTING

- The money paid as rent is an expense unlike EMI which builds an asset.

- Lower IT benefit for money paid towards rent as against money paid towards home loan EMI.

- Forced to change house every 11 months and pay brokerage for new house on rent. This has both financial , emotional and practical difficulties. Changing house every now and then can throw off your social life out of gear. Your kids might have to shift to new school etc unless you manage to find another house in the same locality.

- No income possible post retirement, unlike with self owned house which does offer an option of income through reverse mortgage.

SO WHAT SHOULD YOU DO?Well you must decide for yourself depending upon your need . I would say you should go for buying a house as its pros far outweigh its cons. However, you may consider renting as well in case you cant afford to pay the EMI of the house that you want or are not sure of the certainty of future cash flow .for example if your job etc is not stable.

NOMINATION FACILITY - A MUST DO FOR ALL

Have you ever wondered what happens to all the money in savings account, mutual funds , shares, bonds etc in a person's account , after his demise , in absence of a will? You would assume that it goes to the legal heir. Well it does technically,but not in practical sense. That's because I read somewhere that most of the money in such cases is not passed on immediately to the deceased's wife,children etc due to the legal cases filed from other family members. Everyone wants to claim a piece of the money left behind by the deceased and hence it gets stuck in legal wrangle. In effect , the basic reason of providing for his dependents by the person after his demise is defeated.Certainly, you would not want this to happen to your dependents. So what should you do? Well the answer is simple:Nominate the person whom you want to inherit your investments and savings in all your investments and savings documents.

What is Nomination facility? Nomination facility is an option available to us where we can choose to nominate the person whom we want to inherit our savings and investments in case of our demise.The application forms for every investment or saving option has the column where we can provide the nominee details like his/her name,DOB ,relation with you etc.The bank or the financial institution concerned will refer to this at the time of passing on your money to your dependents comes.

How will it help? Nomination facility seeks to eliminate the chances of legal wrangle after the person's demise and facilitates the access of money by the nominee as stated by the investor/account holder.It helps the nominee to get the money faster.

Who will it help? It helps both the primary investor/account holder and the nominee since it facilitates the transfer of money as per the primary investor/account holder's wishes.

What if its not there? In India, we still find lot of people not using this option. Lack of nomination facility creates a situation of uncertainty and can lead to delays in transfer of money to the person you would have wanted to. This can happen due to the legal cases filed by other family members claiming a part of that money as their rightful part.When that happens the person/s who you would have wanted to inherit your money will be left out in the lurch at the time when they probably need your money the most.

Where all you need to have nomination? Savings account, mutual funds,FDs, PPF, EPF, NSC,shares , bonds . In short wherever you have money invested or saved you must have a nominee . The nominee details need to provided to the bank/financial institutions in writing.

Who to nominate? This is your choice. You may nominate your wife,children etc. whom you would want your money to go to.In some cases like jointly held accounts, you may nominate more than 1 person as your nominee . In case you are nominating more than 1 person as your nominee , you can also specify the ratio in which they will get the money. For example you may want 60% of your money to go to your wife and rest 40% between 2 of your daughters.

Can I change the nominee details ever? Yes , you can change the nominee details as and when you want. The same needs to be intimated to the respective bank/financial institutions in writing.

What's the latest on this ? Recently , RBI has made it mandatory for banks to ask for nomination details from all its customers having saving account with them. The same detail will have to be mentioned on the passbook. You can not leave the nominee details blank, unlike earlier. In case , the customer does not wishes to nominate anyone, he will have to tell the reason for doing so in writing to the bank.This is big change which will hopefully make the whole process of deciding on the legal heir to the money in saving and other accounts much easier.
What about you? Have you nominated your loved ones for your investment and other savings? If no, then you know what should you do first thing tomorrow.
Stay wise n stay wealthy.

