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My comment on the investment type for when I transition info a semi-retired state is open to change based on capital available at the time, interest rate environment at the time, and the big one would be inflation expectations. So it's all open to adjustment by the time I get closer to reaching my end goal.
Generally speaking though, the idea would be that my time is not tied up managing or dealing with that end of things, so I can put that time/effort into other things (as I mentioned in answer 'a').. and combined with that, not be open to the possibility that I fall below my goal after having met it, as I'd have taken on responsibilities and obligations that wouldn't fair well if I stepped down from them to attend to my own personal finances. I mean, if conditions were right, I'd even consider longer term government bonds and annuities since they'd require nearly no time devoted to position management once in place (I stress the 'if conditions were right' part.)
I don't want to get off topic, but there's a reason why some old money stays rich and keeps passing their wealth to the next generation; strict capital preservation with enough principal to weather economic storms AND be able to invest in select higher-yield businesses (direct investment, complex investment, etc..) without the chance of loss affecting their standard of living.
Can you help answer these questions from other members on NexusFi?
Since I am new to this board I try to answer those questions now.
I have a goal but never had it to retire from trading. My goal is to accumulate enough amount of money to be trading safely for a living. I still have a full time job, but my goal is to become a full time trader. I assume that with 500k I can trade safely enough to accumulate 100k annually (20% gain) and use that money as my salary. I planned to use that gain in the following year to avoid stress from trading, for example, let's assume I had the money at the end of 2014 and this year (2015) I will be trading. At the end of 2015 I would take proceeds and use them during 2016 as a regular salary paying myself around $6,000 monthly (assuming that 20% out of the 100k would be taxes, so real cash to pay will be only $80k). From that money I would do everything the exact same way as I do with my regular 9-5 salary - save for "retirement" in dividend paying stocks, and pay all the bills. During 2016 I would then trade for the next year 2017, etc. Once my stream of income reaches 100k annually I would stop trading for a living and start trading for fun or hobby.
There is a difference between inheritance or windfall and starting from scratch. I thought about it many times. It would solve a lot of my problems, issues and speed up my dreams on early retirement. But I was also thinking whether I would want any windfall or not as I really like this phase of building my own wealth. If it ever happens and I get a big chunk of cash, I would keep my plans as they are. I would just invest the windfall into dividend paying stocks and continue trading for fun with the same amount I have had at the time the windfall arrived. I am also curious if I could reach my dream trading or I have to work until I die. Thus I wouldn't use inheritance or windfall for trading at all unless it is smaller than my target amount. In that case I would use it to jump up my goal.
I do not know the answer to the question of being satisfied with some amount instead of complaining about not having enough. I know that with higher income and higher living standard we create for ourselves we also create higher liabilities and in many occasions we still feel as we do not have enough. With bigger house the bills are bigger, taxes are bigger, etc. It can be tricky and that's why many lotto winners become poor quite soon after their big payday. It is quite easy to make money, but a lot more difficult to keep them or multiply them.
Hi Tiger,
The more I read your posts the more I fing myself relating. I'm 57, spent most of my working life in business/trading, it's not about the money but rather the challenge. The worst period was when I retired from business and worked as a senior manager, the salary was triple most professionals, I hated every minute of it. It's been great the last few years, back trading full time, no amount of money compensates you for not being who you really are. Cheers John
To be honest I don't expect to lose otherwise I would have kept my construction company. So I find it hard to visualize a scenario where I would be risking it all in retirement, reduced size and only the best trades sounds like absolute bliss.lol These days it is just a numbers game, I have to get the trades on no matter what, there is no money to be made standing on the sidelines waiting for that great trade, sometimes I think it's like the fish that got away, urban myth.lol This is how I produce my nut so I force myself into the trades as long as they have the bare minimum probability of success that I require, although I do scale my trades, this helps keep control of the inevitable drawdowns.
Cheers John
Very true that this is a numbers game.
But: Money management is the key!
And knowing the market: just get in when your setup is there.
It is better to gain good on a few days than to let your gains
flowing back when trades are made only to have traded.
That's why I made the reference to "the bare minimum level of probability that I require" I never put trades on that don't meet this criteria and only continue to load up if the probabilities improve. Totally agree with the importance of money management hence the scaling.
Cheers John
I don't think that once you reach a certain level of success that you would just pack it in and quit trading... It becomes part of you... you would have to replace that something with something else as or more interesting.
In my case I retired at 54... I did not have enough money to sock it away in some kind of fund or annuity and live out the rest of my life. I had no pensions at the time... no company pension but I gave up my working life in the normal sense once I believed that I could support myself in my normal lifestyle. If I failed back then {shrug} I would have went back to work again... but I never failed.
On thing though, and this would be sort of "retirement" from trading. If I were a daytrader (which I never was though) I would be considering the reduction of stress of being in front of a computer constantly during the trading day. I would be learning to invest in longer term investments and trades. That would be a retirement for me.... earning the same amount of money with less stress.
Most younger people have no clue as to the amount of money they need to reachl in order to retire and live off the interest for the rest of their life.... So I say that while it may be considered work, trading will always be a part of any trader worth his/her salt... I have known several traders over the years... some who have been quite successful doing what they do... never heard of any of them saying they were looking forward to the day when they would stop trading... but then they were not daytrading, options or future/commodity trading... They were in long term stocks, stable and usually paying good dividends.
This could be considered a hobby at this point... nothing wrong with that.