Investments are a great way to generate passive income. With a large enough cash base and the right moves, investments alone can generate enough income to retire off of. Frankly speaking, we don’t have a lot of experience in this area. Our view of investments is that it is a way to diversify income streams and grow cash to fund future businesses (vs. holding cash in the bank).


Steps To Make It Happen

Finding a Platform

The first step to investing is finding the right platform that suits your investment needs. There are many options and things to consider when choosing the right platform.

Things to Consider

What You Plan to Invest In

  • Stocks – Shares of publicly traded companies
  • Bonds – Debt issued by companies or government that pay fixed interest
  • Mutual Funds – Basket of investments managed by a investment management firm
  • Options – The right to buy or sell a stock at a certain price within a certain amount of time

Ease of Use

  • User Experience – The website or mobile app is intuitive and easy to use

Cost to Use

  • Commission Per Trade – Amount charged per transaction (buy and sell)
  • Annual Fee – Amount charged per year to maintain an account
  • Account Minimum – Minimum account balance to maintain an account


Choosing a Platform

Listed below are a few recommendations of popular platforms to help as a resource for you to do some additional research. (If it helps – we currently utilize ING Direct / E-Trade and are considering opening a Robinhood account for $0 commission trades)

Setting Up An Account

Once you’ve selected an investment platform, the next step is to set up an account and link it up to your bank.

Each investment platform can be a bit different but the steps are similar. (Attached are screenshots from E-trade to walk through the process)


Setting Up

The information that you’ll need to have ready before setup are: residential address, date of birth, social security or EIN number and employer name and address.

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Linking Bank Account

After setting up the account the next step is to link a bank account to transfer funds into your brokerage account for investing. Normally there will be a verification process for security reasons to validate the bank account. There are two types of bank account verification. One is to type in your bank account username and password and the other is deposit verification. (Note: With the recent high profile hacking into Target and Chase, our recommendation would be to validate the bank account via deposit verification. May take 2-3 days.)

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Trading Terminology

Now that the account is set up the next step is to learn trading terminology. The most frequently used selections are described below:


Type of Trades
  • Market – The price of the investment is bought or sold at the market price.
  • Market On Close – The price of the investment is bought or sold at the market price at close. (4pm EST)
  • Limit – A limit on the purchase or selling price. For example Buy AAPL at $110 Limit = Buy Apple Stock at or below $110.
  • Stop On Quote – An order is executed at the market price when the purchase/selling price reaches the stop price. Sell AAPL Stop On Quote at $100 = When the price of Apple goes down to $100 sell at current market price.
  • Stop Limit on Quote – An order is converted to a limit order when the purchase/selling prices reaches the stop price. Sell AAPL Stop Limit on Quote at $100 = When the price of Apple goes down to $100, convert to limit order at $100.
  • Trailing Stop $ – These are generally utilized to protect gains and prevent losses. An order is placed to automatically sell when the stock price fluctuates to $X dollars less than existing price. Sell AAPL Trailing Stop $5 = Sell Apple if at any point it drops $5 or more. If the current Apple price is $110 and it goes up to $150 without ever dropping more than $5, and then drops to $145, the trailing stop order would execute and sell Apple at $145.
  • Trailing Stop % – Same as above except based off a X% as opposed to a  $X dollars.

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Terms of Trade
  • Good For The Day – Order is good until the end of market closing for the day (4pm EST). Unfilled orders are cancelled.
  • Good for 60 Days – Order is good for 60 days. Unfilled orders are then cancelled
  • Immediate or Cancel – Order is executed immediately (entirely or partially). If an order is unfilled immediately, it is cancelled.
  • Fill or Kill – Order is executed immediately (entirely). If an order is unfilled immediately, it is cancelled.
  • Extended Hours (Good For The Day) – Order is good until the end of extended hours for the day (8pm EST). Unfilled orders are then cancelled. Actual end of extended hours may vary across brokerages.
  • Extended Hours (Immediate or Cancel) – Order in extended hours is executed immediately (entirely or partially). If an order is unfilled immediately, it is cancelled.

