Thursday, July 15, 2010

How to buy anything for peanuts!

This "self-offer" is valid only for traders who have graduated in the art and science of stock trading.

Those who have been consistently and easily getting atleast 5% per month return from trading.

And those who have sufficient back-up emergency funds, in case....

This has already been implemented by one of my colleague (who is a mature stock trader).

He has been trading with a dedicated capital of Rs. 10 lacs.

He has just "bought" a brand new Scorpio worth Rs.9,89,000/- in just "3 lacs"!

Let me explain how he has "done it"!

He had Rs.7 lacs available with him to buy Scorpio.

He gave 3 lacs margin money to the finance company and gave 60 Monthly Post Dated Cheques of Rs.17,225/- each.

He added the balance 4 lacs to his trading capital of 10 lacs (total capital becomes 14 lac now!).

Since he has been regularly getting 5-10% returns on the capital employed every month
he would be now getting 20-40000 per month more from trading due to the increase in the fund.

This would be more than enough to pay every EMI.

After 5 years (60 months), he would have paid his entire loan with interest out of trading returns from the "extra trading fund".

Also, the surplus returns (which is likely to get as he has been earning more than 5%pm many a times)

will more than take care of the inflation effect on the extra fund of Rs.4 lacs.

After 5 years the "extra trading fund" will become part of the normal trading fund.

Had he not gone this route, he would have been left with nothing out of Rs.4 lac "extra" fund except some interest.

The same way, a mature trader can buy a house or any other asset at a portion of the real cost!

This is just one of the preactical benefits of learning and mastering stock trading.

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