Choose Your Investments Carefully for Long-Term Growth

Entrepreneurs and beginning investors must be aggressive, but you don't have to be careless or foolish. Concentrate your investments in markets where you know and accept the associated risks. For example, if you invest in the futures market, you must be prepared to lose your entire nest egg in a heartbeat. However, this can also be an area of fantastic returns on your investment.
Other investments, like savings accounts, may offer safety, but offer little in the way of appreciation. Your task is to find the investments and business opportunities which offer a level of risk you can live with, while rewarding you sufficiently to reach your wealth building goals. Some investments, which offer stability and growth, include real estate, numismatic coins, and antiques.



In my opinion, however, the best investment in the world is a small business that you own and operate. Read books on small business management, attend seminars sponsored by the Small Business Administration, and talk to other small business owners.

One source of information that people think is great is the college; however, I have a problem taking business advice from a teacher who teaches about business but has probably never operated his or her own profitable business. The classroom is a great place to learn about the theory of business and investing, but search for your mentors beyond the classroom.

Wealth builders must learn from the school of hard knocks, and without the valuable experience gained from your daily exposure to the marketplace, and observation of other successful people, you will never learn to succeed or control your investments. As a rule, you must always maintain absolute control of your investments.

A wealth builder assumes responsibility for his wealth program and does not abdicate control of his resources to anyone. Absentee ownership is fine for the wealthy, but the wealth builder needs to be on hand. Nobody in the world cares about your future as much as you do, and nobody cares about your assets as much as you do.

If you want to get ahead, maintain control of your budding empire. Watch your assets like a mother hen watches her chicks. However, with all this effort to build wealth, don't lose sight of the big picture. In all your getting, don't lose sight of who you are, and don't forsake the love of family and friends.

Entrepreneurs are driven to succeed by an uncontrollable urge to surpass those around them. They are willing to work atrocious hours, sacrifice leisure, forego vacations, and focus every waking minute of their attention to their baby venture.

This is fine for some people, but most of us need to take time to maintain relationships and rest the body and soul. Don't sweat the time spent with your family. And don't ignore your body's demands for rest.

3 FINANCIAL MISTAKES OF MY LIFE

After having completed almost over 6 years in corporate world earning paychecks and living off it, I decided to do a bit of introspection last week and found out that in last 6 years , I have made some grave financial mistakes.I thought of sharing these mistakes with all my readers so that they can learn from them and don't end up making these mistakes themselves.
MISTAKE 1 - Opting for "No PF Deduction"

After I joined my first company ,I was thrilled at the thought of earning a handsome amount of Rs 12000 p.m.(Struggled to get anything better than that in those days after dot com burst). But I was taken aback when the first pay check that I got was for Rs 9800. I was baffled . I wanted to know what happened to the rest. A quick call to the HR and I was told about the various deductions that had eaten up the rest of my money. Eaten up? Yes that's what I felt then, and hence wanted to reclaim my money. So, I found out that there is an option wherein one can choose not to have his Provident Fund deductions out of his salary. off course you have to give a declaration to that effect to your company. I did so, and started enjoying my full salary from next month onwards. It was good while it lasted because it gave instant gratification on every occasion I splurged that extra cash. But, later on I realised that it was a big mistake. Not for nothing, PF deduction is made mandatory, by the Govt Of India. This PF deduction is kind of forced saving for our retirement. And the fact that I did not opt for it meant that I was left with no saving whatsoever after I quit the job. The money which could have gone in the PF fund, would over a period of next 35 years become a huge amount due to compounding effect.I lost out on that opportunity of starting with my retirement fund really early in my life. But, now I can not go back in time and reclaim that money. So my advice to all of you is to never do this with your PF deductions. Infact, if you can , then increase the percentage of PF deductions from minimum 12% to a higher level which you can afford. The more you save in your initial years , the bigger will be your final retirement corpus.

MISTAKE 2 - Buying an insurance policy just to meet a target and then letting it lapse.

