idday Folks, Aussie Rob here I was training a bunch of youngns yesterday when I realized just how powerful

options really were. Of course, I always knew that theyre the best thing since sliced bread, but yesterday, the penny really dropped for me.
Before I get onto that, I wanna thank everyone who has attended one of my FREE workshops. Ive had such a bonza of a time, as nothing motivates me more than teaching a class full of sponges. I mean that in a nice way, people who wanna absorb as much information as I can give them. For those who havent attended yet, check out www.whoisaussierob.com for details of my upcoming events. Read the testimonials, as this stuff is life changn. Life changn, yeh sure. Yeh, it certainly can be, just like the impact it had on my students and me yesterday. We were discussing different strategies and I asked one of the young sheilas in the room what sort of income shed like to retire on. Being not that long out of college, she said, Around $2,000 per week. Hrmmm, nothing like shooting for the stars, eh!

Seriously, what a great goal, I mean, as Donald Trump so famously said, If youre going to think, you might as well think BIG. I agree with him 110 percent; shoot for the stars, aim straight for the TOP and if ya end up a little short, youll most definitely be a lot better off than if you set your goals lower. Now back to the young sheila I asked her how much money she thought she would need to invest to generate that kinda income. And of course, the answer was, I dunno. Now she was no slouch. She was pretty switched on actually; she grasped most of the concepts Id been teaching pretty much straight away. Unfortunately, shes like 99.99 percent of everyone out there who is part of the rat race. Everyones stuck on that mouse wheel workn harder, longer hours, studying more for more degrees to hopefully earn more money, only to find

April 2005 Check out www.AussieRob.biz for more great trading information! 26

theyre j u s t spinning that wheel harder and faster, trying to make more money to pay for the I gotta have it NOW lifestyle that most people seem to have fallen into. Pretty sad, isnt it. Society is teaching our youngns, our future leaders, to fall into the same old trap that most grownups are in. Work harder, earn more, spend more, work even harder, yes, earn more and of course, spend even more, yadda yadda yadda Thats what I call the rat race. Constantly spinnn ya wheels.

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Now, it doesnt have to be that way. All you need is a plan. A plan of where ya wanna go, and a plan of how ya gunna get there. And thats exactly what our class did yesterday. We digressed from our training curriculum and created a plan of attack to be able to provide that $2,000-per-week income. Its quite simple to work out how much money you need to have invested for your retirement. Step 1: You need to determine how much a week you wanna retire on. As we know, the young shelia in my class wanted $2,000 per week. Step 2: Multiply that by 4.3 for monthly income or 52 for yearly income. So, $2,000 per week = $8,600 per month or $104,000 per annum. Now that we know what we want, we have to work out what we need to be able to provide for our wants. Step 3: Determine our investment vehicle. OK, now this is how we can get creative. But first, lets look at the easy way. Lets look at investing with a bank. A nice safe and simple way to invest. After all, this is our retirement that were talkn about, so it has to be safe. I asked our class what sort of interest their bank paid. Now that was an interesting question, as some in the class had no idea. One said, My bank doesnt pay me any interest! What?

April 2005 Check out www.AussieRob.biz for more great trading information! 27

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You mean to say that you put your money in the bank and let them do what they want with it and they dont pay you any interest? Thats right, he said. Its a checking account. Now that was a shock to me, as I didnt realize that most banks in the US dont pay interest on checking accounts. Then, things started getting pretty exciting in the room as another young sheila claimed that her bank paid her 2.5 percent interest. WOW, 2.5 percent for the month, I said. She was quick to set me straight that it was only 2.5 percent for the year, not the month. Now everyone in the room was still pretty excited and they compared notes, as they all wanted to get more than the zero they were getting. I asked the class to think for a moment If you took the easy way out and invested your money with a bank, how much would you need to invest to be able to provide for your $2,000-per-week retirement? You could hear the pens pounding away on notepads and then you could start seeing the change of expressions on their faces as they started realizing how much money they would need to invest. To earn $2,000 per week you would need to invest Ya ready for it? Hope ya sittn down You would need a whopping $4,160,000 in the bank invested at 2.5 percent to be able to earn $2,000-per-week interest. Whoa, wheres that kinda money gunna come from? I asked. You couldve cut the air with a knife as the tension grew. Lets put that into perspective. Id guess that the young sheila was in her early 20s, as she was just outta college, so that would mean that shed have around 40 years until retirement. Thats if she worked right through to the norm of 65. I dont wanna work till Im 65, someone proclaimed. BUT WHERES THE MONEY GUNNA COME FROM???

Forty years to save $4.16 million equates to saving exactly $2,000 per week. Its hard to believe, isnt it! So heres the math: 40 years = 2,080 weeks $4,160,000 divided by 2,080 = $2,000 WOW, wheres the money gunna come from? OK, lets start getting serious here. With that kinda money in the bank, Im sure theyre gunna be a bit more generous, so lets say for the purpose of this exercise that the bank manager does ya a ginormous (thats gigantic and enormous put together) favor and pays you double. He pays you 5 percent per annum. That still equates to having to have more than $2 million by retirement. Thats a heck of a lot better than before, BUT divide that by 40 years and youre gunna have to come up with more than $900 a week. Ah, got it Ive found a solution: get a fantastic paying job, stay at home and live with Mom and Dad for the next 40 years and hope they dont start charging you rent! Seriously folks, this is a HUGE dilemma that the youngns have and no one seems to be educating them on what they can do about it. Society just sends em off to work to join the rat race and they dont have a clue about saving, investing or planing for their retirement. Just work hard, getta job (speaking of which, do ya know why its called a job? Just Over Broke) and spend. Wanna spend more? Work harder, getta better job and spend more. NO, theres an easier way than that. Getta credit card! And when it hits its limit, get another one. Theres plenty of banks around thatll giva ya one Scary, eh! Now dont go slashn ya wrists I HAVE A SOLUTION FOR YA! But before I ease your pain, heres something else for ya to think about. What sort of Social Security benefits are

