Derivatives trading and the warning from Warren Buffet

Important for all investment is always to only invest in what you understand

Important for all investment is always to only invest in what you understand. If derivatives are so complicated that you can not explain them in a few sentences leave them for what they are. Derivatives of products,
but always continue to be packaged and sold as investment products may even pose a threat to the entire financial system. Not for nothing warned the U.S. top blogger Warren Buffet all that derivatives can be considered as "financial weapons of mass destruction" financial weapons of mass destruction.

 What are derivatives trading?

Derivatives trading are financial instruments derived from other products ( To derive literally means distracting). A financial derivative has value because it represents the value of another product, such as stocks, commodities or real estate.
Derivatives are traded as investment in a market that is extremely large. The potential derivatives trading is almost endless, since the derivatives themselves can always be packed further. So it can happen that certain derivatives of other derivatives are sold as an investment.

No restrictions on the packaging of derivatives

Derivatives trading may be issued or "packaged" are based on a wide variety of financial characteristics. As mortgages from banks may for example be sold to other banks, or may be issued derivatives related to equities or equity indices.
But not only financial instruments can be contained. For example, there derivatives trading have been speculated on the bankruptcy of Greece, the so-called credit default swaps .

Responding to human weaknesses

Crucial to such "get rich quick" programs is that they are responsive to human weaknesses such as greed and laziness. If you quickly and easily earn a lot of money behind your PC to tinker,
why would you even 9 to 5 for a difficult boss to work? Delicious from your armchair earn money is so much better than to stand together with other slaves work? Stuck in traffic every day Exactly those emotions focus such programs to lure customers.

Too good to be true

A simple criterion to use in judging "get rich quick" programs as critical Internet user is the following: if it looks too good to be true, then it is usually too good to be true. And if the profit model of the program is unbelievable, keep your hands off of it better.
In conclusion, you say get rich quick is an illusion. (We do not consider this exceptional cases like winning the lottery or get rich through inheritance). Also online investing or day trading is only for little people successful: often forgotten that include extreme losses to the possibilities besides extremely high returns.
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Well to be rich, but not fast

The ability to get rich thanks to online work is certainly, but you will still have to work hard.
Examples include the development of a popular website and make money with ads , or the development of an ingenious idea that completely new is. If you want earn more money in Stock Market,you can follow the web.

But you can still be as creative as you want, be rich by the profitability of an idea (eg  the social network Facebook) is reserved for the few. For most of us, so wait the long and patient work on a website, blog or affiliate program.

Financial Freedom With dividend investing by warren Buffett



How to Rich by investing   Dividend

Secret Open by Warren Buffett

Financial Freedom With dividend investing .Would not it be great if you do not have to work because you passive income (dividends) is at such a high level that exceeds your expenses? At a given time That is financial freedom! In this article you can read what the two most common forms of dividend investing and how to put it achieved financial freedom.

What is passive income  anyway?

Passive income means that anyone enjoys, need no longer be working for the income for it is passive income. So you do not have time and effort to somewhere more stabbing which payment (money) enjoyed. In short, there is still money coming in without you there for work. Passive income can include:

interest paid on savings,
dividends or a reward for written articles


Dividend Investing

There are various forms of dividend investing, the most famous and interesting are
1) Dividend growth investing and
2) high dividend investing.

these two methods are discussed in. Dividend Growth Investing Dividend  Growth Investing implies that the investor buys shares in companies with more pay a dividend each year (= growth of dividend income).

In the United States, this is a popular phenomenon in Europe but lives much less. these companies, which are increasingly paying dividends each year, called "dividend aristocrats" .

Before a company can be so called, the company must have increased dividends. Example for 25 years in a row These are often solid companies with a good business model that already exist for very long.

On the Internet you can find such a list of dividend aristocrats. High dividend investing High dividend investing implies that the investor buys shares in companies with a high dividend, for example, in Business Development Companies (BDCs).

These are companies that invest in small businesses, and help - the name says it all - to develop these small businesses. A characteristic of a BDC is that it is at least 90% of the profits should cede to the shareholders.

As a shareholder, you have so soon a dividend yield of approximately 10%, which is obviously very interesting. For high dividend investors are real estate investment trusts  and utilities also possible. these two ways of dividend investing are the best ways to capture.

passive income from investments It lies on the personal situation (age, risk appetite, vision, income vs. expenses. Etc.) of each individual, which form is best suited. All in all, should ensure that more income is generated than is spent.

When is achieved financial freedom?

Financial freedom is achieved, if the dividend income exceeds expenses. Below each of these types of dividend investing an example of financial freedom is achieved. Dividend growth investing.
example Give your Rs . 25.000, - per year, then you have a dividend yield of 4% required a capital of Rs.  625.000, -. And mind you, the revenues grow each year because companies are shareholder-friendly,

returning more dividend every year! high dividend investing. Suppose you have Rs. 300,000, - and you get 10% on dividend income.

This means that you have a year Rs. 30.000, - receive. High dividend investing so you have less capital is needed for the same income. Mind you, the higher the return, the greater the risk.

Dividend Growth Investing  vs. high dividend investing

High dividend investing looks interesting at first glance, however, also remember that here sticking more risks. Again, the higher the yield, the greater the risk. Dividend growth investors often have shares in companies such as Coca Cola, McDonalds and Microsoft. These are great, reliable and reputable companies for decades and provide quality where every investor has a great trust.

High dividend investors investing among other BDCs that have to borrow money and this then lending again to small businesses that have yet to develop (and not yet well-established and reliable, and therefore more risk brings with it). For example, a fairly well-known BDC's Prospect Capital Corporation, a dividend yield of approximately 12%.


There are various forms of dividend investing, the two best known are 'dividend growth investing' and 'high dividend investing. High dividend investing is an investor in order to achieve financial freedom. Less capital With dividend growth investing, the investor receives each year more income from dividends, so the income is higher every year and spending will surpass increasingly.