Tuesday, August 19, 2014

How Can I Raise Money to Start Trading?

One of the problems many people have when trying to make money trading is a lack of money to begin with. One of the oldest sayings in the world is that it "takes money to make money," right? It's true. Ask any economist today about why the gap between the rich and poor has widened an they are sure to answer, "access to cheap money." In other words, the wealthy have limitless access to funding, which allows them to make more either by investing it in a business, or lending it out, or otherwise using it to create more wealth for themselves.

Unfortunately access to limitless capital isn't a problem most of us have, in fact, most of us starting out as investors or day traders have none at all. How then are average Joes like you and me supposed to get a start then? As poor people, our limited methods of raising capital (from least to most expensive) come down to how much we can earn and save, how much we can get from selling what we already have, and how much we can borrow.

Can You Earn Money Sitting on the Couch?

The sad thing about any of these three options is that each have a price tag associated with them. The first method involves the least efficient way to raising funds - trading our time for money. Let's face it, this is a lousy way to raise funds, because employers and customers want to pay as little as possible for whatever you have to offer - presuming they want what you have to offer in the first place (not a given in this economy)! The trouble is, many of us have a lot of time on our hands - which we then spend playing video games or watching TV. Since some of have way too much time on our hands, is there any reason we couldn't use that time to make a little money instead? As odd as it may seem, while employers and customers may not want your labor efforts, many times those same people want your opinion! Even funnier there is a way to earn extra money while sitting on your lounge chair if you have internet access and are opinionated: online surveys (see here for example). Don't laugh - it's hard to imagine a lower skilled, easier way to make money with your time.

Do You Have Something of Value to Sell?

A second way to raise funds is to sell things we already own. For many people the most valuable asset they own is a car. Would you trade your car (and all the expenses that go with it - gas, parking, tolls, registration, etc.) for some cash to put in the stock market? I've heard worse ideas honestly. Most people don't actually own very much that is worth selling, but you can usually raise a few dollars on that old pair of skis by selling consignment or via craigslist, or eBid. Again, it comes down to how bad you want to raise money for trading. I saw one ad today from eBay promising $100 for your used electronics goods if they don't sell. With just a couple of old iPhones you could easily raise enough cash ($200 to $500) to start trading binary options.

Are You Willing to Borrow Money to Invest

Early on when I began investing I was having a conversation with a friend about my troubles raising cash for investing. He said, "Steve, you have access to tons of credit, why not borrow on that credit and invest it?" I thought about it for a few minutes, and a few days later I did just that - and that's how I got my start options trading. I don't actually recall which credit card I used to get started, but there are certainly no shortage of banks out there willing to lend large amounts on cash advances with zero or very low introductory rates. My first dabble was on a 9-month 3.9% interest offer. These days card companies offer 12 months or more at zero percent!