Forex Project: Launched!

In a recent post I described how I had accepted an offer from Discover Bank for a very low interest rate loan with the intention of using it to build more personal wealth via the foreign currency market. It has taken some time to get the funds into position because of the processing time involved between Discover Bank, Paypal, Oanda, and ING Direct, but everything fell into place Monday night. Yesterday morning I sold the USD/TRY pair using 10% of my balance and launched this project.

Since first describing the plan (follow the above link for that), I've decided to make a few minor changes. Originally I was going to place the portion of the loan proceeds intended for Forex trading into my primary Forex account, then withdraw that sum in the future when the account had doubled it.

In the days between accepting the loan and getting to "go," I thought quite a bit about what it is I want my Forex account to be for. Basically, I intend to build it up as an ever-increasing source of monthly passive income. There is nothing in my original plan that would have prevented this except that I began to puzzle a bit over how to handle tracking my passive income - what portion of it comes from my principal balance, the portion resulting from the borrowed sum, how much monthly cash flow it would create now versus what it would drop back to after returning the money to Discover Bank in ten months, etc. I realized that I was setting myself up for unnecessary complication.

So I decided on a simple solution: place the borrowed funds in a sub account and shift the gains over to the primary where they'll become part of the principal. Before I do this I'm going to allow enough interest and capital gains to accumulate in the sub account to cover the initial costs of the loan (a $99 balance transfer fee and a $5 eCheck fee for moving the money to Oanda via Paypal, so $104 total), which will be the sum of $3959. After that, upon each capital gain event (when I cash out positions if it would result in a greater profit than one day's worth of interest) amounts above this will be what gets moved over.

Because I won't be working with a specific dollar amount as the trigger for ending the project before ten months is up (when the ultra-low interest rate on the borrowed money goes away), I will instead keep this going for the full ten months. This may lead to more than doubling the money, or it may never reach that point, but since I will be enhancing the monthly cash flow of my primary account, there's no reason to stop doing that until I have to!

Carrying out the project this way will help me to avoid the data tracking headache I think I was setting myself up for, and it will allow me to know what portion of the income of my primary account is really mine: all of it. Whatever it becomes after the first transfer of gains from the sub account, so shall it be at the end of the ten months (and possibly higher) and thus I'll know how much I truly have to use month-to-month (why this will be important in the near future I'll describe in another post).