No matter what you do, you will still encounter a certain level of risk when you trade with binary options. The upside though is that while you can never really get rid of risk, there are a number of ways you can employ to lessen it as much as possible. Just because you’ve admitted that you cannot beat risk does not mean that you’ll go down without a fight. Trading is exciting because you just never know what’s going to happen until the moment it does. For the most part though, knowing what you’re dealing with is the best way to alleviate risks associated with binary options.

Along that line, it is a good idea to brush up on the different kinds of risks binary options may bring. Knowing what you’re up against, after all, will help you figure out how to deal better. These risks include:

  • Market risk. How the market moves on the overall will affect how much risk you take on. And while market movement can be predicted, predictions are not 100% accurate.
  • Fixed profit. Strike prices are set so your profits are limited to what has been agreed upon. You can’t earn any more than what your option will allow you to, no matter what other factors are in play. But in the same way that profits are fixed, losses are capped too so you already know what you’re going to lose when the option expires.
  • Not a liquid investment. Unlike other types of investment, binary options are not liquid, meaning you can’t use them any time you want. You have to wait until the expiration set for the option before you can take your profits or deal with your losses. Having to wait may delay other trades you might be interested in.
  • Underlying assets are not yours. Binary options simply give you stake at how an underlying asset will move, and not actual ownership. If wagering on something not tangible is uncomfortable to you, then binary options may not be a good choice for you.
  • Limited regulation. OTC markets are not regulated so while trading may be generally organized it is not impossible to run into unscrupulous practices. This means that no matter how much you play by the rules, there may be players who won’t play fair.

Now that you have a good grasp of the many things that could get in the way of your success with binary options, here are some ways you can limit those risks:

  • Hire a broker. A broker knows the ins and outs of trading so they’re better suited at analyzing markets, and therefore advise you on the best course of action. If you feel that hiring a broker takes away your participation in a trade, you can have it set up in such a way that you still have the final say so you get to make use of the broker’s expertise while still indulging your need to be part of all the action.
  • Educate yourself. Keep learning new strategies for trading. There are plenty of resources available on the web including in other languages. In addition, many online brokers have education center on their websites.
  • Set a limit. To a certain degree, trading is like gambling—when you’re on a roll, it’s hard to stop. Unfortunately, just like gambling, one move can easily take away everything you have. Yes, there is always that possibility that you can still get more profits but it gets more dangerous the longer your streak is. Set a limit to how much profit you want in a day, stick to it, and live to trade another day.
  • Hedging. When it’s clear to you that you’re not going to benefit from a certain option, you can terminate the contract so you don’t end up taking the full force of a loss. You will still lose a bit of your investment with this move but at least you won’t be reeling from a bigger loss.

In the olden days, it is somehow required to make lots of money to make an investment account. However, times have changed – now, it does not take a lot of effort to start making steps in making your money grow.

It Depends on Your Plans

In determining how much money you should put up for investment, you must first determine what you would want to do with your money.

If you plan to achieve several short-term goals such as buying a house in a span of a year, you would want to put your money aside using US Treasury bonds or invest in Certificates of Deposit or CD. Such investments allow your money to grow over time and they involve little to no investment risks. While the idea of such investments is to protect your capital, they would generally yield lower returns.

If you are the type that would want to go solo, self-starter investments, or businesses, may also work. However, it is needless to say that you may need to put up a large capital in order for you to start making money out of this investment.

If you are planning to start your investment with a small amount of money and you are willing to wait long-term, you may want to consider investing on mutual funds and brokerage. These forms of investments are best for people who want to make their money grow for retirement or a college plan.

Companies That Will Help You Invest

The amount that you need to start investing also relies on what kinds of companies are you going to approach to help you grow your money. If you plan to work on mutual funds or brokerage, there is a minimum amount for you to open up an account with companies that work on these types of investment. There are companies that would require you to start paying $50 and will ask for subsequent amounts of $25. Other companies may require you to make a startup payment of $25, and then charge you with automatic purchases of the same amount every month. Each time you make an investment in a company, make sure that you keep these fees in mind so that you’d know how much you should allocate for your investment.

