+4 for Cutten's post.
I agree wholly with what he suggested.
I agree wholly with what he suggested.
£800k to invest
- Thread starter alexrpeters
- Start date
Great post by GoC although to my feeling his portfolio is a tad overweight equities. I would change the ratio from 50% to 40% stock exposure and put the freed up 10% in physical gold.
As the crash of 08 showed you get substantial outperformance of gold versus equities in a big crash and if the markets would continue to rise chances are pretty high gold moves up accordingly hence the risk reward ratio being relatively favourable of some gold exposure I would think.
As the crash of 08 showed you get substantial outperformance of gold versus equities in a big crash and if the markets would continue to rise chances are pretty high gold moves up accordingly hence the risk reward ratio being relatively favourable of some gold exposure I would think.
I would listen to him.
Have you ever done any planning? How much money do you need to live "comfortably" every year?
Do you have any other income to support yourself?
Ok I won't comment on all of your post but will thank you for a comprehensive answer.
With regards to the original question, how long do you think it would be take to turn the £800k into £5 million following your investment structure?
I've got it into my head that money makes money and that with an 800k pot, I shouldn't find it too difficult to get to my target (5mil) and then retire. I have no other income or revenue streams at the moment apart from this windfall and a requirement that I don't enter the same market again.
Trouble is everyone I've talked to has different ideas. Set up something similar to capitalfactory.com in India, invest in shares, don't invest in shares, invest in Chinese property, don't invest in property at all, buy tracker funds, open a nursing home etc.
Am a bit paralysed by all the advice to be honest.
Best thing I think is to do nothing for the first 6-12 months and then take it from there.
Would love some more recommendations of books to read if you guys can help me out
What do you guys think of options selling as mentioned elsehwere in this thread, which seems to have at it's core small profits and relative little risk to the capital?
1. You must do your own work. Asking for advice is fine. Asking for explanations of rudimentary concepts that you could research yourself is not inspiring. If I ever worked with someone, I'd expect them to learn all they could for themselves, and learn from me only what is specialised knowledge not available in mainstream.
2. What percentage annual return should you expect to make as a novice? None. If you have not developed a proven strategy based on a legitimate edge you should not expect to make even enough to cover your commissions and fees. You are putting capital to work without an advantage and should expect to lose. This is not a sensible course of action. Others have suggested inflation protected government bonds etc as possible investment choices. You should build a sensible and diversified portfolio. When you do come to speculate, after you have developed an edge, you should start at small size first. You will make mistakes, and the unexpected will happen. Do not risk all of your net worth at the beginning.
3. No. I have not been on any of these courses so cannot comment on Don Bright or his company. The reason I would not recommend it is that there is a lot of nonsense bandied about this subject. Like the real estate investment seminars, most "trading education" you find is fraudulent nonsense. You can research for yourself instead of expecting to be taught - this business requires independent thought.
Nobody is going to show you how to do this. The people who charge for "education" are salesmen, not traders. Those who understand how to do this and are successful do not need your money. What do you have to offer except your money?
I see you have been successful in a prior business. Treat trading as a business. Anyone who is prepared to take responsibility for themselves and approach trading responsibly can succeed. It is not easy, and I would advise you not to look for shortcuts. You should not be expecting to make good returns on a 750k fund in your first year of approaching this. The currency market is potentially the worst place for you to start. The Bank of England trains its FX dealers for four years before letting them loose on the desk.
You can comfortably afford to support yourself for the next few years while you are learning. You should resist the temptation to trade before you are ready. It is more dangerous for those with more to lose.
For the love of God don't put much of that money at risk until you have demonstrated statistically significant success running it.
Thats quite a newbie type of thinking to think you can turn 500% with no experience.
In your previous business did complete newbies beat you at your own game?
500% is professional level. Very professional level with decades of experience.
Even the best of the business, GOOG (google) on the internet turned 300% in 7 years. Are you the best in the business?
House prices in the UK have historically doubled every 7 years since records began in around 1900 (taking into account the dips in the recession)
Therefore if I bought a commercial property in the Docklands on a current yield of 6% with full tenant covenants on a 25 year lease, I could expect to reasonably expect to reach the target of £5 million in around 20 years
And that's with doing NOTHING and still receiving around £50,000 per annum gross.
However my point is that some astute investments can acheive greater yields in a shorter time frame which is why I was asking. One of my accountants clients invested in the Kent airport in 1991 for £2.5 million when it was a tiny regional airport. Recent developments including a new proposed runway and continental flights have made his holding worth £80 million now.
I'm not expecting to get handed deals like this on Elite Trader, but I am looking for alternatives to what I currently know which is property and software.
Selling DOTM premium holds big temptation for market newbs who can't trade. Don't be fooled. The market goes up until it goes down. Ask Long Term Capital Management. Yes, there's long-term market bias to the upside inherent in debt-based money systems. The problem? When sovereign debt gets "too big" (in excess of 5 to 1, debt to tax revenue), a Portugal, Ireland, Italy, Greece or Spain happens. Check the news. US is next. I call a 70:30 chance Bernacke monetizes Americas debt/unfunded entitlements away. 70% he monetizes - stocks, commodities, real estate go to the moon = You win (writing DOTM SPY puts). 30% he doesn't - stocks, commodities, real estate crash worse than we've ever seen. You lose. You go bankrupt. This is not the up-up-and-away equity markets we've seen for the past 50 years. The new macro prism to decipher global markets is now sovereign debt. Rest assured, we're headed for a Depression either way (inflate or deflate). If all that is greek to you, step away from the table and give yourself that much needed 12 months to get literate on macro economics and the current financial landscape before you flush that 800K.
In the interim, put most of your capital with a hedge fund that has >1 Billion assets under management AND a positive YOY track record, for the past 13 years. Why 13 years? Any idiot CTA, financial adviser, or Ivy League schmuck can index their mutual fund to the S&P and look like a hero during bull markets. A rising tide buoys all ships. The real test of metal (what separates men from boys, in the investment world)? Funds that outperform during BEAR MARKETS. Remember 2008 when the market dropped 50%? How much did your CTA/Financial Adviser/Mutual Fund lose then? Positive returns over 13 years, includes 2 wicked bear markets, and is a great litmus test for competency in your prospective manager. This arena is for experts. Not rank amateurs. A handful of renowned hedge fund managers earn BILLIONS a year. And not for losing money.
I'm talking Paul Tudor Jones, Jim Simmons, Bill Gross, etc. These are the heavyweights who only manage HNW individuals. Do the search, find the right guy (PIMCO is great - min 10% annualized over 15 years, I believe), and pull the trigger. Leave that shit to experts while you get up to speed, please.
Otherwise, traders like me (and everyone else on the thread, I'm sure), are only TOO HAPPY to take the other side of your 800K on the GLOBEX or Reuters Dealing. Think about that, too. This is a game of sharks, and you're a HUGE Guppy fish out for a joy ride. Nothing personal.
Last, if you want to play around with speculation, take 10K, open an account, stick to price action, market psychology, support and resistance, basic indicators (200 MA), multi time frame analysis and basic chart patterns. That's 10 years of permutations, alone. This is no joke. Daytrading is possible (I do it). Took me 7 years to LEARN. The average is 5. Minimum screen time is 5,000 to 10,000 hours. That's not hyperbole. You have a wife and children. If you want to dabble, treat speculation like a day job, watch the ES everyday during regular market hours (wife is working, kid at school), and see what happens. When day-trading is consistent, transfer more assets from the hedge fund into your brokerage account. Do it in very small pieces. Good luck.
Very generous advice indeed.