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How Forex Brokers Earn Money

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The foreign exchange market involves buying and selling different currencies based on whether their value will appreciate or depreciate. This exchange takes place between traders and speculators. Forex is a high-risk market that trades $5 trillion on ...

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Quit Sniveling: How to Make Lots of Money Doing What You Hate

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Readers: Nobody has written more guest articles for my blog than my good friend, the inimitable Mr. Credit Card. Today Mr. CC is going to entertain us with another of his always thought-provoking ideas.   By the way, Mr. Credit Card has just updated his business charge card recommendations for 2011, so please be sure to check them out if you're looking for one. by Mr. Credit Card Those of you who follow my Ask Mr. Credit Card blog know that I was recently on travel, visiting California.   One of the highlights of my trip was being kingly invited to Len's place for a nice burger grill. I always buy a new book before I fly to the West Coast and, on this particular trip, I bought Andre Agassi's autobiography. It was a most fascinating read for me because he told the story of his childhood and how he became a top tennis player. The real shocker though was at the beginning of the book, when he claimed he actually hated tennis.   What?!   I could not believe it when I read those words! It turns out that Andre's father was a tennis nut, and he was determined to train his young son to be the world's number one player. Andre describes his training when he was seven years old. His father created a tennis machine that would hit a ball close to Andre's feet.   During endless hours of practice his dad would constantly stand behind him and yell at him. "Hit the ball early," and "harder" were common phrases. I guess it should be no surprise that Andre ended up becoming one of the best hitters of the ball on the rise -- and a pretty hard hitter too. When Andre was fourteen, his father decided to send him -- against Andre's will -- to the Nick Bolletieri tennis school in Florida. At first the plan was to go for only three months. Then, the folks at the school determined that he was the best talent they had ever seen, and three months eventually became "forever." Andre was so good that he was able to negotiate a deal that allowed him to skip school.   He eventually turned professional before he was twenty. He also went on to become one of the best tennis players of all time, and one of only a few players to ever win all four grand slam titles. As a professional, Andre was never satisfied if he lost. He maintained a coach. He even hired a fitness trainer who imposed a ruthless fitness regimen that he faithfully stuck to throughout his long career, training for many hours every day. How to Excel at a Job You Hate So why I am telling you all of this? Though extreme, I think Andre's story is a clear example that you can excel at something even though you do not like it, assuming you are willing to put in the effort to be good at it. And even though Andre did not like tennis, he still put in hours of work to be good at his chosen profession. Andre not only earned lots of prize money, but also in endorsement deals with Nike and  American Express. I can think of numerous people I know who dislike their jobs and yet stick to it and earn great financial rewards. I know many folks who work for investment banks and disliked their jobs, but they stuck with it and became good at it because it paid well. I guess there was some motivation there. You may say that I'm using examples where the financial payoffs are great for those who rise to the top, but I would counter by saying that there are great rewards in any profession when you rise to the top. And here is the thing that sometimes gets to me: I read lots of blogs (especially lifestyle blogs) and, to me, there are too many instances where you read about folks being "unhappy" with their jobs; everybody wants to make "passive income" and work only a few hours a week.   While that is a worthy aim, I think before one starts to focus their attention to entrepreneurship, one should try to focus on being the best they can be in their jobs. Figure out what it takes to succeed in your industry and profession. You may find that it will bring great financial rewards and you may be happier as a result. And trying to be the best you can be is a trait that is necessary if you ever want to be successful at your own business. The Bottom Line Len is always talking about sound money principals. Spend less than you earn, yes!   Save, yes!   But another important part of the equation is increasing your income. Making more money is a very important part of our personal finances but, too often, the "making more money" part tends to focus on ways to acquire passive income or, even worse, making money by blogging or via network marketing. I urge you to refocus your attention on your present occupation (whether you like it or not) because I suspect we all can put a little more effort in getting ahead in what we currently do, and reap the resulting financial rewards.   Even if we don't like what we're doing. Editor's Note: Mr. Credit Card told me those were the best burgers and hot dogs he had ever eaten!   Okay, not really.   But he did have multiple helpings. Photo Credit: loneymops ...

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Why Baseball’s Jayson Werth Is Worth $126 Million (and You’re Not)