I was working with ICICI Prudential and was involved in insurance sales. ICICI Prudential is known as the most aggressive company in the insurance domain in India and as such being in sales meant that we were always under huge pressure to log in more policies than the others. But insurance being insurance, no one wanted to buy it.Now under pressure, sometimes,the sales people buy policies in their own name just to meet the targets. This was counted under their targets which helped them save their skin from the boss's ire and then later on they used to cancel the policy.Cancellation of the policy in the free look period meant getting back almost the whole money back. So it was tactic used by lot of sales people to manage a difficult month in sales. I was always dead against it and never thought of buying a policy on ones own name just to meet the target as the right option. I always believed that you should buy a policy from your own company only if you really need it. But one one such really tough months when sales were not happening , I too fell for this. I convinced myself that I am not buying this policy to meet the number but because I really need it. So I bought the policy for RS 25000 annual premium. And Since I had somehow convinced myself that its a policy that I need it , I didn't cancel it during free look period. Had I cancelled it during free look period of 15 days , I would have got my money back. I continued with the policy for 5 more months and then stopped paying. I stopped because I knew that it was not the policy I needed. It was not worth paying for a ULIP . Result was that I lost my hard earned money in that policy. Had I put the same money in stock markets then,today I would have been sitting with a neat profit of atleast 400% on that. That taught me that one should never buy own company's product just to meet the numbers for your boss.

MISTAKE 3- Not transferring my PF accumulated from my 2nd and 3rd job.

This mistake is the lesser of the earlier two. You all know that in my first job, I didn't have any PF deductions and hence no hassle of transferring my PF money. However, I had PF deductions in my 2nd and 3rd job . But after I quit those respective jobs, I didn't get the money transferred to my new PF account. I have no reason why I didn't do so. Maybe I didn't think it was important enough or maybe I was just too lazy. But the fact is today after so many years I have not yet got the money transferred to my new account.Worse is that I have forgotten details like My employee ID etc of my earlier jobs. I am really at loss to explain this lack of sense of urgency on my part to deal with something which is so very important.But, the good thing is that , I can still reclaim it and get the money transferred. Hopefully will do so now.
I hope you will stay away from these mistakes that I made. If any of you have some thing similar to say , please do share with the fraternity.

How to a Earn Residual Income

Residual income is also known as passive income. It is an income generated through indirect involvement in something. Residual income is extra cash that you have earned as a product of another action like for example, writing a book and later you are receiving royalties on the sale of each book. Residual income is very appealing and attractive. Some people would like to free up time so they can seek other ways to earn income and others don't want to work anymore but desire income.
Here are some things to consider to earn residual income.

• In order to achieve extra income, try to consider investing your money. Popular venues to earn an income that requires an initial investment include interest, rental properties and dividends.

• Know where you are good at. Once you know what your strengths are, you can explore your skills and abilities to earn residual income.

• Create a site based on your interest and knowledge. Chances are if you are interested to something, others are interested too, and if you have a huge knowledge base to back that up, that is the prime situation for creating a site for others to link up and use that knowledge.

• Internet revenues. This is another type of popular residual income. This is money earned on web site through promoting and advertising a certain product or services. While, the initial direct work in building the business marketing web site is needed, the monthly earnings from advertising keeps on generating and this creates a passive income.

Stock Market Trading: Here Are Some Little Lessons to Learn

Stock market trading is like buying a company. The shares are equal parts of the company and each shareholder owns a portion. Most people watch infomercials or hear people talking and they believe that the only way to make money in the stock market is to buy and sell frantically.
Think about it, would you buy a store one day, and sell it right away the next? Maybe if the price was right. However, you have to ask, why did you buy the store in the first place? To make money for years and years, not just for one day.

You earn money from the profits of the business when you trade in the stock market for long-term results. After the company you purchase pays their taxes and other bills, the money left over is their earnings.

These earnings go back to the shareholders as dividends. The best news is that sometimes, you can reinvest those dividends and get more shares that grow and pay even more dividends. There's a lot of money to make when you do stock market trading that's not just from the rise and fall of the stock price.

One of the top mutual fund managers said that he purchased stock after he sampled their customer service. If the stock was that of a restaurant chain, he ate at the restaurant. If it was an airline, he flew the airline. Often the consumer sees situations that create hazards or growth in the company.