Apart from these fees, you will want to keep in mind that there are certain hidden fees that investments companies charge. Among these fees are year-end fees that works as a safety net for the company. Then again, some fees may be waived if you have a high balance in your account.

Choosing a Broker

Brokers are people who lend you professional knowledge regarding your investment. They are best to hire when you need more knowledge on where to invest your money, or if you need someone to attend to your investment.

Brokers, or financial advisors, do not do this for charity. As there is no free lunch when it comes to business, part of considering how much money you would need to put aside for your investment is how much commission these financial experts are going to charge you for their services.

The most common and, in my opinion, the better way to manage your investments is to use one or, in some cases more than one, of the online brokerage firms. These firms are much cheaper and provide many useful and insightful tools that support the investments that you choose. One brokerage firm that is a bit different than the others is which allows you to build up your portfolio automatically after you set up your goals. They charge very low fees and you can learn more about how they work here which also elaborates when is best to use them. In addition to Betterment, here are few more reviews of online brokerage companies that are worth to check out:

The Other Important Things

The other important things that you need to consider when starting with investment are your monthly income and the bills that you pay for. In a nutshell, these factors determine what you can afford to actually put aside for investment. If you are making $400 a month and you are paying for your child’s schooling and rent, you may want to look for additional income to augment the money you have left at the end of the month.

Everyone thinks that retiring from work is one of the most loosening up decision to do. Imagine yourself not waking up early in the morning, not jostling yourself on your way to work and not accomplishing several stress-driven assignments. Imagine yourself just enjoying a day in a tropical beach facing the crystal blue water while sipping a glass of mango shake.

But are you prepared enough (mentally and financially) to embrace another chapter of your life without worries and apprehensions?

According to the Employee Benefits Research Institute’s Retirement Confidence Survey, 14% of adults are convinced that they will live a comfortable life after retiring while 60% have admitted they have less than $25,000 worth of savings. Will that be enough to compensate the life you dreamed of after completely quitting work?

Here are seven of biggest mistakes you have to avoid when planning your retirement:

  1. Being too complacent. Most adults retire from work earlier than planned. There are inevitable causes that you may encounter just like accidents, illness or job loss. These may prohibit you from working efficiently and productively. Let us say a worker encountered a horrible accident and he accidentally lost his arms or legs. This may affect the capability to carry out the work and the employer might terminate or look for another one as replacement. So while your nerves are still running sprightly, learn to save 10% of your monthly income.
  2. Not preparing and saving for medical benefits. As we grow older, we may also experience different abnormalities in our bodies. Our immune system becomes weaker (not when we regularly exercise and practice healthy living). An average couple retiring nowadays at the age of 65 will normally spend $285,000 for their health-care costs upon retirement. It’s also important to secure or invest in a medical or life insurance while you are still young.
  3. Failing to secure a stable income upon retirement. Income pensions can also be gone especially when you spend a lot. It’s advisable to convert your savings to a lifetime source of income just like a business.
  4. Early retirement. Many adults retire too soon. Most companies provide bigger retirement income to those who stay longer on the job. This will also prevent you to tap your savings and take Social Security benefits. Almost half of the Americans collect Social Security and not even wait for their normal retirement age. If you are still active and healthy, and financially sound, it is recommended to wait until you reach 70.
  5. Underestimating longevity. As reported, 60% of Americans say that they live longer than what they have expected amidst the exposure to different kinds of unhealthy food and lifestyle. Generally, a woman at 65 can anticipate living up to 84 while it’s 81 for an average man. There are also a lot who even make it to 95 or 100.
  6. Spending too much. Many draw down savings from retirement too speedily. It’s tempting to buy things that you want and go to places you have just dreamed of visiting. Many retirees tell themselves that now is the time to experience things they included in their bucket lists but always bear in mind that concrete financial planning is important to manage your savings properly. Financial experts advise to maintain your annual drawdown rate to 4% of assets.
  7. Disregarding tax impacts of distributions. When you are planning to retire, it is important to create tax-efficient income. It will help you to obtain several kinds of accounts: fully taxable, tax-free and tax-deferred. Also, as much as possible, avoid early distribution take-out. This will initiate penalties and hold back to a later time your assets’ long-term growth.