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This is a guest post from my good friend, Mr. Credit Card, from www.askmrcreditcard.com.   For the past three years, his Philadelphia Phillies have been the nemesis of my beloved Los Angeles Dodgers. I certainly feel we can learn a lot from how baseball teams run their franchises and how they develop, buy, and trade players, and then apply that to our financial lives. The Rumors and Free Agent Market - Baseball season is over and fans and aficionados are now eagerly watching the free agent market to see which players go where and who buys who.   There are several top free agents in the market, but I want to highlight two in particular. Firstly, Jayson Werth, who is the right outfielder for the Phillies the last three years is a free agent this season.   Actually, he was a free agent until he signed a $126 million, 7-year contract with the Washington Nationals earlier this month.   As the top right-handed outfielder in the free agency market this year, folks justifiably expected him to demand top wages and a fat contract, and he got it.   As a point of reference, Matt Holiday landed a seven-year, $120 million contract the Cardinals last off season. Cliff Lee is also another huge free agent in the market this year.   He was acquired by the Phillies in 2009, but was traded this past season because it was perceived he wanted to test the free market! He moved to the Seattle Mariners and was later traded to the Texas Rangers before the trade deadline this year.   He was obviously a big factor in the Rangers charge to the World Series. Over the past three seasons, Lee was 48-25 with a 2.98 ERA, 17 complete games in 93 starts, five shutouts, 667 1/3 innings pitched, a 1.122 WHIP. Lee is 7-2 with a 2.13 ERA, three complete games in 10 starts in the post season. Although Werth is now off the market, baseball clubs still have to make a decision as to whether or not to bid for Cliff Lee and, if so, what they're willing to pay him.   As I eagerly watch the free agent season play out, I can't help but see the parallel between the financial decisions baseball clubs make and personal finance decisions us fans make.   Here's my take. Never Settle For Being Average - Because Top Guys Get Paid A Lot More - Some of you might be astounded by the numbers that Werth and Lee can command. Well, that is reality folks. The top guys in any industry, whether it is the CEO, company founders, music artist, make a heck of a lot more than the average Joe in the same industry. The top hedge fund owners with billions under asset management take home a lot more than the small ones with a "couple of hundred million in assets."   Likewise, top music artists rake in a lot more than than average ones, and the top movie superstars make lots more than their supporting cast mates and even the people actually producing the films!   Yes, that's life. Open a pizza shop in your neighborhood and you are still an employee for yourself and making employee wages! Open a few more stores, and your rewards go up!   Franchise your restaurant nationwide and you will become a really wealthy -- and if the world world likes your product, then the gap between your wealth and that of the common folks widens to astronomical levels. So never settle being second best.   Always strive to be the best in your work, your career because the rewards for moving up the ladder are exponential indeed. Live Within Your Means - From the players, let's move back to the baseball organizations.   Yes, Jayson Werth got a huge contract.   So why didn't my Phillies sign him?   It's because they already have a $146 million payroll.   Even they need to "budget" just like the rest of us.   If they signed Werth, they would almost certainly have had to sell or trade a highly paid player to make room for Werth's salary. On the other hand, the Pittsburgh Pirates are not exactly an elite team.   In fact, their payroll was only $36 million for 2010.   Contrast that to the New York Yankees ($200 million) and there is a vast gap in their resources.   Since the Pirates are certainly not playoff contenders, they have to settle for much less if they want to operate with their finances in the black. The bottom line here is, whether we are millionaires, a billionaires or thousandaires, we all have to live within our means because, unlike the federal government, we cannot print money! Always Consider Long Terms Costs And Obligations - There is always considerable debate as to how long a contract any club should offer a free agent.   Lee and Werth are obviously valuable now, but the big question is will they still be good players down the road. In our own personal finance lives, we have to consider long-term expenses as well.   For example, trying to decide how big a house can we afford.   Even if we can "afford" one based on our "present income", bear in mind that our "future income" may not be the same.   It could be lower! This is not to say you should not take on any long term financial obligations. But you have to make sure you are getting great value out of it and not overpay for these items. There Are Different Paths For Different People - The Yankees are the biggest franchise in baseball.   Their huge fan base allows them to get even bigger, spend more on very good free agents and keep winning.   Their strategy has always been to be the biggest franchise. This is the same strategy followed by other big sports club like the Los Angeles Lakers and Manchester United. The Yankees do not mind paying up for a free agent because they dislike trading their farm system. Compare them to the Pittsburgh Pirates, who are obviously not a household name.   For them, being the best baseball team and having the largest franchise is not realistic.   So their approach on free agents is different from high-payroll teams like the Yankees and Phillies.     Since the Pirates cannot afford top-tier talent they rely almost soley on their farm system. We as individuals also have to plan our personal finances around our goals, objectives and means.   For instance, should we open a joint account? Should we save our money or use it to pay down debt? How much should we put aside for retirement?   No one can answer those questions for us; we have to do what is right for us.   For example, some people can afford the annual fees and perhaps benefit from carrying an American Express Platinum or a Chase Sapphire credit card, while other folks may simply choose not to carry one at all because it might lead to overspending and credit card debt. Be Creative And Seek Value - The Phillies didn't decide to sign Werth to a long term contract, but they can still be creative and perhaps find a way to offload another player like Raul Ibanez, and then   rely on Ben Francisco and Dominic Brown to platoon right field. We face similar decisions in our financial lives as well.   Which house should we buy?   Which car should we buy?   Should our kids go to public or private school?   If money is no object, then there is no decision to make, but for most people money is a constraint, so we have to prioritize and decide which choice provides the most value. Treat Your Household Finances As A Business - When a baseball player gets traded against his will, or if a club does not want to renew his contract, he usually says "it's only business."   Yes, it is business; a baseball organization has to do what is right for the franchise.   It is the same with our household personal finances.   We have to approach them like a general manager of a baseball club. We need to plan ahead and make decisions that are right for our individual situation. ...