All of these things affect the life and profitability of that company. You need to look at the company from a business angle. Are their computers junk, or do you love the new changes and models? Does the company have a good reputation for quality? These are simple questions that you need answering before you purchase a stock.

People that do stock market trading sometimes look for price fluctuations and have no concept what that company does. Trading on price movement alone puts your money at risk to the whims of the market. If you know that a company's financial situation is solid, then you don't panic and sell each time the price of the stock dips.

Remember, the stock price is not real. It's what people perceive to be real. When you buy stock without knowing any of the companies financials or even the type of industry they're in, you might as well put your money on the pass line at a Vegas craps table, because your odds of winning are just about the same.

Understand the company and the industry when you do stock market trading. During times of depression and recession, some companies do quite well. During bull markets when the economy has a sunnier picture painted, other companies do quite well.

You can grab up bargains in the period of time when your company stock, through no fault of it's own, drops in price. The company is still the same, but the idiots that buy willy-nilly drive the price down because they don't understand the real money made on long term investing. If you know the financial situation and the company and it's good, during that industry down time you get bargains on that stock so it's time the to buy more.

Knowledge is your best comrade when you do stock market trading. Just remember the staff at Microsoft. If they sold their shares at first, they would have made pennies. A few years later, a sale would have brought them thousands. Those staffers that knew the quality of their company and held the shares ended up making millions because they had knowledge.

Interesting Fibonacci Retracement

Is The Rally Over, or Just Starting? It's been a nice bounce off the "devil's bottom" (666 on SPX, March 6), if it was indeed a bottom. We've been there before, so caution is warranted. However, some signs are there that this 'could be different' this time around. New lows seemed to have peaked at the November lows and while price made a dash lower, there is a positive divergence. Perhaps the situation may not improve but it's may not get much worse, either. Fear is another factor, another positive divergence. A new high in the VIX was not seen at the recent lows in March. Many out there are non-believers in this rally, too...after being burned time and again. Finally, bond yields were lower on March than in November...another positive. While inflation is an issue to be reckoned with someday, the stimulation methods seem to be putting a stop to a deflationary cycle.
The following chart shows an interesting 50% retracement level we reached on Thursday's close, which is based on previous 1000 highs and the 666 low in the S&P 500 Index (SPX). 50% is a Fibonacci Number, but also is a logical retracement point on rallies.

Anecdotal Evidence The complexities still exist around our economy and cannot be solved with a few Fed plans, banking or credit. However, some small 'signs' are out there, I'll share with you what I am seeing. The house next door to us was a foreclosure last year and had been on the market for about eight months. It was recently sold, albeit for a big discount. In fact, I've seen more sold signs around the city than I've seen in years. In retail, stores are seeing traffic again, and it's not just window shopping. Restaurants are starting to get patrons back, too. Finally, my parents bought a new car recently, first one in six years. Did they need one? No, but they got such a great deal that it was tough to pass up. A couple of other family members also bought new cars lately. Small but notable signs...we'll see if they turn out to be meaningful. Sentiment - Improving, but... The economy and the stock market are all about sentiment. Good feelings tend to flow to positive action, and vice versa. Let's be honest, the economy was literally frozen for the last six months, and it wasn't just credit. They say borrowing is the lifeblood of the economy, yet the savings rate has been on the rise, its largest increase in decades. Could it be this rise is due to the lack of confidence by the public in investment? Recent sentiment figures show a modest improvement but like any trend momentum is key here. Jobs are still being lost at an alarming rate and confidence, while on the rise is still fragile. It won't take much bad news to get that turned back. Bonds, Gold and the Greenback I was completely stunned by the action of these three on March 18 following the Fed announcement. With Bernanke stating the Fed would be buying treasuries in a big hurry and in a big swoop, along with other programs...bonds rallied huge in about thirty minutes. Gold went higher by nearly $70 while the dollar plunged. Since then these markets have settled down somewhat. However, I can't recall such a large move simultaneously. This was clearly the nuclear option by the Fed, going 'all in' attempting to pull the economy up from the bottom. Will it work? History shows that printing your way out of a problem, inflating the economy has never worked for any nation. Why would it work for the US in this instance? There is a high risk in this approach and consequences will be severe if it fails. A market reaction such as that seen on March 18 tells us so.

