Earning A Passive Income Through Managed Foreign Exchange Accounts
It seems as if the term "passive income" is popping up all over the Internet lately. And why shouldn't it? People have always been fascinated with the idea of making the most amount of money doing the least amount of work. In the past, passive income was generated through multiple rental properties or royalty fees. Today, the Internet has created hundreds of opportunities to generate passive income and thousands of people are cashing in.
Unfortunately, there are many companies online preying on people's desire to make money online. It is critical before investing in any business opportunity - especially one that seems too good to be true - that you do your homework and confirm the opportunity is legitimate.
Managed Foreign Exchange accounts, or forex accounts, have proven to be great passive income generators for the right investor. Here are some details to help decide if this investment opportunity is right for you:
Background
The Foreign Exchange is where banks and other institutions trade the world's currency. It is the largest financial market with over 2 trillion trades posted daily. The forex market began as an investment tool over a decade ago. Before this, only banks and other investment firms like hedge funds had the opportunity to invest. Individual investments started at $10 million.
What Is A Managed Forex Account?
A managed forex account is when a licensed investment firm makes trades on an investor's behalf. Investors give them control of their investment and a firm's account managers make the daily currency trades. Typically they charge anywhere from 20% to 50% of the monthly profits as a management fee. This can be good for investors looking to earn a passive income because they only charge if they make a profit!
Investment Requirements
Depending on the forex trading firm chosen, an investor is typically required to invest a minimum of $5,000 to $25,000 to begin trading. When choosing a firm, make sure that as an investor you are in control of your money at all times and can monitor all trades. Usually a trading manager uses a limited power of attorney to make the currency trades on an investor's behalf.
Forex Fraud
Unfortunately, there are plenty of fraudulent forex investment companies operating online and elsewhere. Before selecting a managed forex account as a passive income investment, be sure to know the signs of a forex scam. From 2001 to 2007, The U.S. Commodity Futures Trading Commission said that 26,000 people lost $460 million in forex frauds. Here are a few of the warning signs the CFTC issued when determining if a forex firm is fraudulent:
- If it sounds too good to be true, it probably is
- Do not choose investment firms that guarantee high returns
- Stay away from companies that promise little or no financial risk
- Don't trade on margin unless you understand exactly what it means
- Investigate a firm's track record and background before investing
A well-managed Forex account can be an excellent passive income investment for the right person. These accounts typically come with high risk, so it is important to only invest money that is not earmarked for other important uses. For investors who have the disposable income, the high risk can often mean high gains with very little effort!
Scott Robinson is the owner of Scott Robinson Inc., an Internet company focused on helping people make money online through various residual income opportunities.
Source: http://ezinearticles.com/
Added: May 1, 2008
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