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The (Dead)Beat Generation

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Should you walk away from your mortgage just because your home depreciated? So you refinanced. Or bought too much house. You divided the mortgage payments by your income, and decided you could swing something a few percentage points higher than the recommended 25—33 because the market was rising and your house would make you rich just by existing. You relied on speculation as an investment strategy (not even your own speculation, but other peoples’.) But your house got cheaper, maybe cheaper than what you bought it for. That’s called “losing money on an investment,” which happens all the time, but people think it oughtn’t when your bedroom and kitchen are inside the investment. The market might bounce back. If you’re 7 years in, lots can happen in the remaining 23 on a 30-year mortgage. When you lose money on a stock, your (invisible) bank account gets wiped out. Owe more than your vehicle is worth, and it might get repoed. But stop making payments on a house, and there’s a letter from the constable on the door, maybe some yellow tape involved — hard to keep that quiet from the neighbors. Also, people getting forcibly removed from “their” house (it’s yours and not the bank’s only after you pay the entire mortgage) make for striking photo and political opportunities. After all, bankers are evil. Meanwhile, it’s the working stiffs just trying to make ends meet who get raked over the coals. (Wow, a sentence composed entirely of idioms. Mike Lupica approves.) Some people who make enough to cover the mortgage dump the house anyway — the strategic default. They assume investment values only move in one direction. According to Experian, that includes 20% of defaulters. This is hiding behind the law. Stop making payments, and it’s not like you’ll be evicted that week. It takes months, even years. The idea here is to take the mortgage payments and put them toward, say, your credit card balance, figuring the lender will gladly renegotiate a contract you signed in order to get some sort of return on its investment. Some borrowers think this is fine because if the lender kicks you out, it’ll be tough for them to sell the house to someone else in a down market anyway. The lender at least wants the house to stay lived in. This is nonsense. Strategic defaults hurt everyone. A strategic default does to your credit score what O.J. did to Nicole. You’ll never be able to borrow either a) again, or b) until Congress and the White House decide that so many people need to improve their credit score that it just wouldn’t be nice to let something as insidious as that have such power over their lives. What’s the solution? Well, no politician of either party wants the other accusing them of standing by while old ladies and cripples are being kicked out of “their” houses. The government would then essentially renegotiate mortgage contracts, setting caps on future ones and insisting the lenders take less. Under this type of forced renegotiation, the borrowers don’t even have to sack up and face the lenders themselves. Besides, neighbors, professors, and the blonde lady on TV say defaulting is fine. And for PR reasons, lenders are hunting down deficient borrowers about as aggressively as the federal government goes after illegal immigrants. Say you walk away from your mortgage, mail your keys to your lender (this is how it’s done), then rent somewhere. Your (old) neighbor follows, then a third. No matter how swank a neighborhood you deserted, the lawns turn brown and the pools green because no one’s living in the houses. Which reduces the value of the remaining houses. Now the people who stayed behind and haven’t (yet) defaulted watch their homes’ values decline. Which means they’ll likely owe more than their houses are worth, making it more likely that those folks will default. Continue like this, and you end up with…Detroit. When you declare bankruptcy, you can renegotiate to protect yourself from creditors. But strategically defaulting is the opposite — you keep all your assets except the house and mortgage. So what to do? Four choices: 1. Man up, economize and make your payments. You’re obligated to the lender, yourself (to preserve your credit), any kids of yours (unless you don’t think you need to set an example) and society. If you steal from your lender, it doesn’t directly affect the rest of us, but it makes civilization incrementally more difficult to live in–the broken window theory. You don’t like that answer? It’s a house, for crying out loud. You need somewhere to live. No matter how much value it loses, it’s still better than renting and never building a dime of equity. Stop assuming that because your $100,000 house lost 10% of its value last year, it’ll lose a similar amount next year and by 2021 will be worth -$10,000. 2. Short sale. If you know you can’t make your payments, and you’ve exhausted every possible way of earning or otherwise securing money, call the lender and come clean AS SOON AS POSSIBLE. They’ll sell the house at a loss, just to get you out of there and collect their money. You’ll still be on the hook until the bank resells the house, but that won’t last forever and at least you can stop throwing good money after bad. 3. Ask for a loan modification. It’s begging, but your pride already left a while ago. 4. The Deed in Lieu of Foreclosure. Tell the lender, “Look, I can’t make the payments. Let’s not short sell, I’ll just give you the damn thing to get out of this debt.” This hurts your credit rating the least, and tells the lender not to worry about you being one of those evictees who pours concrete in the toilets and makes off with the copper wire. And next time, get a vanilla 30-year fixed-rate mortgage. About the Author Greg McFarlane lives in Las Vegas, winters in Maui, travels the globe and hates working for other people. He recently wrote Control Your Cash: Making Money Make Sense, a financial primer for people in their 20s and 30s who know nothing about money. You can buy the book here and reach Greg at greg@ControlYourCash.com. ...

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