DO YOU KNOW THESE 10 THINGS ABOUT STOCK MARKETS

Investing in stock attracts extreme reactions from people ranging from extreme enthusiasm and optimism to complete pessimism and apathy. None of this is right way of approaching stock markets. Stock markets like any other asset class do offer scope for capital appreciation within the boundary of its inherent risk reward equation.Fortunes have been made on stock markets, as Rakesh Jhunjhunwala or Warren Buffett would tell you. But for every Warren Buffett and Rakesh Khunkhunwala,we have quite a few who have lost money in the stock markets well. The key is to understand the dynamics of this market and play it well. So, for you and me , what are the things that we need to know before we trust equities with our hard earned money? I have outlined 10 such things which all equity investors should know. 1. Stock Market is a financial institution , not a casino - First thing to understand for everybody before we get any further is that stock market is a place where trading of stocks happens. It is not a casino where you make money by wagering. There is a method to even day trading that takes place on the indices and hence you must not approach stock markets just to try your luck. You might get lucky at times, but,certainly not always. If you approach stock markets like a casino then be prepared for an outcome like you get in casino.
2.Understand the risk reward ratio - Equities like all other investment class has its own risk reward ratio. Equities are supposed to be relatively riskier asset class as compared to debt based instruments like FD, bonds, Gilts etc. So people investing in equities should be aware of this fact that equity is riskier than other investment tools. And since there is more risk in equities, the chance of returns are also higher in it than other investment tools like Bonds, Gilts, FD etc. One must enter into stock markets only if he is ready to take the risk that is inherent in equity investment. 3.Past performance is not an indication of future performance - This might sound cliched but the fact is that this is very critical for all investors to understand.Past performance of a particular stock or broad markets is no indication or guarantee of future performance. In other words, if the market did well in last 12 month delivering over 30% returns, it does not mean that in next 12 months it will again deliver 30% returns. The markets can under perform or over perform over next 12 months and that may not have anything to do with the way markets behaved in last 12 months. So one must make his investment decisions based on the fundamentals of the company, its management quality, its growth potential etc and not on the basis of its historical returns. 4.Know about the company you want to invest- Great investment guru Warren Buffett says that he invests in equities based on his assessment of the quality of the management running the company, the company's inherent strength and its growth potential and whether the company enjoys a consumer monopoly or not in the market.He says even if the stock markets were to shut for next 20 years , he would still invest in the same companies. The essence of this is that while investing in a stock , one must do a thorough analysis of the company, its management quality , growth potential etc. One must never invest based on a "tip". Its your money and hence you must know the company before you give them your money. 5. Trust professionals if you don't have the time - For all those who don't have the time or expertise required to follow the stock markets, companies , its financial etc, there is way out. They must trust professionals to do this job for them. One can take help of noted stock brokers/financial planners etc to help them out with this. 6.Avoid joining the herd - Warren Buffett's prescription for making money in stock markets is to "be greedy when others are fearful and be fearful when others are greedy". Or in other words, one should try and buy when every one is selling and sell when others are buying. Rakesh Khunkhunwala, the other day said in an interview that he made his fortune by buying stocks much against what others were doing before Madhu Dandwate presented his budget in 70s. He took a contrarian view and that paid off handsomely. 7.Define your goals and stick to it -Another important thing is to enter the markets with a target in mind of how much returns you want from it. Make that a realistic target and then stick to it. So for instance if your target is to make 20% returns on a stock then sell it once it appreciates by 20%. Don't wait for it to go up to 25% or 30% .Doing so will expose you to the risk of loosing even 20% gain that you have now if you waited too long. 8.Buy stocks with stop loss -Almost any trader active in stock market will tell you the importance of buying stocks with strict stop loss on it. Stop Loss is a value below the market price of the stock which is assigned to that stock at which you sell it, cutting your lossses. This ensures that you looses are within manageable limits. For example, lets say you buy Reliance at Rs 1600 and keep a stop loss of Rs 1500, then this ensures that the maximum loss that you are willing to take on this stock is Rs 100 and not more, thereby limiting your downside risk in the stock. 9.Monitor the funds - It is not only important to invest in good stocks and build a good portfolio , its also imperative that you monitor the performance of the portfolio and each of the stocks regularly, to weed out the deadwood from the portfolio. 10.Stick to index funds - For all those who want to invest in mutual funds , index funds offer a great opportunity to invest in the markets at minimum charges. The relative performance of the index funds are same, if not better, than any actively managed fund. This coupled with the fact that the charges are lower ,makes it a better option than actively managed funds.