there gunna be for retirees in another 20, 30 or 40 years? By the time the college grads of today get to retirement, they had better saved a few million, as there aint gunna be much in the governments coffers to help them out. As we all know, were an aging society. The Baby Boomers are starting to retire and the youngns arent breeding as much as the previous generations did. Theyre too busy workn two jobs to meet their mortgage and credit card payments. No time or money for rug rats these days. Everyones on a mission. Theyre joinn the rat race. Hi ho, hi ho, its off to work we go. As I said, I have a solution for ya! Ya gotta learn how to trade options!!! Now heres a thought Why dont we pitch colleges or better still, high schools, to add options trading to their curriculum? Professor Aussie Rob hrmmm, gotta nice ring to it Hang on a minute you crazy Aussie, I thought you should be don something safe with your retirement fund, not trading high-risk options! Ha, where have I heard that before? Ah, thats right. The plumber next door, the options expert. You know the type, the doubting Thomas. The moment you try to be different and step outta the rat race and start to become successful, there are people who wanna cut ya down. Success if not for the meek, ya gotta really want it; you gotta have the courage and the determination to follow through. You gotta have the commitment to study this kinda stuff. Now not all option strategies are high risk. Take good old covered calls for example. Gee, they cant be high risk since the government allows you to trade them in your IRA. Surely if the government allows you to trade them, they must be ok! Lets get back to my story about yesterdays training By now, everyone in the room was lookn pretty depressed. The thought of spendn the next 40 years living with Mom and Dad just didnt cut it with these guys. Heck, theyve been livn with em for 20-odd years now and all they

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could think about was how to escape. But freedom comes at a cost. Gee Mom, I didnt realize groceries cost so much. Gee Pop, can you lend me 500 bucks, I gotta get my car fixed, its dumped a gallon of oil in your driveway. So where are the few million bucks gunna come from? Ah thats right, retirement; I was kinda trying to forget about that!?!?!? I proceeded with teaching the class covered calls. (Ms. Jen, our editor, wont give me enough space to teach ya everything today about covered calls, so Ill have to give ya the condensed version. Buy some back issues of this magazine, as Ive covered them in more detail before. Better still; come to one of my FREE workshops so I can spend some time with ya.) To write a covered call is to sell a call option against a stock you already own. Heres the example I used: If the stock is trading at $20 and you sell a $20 call for $1, you are selling someone the right to buy your stock from you for $20. They are paying you $1 per share for that right. To buy the stock and sell a call in the same transaction is called a buy write. Think about it for a moment. You bought a stock at $20 and sold someone the right to buy it off you for $20, and they paid you a buck for that right. Pickle me Grandmother, if the stock doesnt do anything, you still make a buck. How cool is that?! Now everyone in the class was starting to feel a bit better. One person actually yelled out, Thats a 5 percent return! You betcha it is. Thats 5 percent for the month. Thats what the generous bank manager agreed to pay ya for the YEAR. If ya bought the stock on margin, your return would double, giving you 10 percent for the month. Now is that worth getting outta bed for? Do ya think thatll help ya save for your retirement, I asked? Now everyone in the class wasnt just feeln a bit better, they were getting EXCITED! They could see light at the end of the rat race tunnel. Lets do some more math and recalculate the lump sum needed for retirement if you traded covered calls. Remember, the young sheila wanted to retire on $2,000 a week and we

calculated that with a friendly bank manager, shed have to have more than $2 million saved up. Compare that to earning 10 percent a month, which equates to 120 percent per annum. (I didnt compound it to allow for a couple of lean months.) By the way, the 10 percent example is not some pie in the sky dream, its a reality. Check em out yourself and youll see that there are truck loads of covered calls thatll earn 5 percent or more per month. Apply margin and you could hit that 10 percent jackpot! Back to the $2,000 per week and 10 percent per month the class worked out that she now only needed $86,000 earning 10 percent per month to get her $2,000 a week. Phew, what a relief! Now she only needs to save $41.34 per week for the next 40 years to have enough for her retirement. YAHOOO, now she doesnt have to live with Mom and Dad for the next 40 years either. Now thats taken care of the youngns. They now have hope for a brighter future. These guys were pretty switched on and realized theyd probably have to save up a bit more than that just in case things didnt work exactly to plan. But hey, what if were 50 percent off? They now have a plan. But now its up to them; they know a plan can only work if they stick to it. Some of you reading this are probably a tad over early 20s, right? Well think for a moment how this can help you. Some of your 401Ks are probably lookn more like 4.01Ks after the last few years. Am I right? Well, now you know what you can do to build it back up again. Start writing covered calls and get some action back into your account. You may not have to work that extra 10 years to recover from those losses. Heck, you may even have enough in your account right NOW to retire early. Try it, give covered calls a go. Do some further study and start paper trading them and you just might end up being able to tell your boss what to do with his JOB. When you do, lemme know, Id love to celebrate with ya. You can buy the Fosters; I think yall owe me one! Cheers and heres to an early retirement. After all, there is life after work!

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Trading options involves both the potential for loss as well as profit, and all trade examples are hypothetical only. Aussie Rob Financial Services ABN 36 116 471 820 trading as Lifestyle Trader is a Corporate Authorised Representative of The International Securities & Derivatives Group (ISDG) ABN 22 103 552 683 Australian Financial Service License AFSL 227544 Please see a financial advisor to see if this product is right you. Please refer to our Financial Services Guide (FSG) located on www.lifestyletrader.com.au/fsg before undertaking this form of investment. Any advice is general and does not take into consideration your personal profile.