Retirement Money
Many investors have the majority of their trading capital in retirement accounts. IRA's, 401K, and Keoghs are just some retirement accounts currently used. Retirement money grows tax-free. Over time these savings can be huge.
To trade a trend following method one must be able to trade both sides of the trend. Normal retirement accounts limit the types of trades that can be placed. These restrictions are onerous.
LEAPS break through this restriction. LEAPS can used in retirement accounts. And LEAPs can be used to trade both sides of a trend. The rate of growth of pre-tax dollars is astounding. An example to show how attractive LEAPS are:
| Comparison Between Pre-tax & Post-tax Capital | ||||
| Taxed Returns | Untaxed Returns | |||
| Starting Account: | $50,000 | Starting Account: | $50,000 | |
| Annual Return: | 12.0% | Annual Return: | 12.0% | |
| Tax Rate:: | 20.0% | Tax Rate: | 0.0% | |
| 30 Year Result: | $782,143.84 | 30 Year Result: | $1,498.996.11 | |
Trend followers seek above average returns (25% and higher). Using pre-tax capital and achieving returns of 25%+ with LEAPS -- the results can be quite large.