So, these are the top 10 things you must be aware of before trying your luck with stock markets.Please add up things which you feel I might have missed out.

Something Every Stock Trader Needs To Know

One of the known strategies in marketing today is the Contrarian trading. This is an act of buying stocks even though all indicators affirm that those products will eventually go down. As risky as it may sound, there are still some people who are not afraid to try something new for their business and when they have tried this, they will surely find how beneficial it is for them. Many businessmen hire advisors who give them some recommendations as to what they have to do in order for their business to thrive. However, did it ever cross your mind that they are merely following what they have read or heard from other people? Contrarian investing is not about getting ideas from other people but doing different things to be able to achieve top profits.
What the other investors say in their articles or other sources will only mislead you because you will think that it is right to follow their steps. There may be instances wherein you might think that they are doing okay today and so you copy what they are doing. However, what if the time comes when their sales declined and their customers are slowly decreasing? You should go against the flow in the very beginning of your venture. If you are able to do this, you will be counting your profits and increase them every single day.

However, in contrarian trading you may not always be right. There are certain instances when you have to make efforts and money but in the end, you will not gain any. You will be facing a lot of risks and committing mistakes as you make your contrarian investing. As a matter of fact, you will make more faults than making the right guesses so when you want to avoid them, you should make the selling quickly.

In addition, you will need to exert efforts in order to keep your losses in minimum instead of sitting in your office and waiting for the opportunity that will enable you to avoid the deficits. Those who are willing to be in the contrarian trading industry should permanently possess a view of the bear market, which refers to the steady plunge of certain products or services in the stock market.

It is not true that the contrarians are pessimistic. It is also incorrect to state that they believe that everything is hyped. In reality, both pessimism and optimism will result to the plunge of the business when they are used in an unjustified manner. What you can do about this is to observe the stock movements and the crowd behavior.

Be wise enough and differ from the business manner of conventional wisdom. This will give you good profits. In the end, you will be one of those individuals who thank the contrarian investing approach, which will enable you to seek opportunities that occur in periods when everybody is doing the opposite.

ETFs for Long Term Investments

ETFs can be a great way to profit in the long term. If you want to get into investing and do not know which stocks to buy and hold ETFs can be a great benefit to you. And here is why.
1. Already Diverse

ETFs are already diverse. If you buy an ETF you are buying something that tracks many different companies and possibly many different sectors. So instead of you trying to find 20-30 different companies to hold you can simply invest in a couple big ETFs.

That would give you the power to have a diverse portfolio which is great for the long term.

2. ETFs Pay Dividends

Many ETFs will pay a nice little dividend. That is a great added bonus to owning a diverse portfolio. There are even income ETFs that you can search for if your interest is mainly in the dividends.

3. Covered Calls

Many ETFs will also allow you to sell covered calls on it so you can make an even higher income off of it. When you sell a covered call you are selling someone else the right to buy your ETF from you at a given price on or before a given date, so you might end up getting called out.

But if you sell the call with a strike price that is higher than the price you paid for it you would stand to profit from exiting the position anyways. Covered calls are also a good way to pull out an income and make up some of the loss when the ETF is going through pullbacks.

4. Most Mutual Funds Don't Beat The Market

Most mutual funds do worse than the market average. Well there are ETFs out there that allow you to buy the market average. In other words these funds allow you to beat the majority of mutual funds.