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Choosing a Stock

“We define intrinsic value as the discounted value of the cash that can be taken out of a business during its remaining life. Anyone calculating intrinsic value necessarily comes up with a highly subjective figure that will change both as estimates of future cash flows are revised and as interest rates move. Despite its fuzziness, however, intrinsic value is all important and is the only logical way to evaluate the relative attractiveness of investments and businesses.” – Warren Buffett Letter to Shareholders


Thought Starters

This section gives you a thought process on how to evaluate investments. Given that the market can swing based off changes in expectation of future cash flows, it can be subjective and there is no way to consistently beat the market, but here are some thought starters on how to evaluate investments.

P/E Multiple – P/E is defined as the Price/Earnings multiple. It is the stock price (per share) in comparison to earnings (per share). You can also think of this as how long it would take for the company to pay back its share price. For example a company with a P/E multiple of 10 would take 10 years to generate enough earnings to payback the stock price. The key assumptions being that their anticipated future earnings is the same or relatively stable to current earnings. When growth companies are in their growth phase and earnings are increasing drastically year over year they will tend to have a much higher Price/Earnings multiple. For context, the current dow industrial P/E multiple is 15.73, and has historically been between 10 – 25.

Debt to Equity Ratio – Debt to Equity is amount of debt (loans) that a company has relative to the amount of equity (value of shares of stock). As the debt to equity ratio rises and the proportion of debt starts to outweigh equity drastically it could be a potential sign of troubles ahead in terms of the ability to repay debt.

Dividend Investing – A dividend is a payment to investors from profits of the company. Each company chooses how much (if any) to pay back to investors. One might think that companies should payback all profits to investors, the flip side is that all profits repaid to investors is money that can not be re-invested into the business. What the company is signaling to investors is that investors can do a better job of investing the money in other endeavors rather than the returns that a company can generate with that money. Usually in industries where profitability is quite stable and growth potential is limited, they will have higher dividend ratio payouts than companies that are going through periods of high growth. I.e. Energy/Telecom as an industry has a higher dividend ratio than Technology. It is worthwhile to consider dividend stocks as part of your portfolio as these companies can generate consistent dividend returns like fixed income.

Understand and Believe in The Business – In order to feel comfortable with investments it’s worthwhile to understand how the business works and also believe in the long term growth and success of the business. Information on the company is found within the 10K / Annual Reports for publicly traded companies. These will paint a rosier picture of the company but are a good way to start understanding how the business works and where senior management believes growth will come from.

Big Brands that You Love – Take a look at the stocks of brands that you love. When companies have a loyal following, they tend to grow at a faster rate than market expectations and this can drive the stock price up. In a nutshell, if you believe that the market has under-estimated a stock, it may be worthwhile to invest in it. Usually folks have a hard time estimating the future cash flows or future potential of a company, especially when it a loyal following.

Historical Stock Price & Volatility – The past will never predict the future, but may be utilized as a data point when it comes to investing. Seeing the historical price and volatility of a stock may provide insight into the future.


No matter what your investing in, doing homework and research is essential. We’ve provided you with steps to find a platform to invest and thought starters on how to look for investments.

What we hope is that you do more research to find investments that you believe in. Listed below are resources that will prove to be helpful on your journey.


  • Berkshire Hathaway – Warrens / Charlies Letter to Shareholders
    Warren Buffett is widely regarded as one of the best investors of all time and has been coined the “Oracle of Omaha”. He share’s his insight through Berkshire Hathaway’s letter to shareholders which provides great information for what is going on in the market and how to invest.
  • Motley Fool
    Motley Fool was founded in 1993 and is highly regarded as one of the best websites for investment research. They provide articles on current events, research and recommendations on investments in a fun way.
  • Investopedia
    Investopedia is a one stop shop for learning anything related to investments. They are an excellent resource with a mission to educate the world about finance.
  • Yahoo Finance
    Yahoo Finance is a site that helps with investment research. They have great tools to look at historical prices and also aggregates recent news about companies.
  • FinMason
    FinMason is a site that helps find suitable investments based off a risk profile. A fun retirement calculator that starts with the end in mind and makes recommendations on investments to get there.


Investment Platforms