Can I continue trading for living?
- Thread starter IT-EarlyRetired
- Start date
If I put $200K as capital and make 25% return. I can take out my return of $50K to live and still preserve my $200K as capital.
And if I had wings, I'd be an eagle.
Listen up and this is for your benefit. I'm not going to repeat this message. You stand NO CHANCE of making that return.
Maybe you can find a professional money manger with a solid track record who can make that happen. Instead of asking the people here, spend time finding someone who you think has a chance of getting the returns you seek and stop pissing in the wind.
Trading may not be what you think it is. It may not be for you. It is best to get out before it is too late.
Pension_Admin
You need to take a cold shower and wake up to reality.
50 is not old. It is only old if you think it is. For God's sake you're 15 years away from average retirement age.
So change your attitude. If you must, change careers or take some of your assets and invest them in getting retrained. NOW. Get off your ass and get working or studying. If you need help, get to a career counselor. (This doesn't include trading gurus.)
You will not make a living from your assets by trading stocks, because you are attempting to do so under the worst possible circumstances. The money you made last fall was due to the volatility and the bull market top, and will not easily repeat.
You will continue to draw down your accounts, which is a damn stupid thing to do. You've worked hard for that money. Wisely and conservatively invested, it can be worth a lot in 10 years when you really need it. You are still an an age where you should be working and earning, and you need to do that.
You want to end up in your 60's and running a cash register at Costco? Great. That's the path you're on. But you can change it. Up to you.
You can't take out 50k out a year, most of your capital is in an IRA account. You will experience tax penalties. 50k*45% tax (Hypothetical) rate=22.5k, which means you might have 27.5k left to live on.
"So far I have total only $210K assets (which include cash out from the sale of my NJ home) and $168K IRA."
Plus the way you trade is definitely short term.
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There are two holding periods for capital assets sold:
Those held for one year or less are considered short-term and receive no preferred tax treatment. You'll simply pay taxes at your "normal" tax rate on those gains.
Those held for more than one year are considered long-term and you will receive a tax break on the sale of those assets.
Here's the bottom line:
If you're in the 15% tax bracket:
Capital gains on assets held for a year or less are taxed at your ordinary income tax rate (in this case 15%).
Capital gains on assets held for more than a year are taxed at a reduced tax rate of 10%.
If your ordinary income tax bracket is greater than 15%:
Capital gains on assets held for a year or less are taxed at your ordinary income tax rate (anywhere from 28% to 39.6%, depending on your specific ordinary tax rate).
Capital gains on assets held for more than a year are taxed at a reduced tax rate of 20%.
Note that when you place an order to buy or sell a security with your broker, there will be a "trade date" and a "settlement date" recorded for the order. Which one counts for tax purposes? The trade date, which is the date that the order was executed. The settlement date is immaterial for tax-reporting purposes.
"So far I have total only $210K assets (which include cash out from the sale of my NJ home) and $168K IRA."
Plus the way you trade is definitely short term.
-------------------------------------------------------------------------
There are two holding periods for capital assets sold:
Those held for one year or less are considered short-term and receive no preferred tax treatment. You'll simply pay taxes at your "normal" tax rate on those gains.
Those held for more than one year are considered long-term and you will receive a tax break on the sale of those assets.
Here's the bottom line:
If you're in the 15% tax bracket:
Capital gains on assets held for a year or less are taxed at your ordinary income tax rate (in this case 15%).
Capital gains on assets held for more than a year are taxed at a reduced tax rate of 10%.
If your ordinary income tax bracket is greater than 15%:
Capital gains on assets held for a year or less are taxed at your ordinary income tax rate (anywhere from 28% to 39.6%, depending on your specific ordinary tax rate).
Capital gains on assets held for more than a year are taxed at a reduced tax rate of 20%.
Note that when you place an order to buy or sell a security with your broker, there will be a "trade date" and a "settlement date" recorded for the order. Which one counts for tax purposes? The trade date, which is the date that the order was executed. The settlement date is immaterial for tax-reporting purposes.
I think you should stick to penny slots in Atlantic City. Otherwise, you would probably lose everything. You have no clue what you;re doing.
IT-EarlyRetired says...
"Thanks for all your responses. I am really touched by so many enthusiastic people in this forum. However, my question is for serious full time stock investors not for traders.
Here I want to point out is that I actually mean "Investing for living" or make stock investing as my full time job. Ideally combing investing and trading will get the best result and minimize the risk. I want to be an investor and trader in the same time. I don't want to gamble my money. I don't want to be a day trader. I try to avoid short strategy. I diversify my portfolio and only purchase quality stocks. All my stocks can be a long term investment. I follow the rule. Many of you suggest that I should start with very small account to see if it would work for me. A small account is really for a trader, not for an investor. If your capital is $200K, an yearly return of 25% would be $50K. If your capital is $50K, you need to have 100% return to make $50K. Don't you have to take more risk to get 100% return? I think 25% return is not unrealistic in the year of 2005, 2006 for an "investor and trader". Unfortunately I was not in the market at that time. I don't know if there is any investing strategy to have 25% return in the recession, except gambling in very short term trading. I post my exact asset figure is trying to get advises from a full time conservative "investor and trader", who are only doing equity, not future.
I made 15% in the period of June to October last year as I had CHL, LFC, RIO, SID, RIMM, AAPL, GOOG, MON & etc. I made mistakes of selling high flying RIO, SID, MON & etc to purchase CITIBANK and Wachovia bank at price of $35 and $40. I thought financial stocks were in the bottom. I always followed technical chart to make buy and sell. I made exception for CITIBANK and Wachovia. It is a big lesson for me. In January I sold AAPL and GOOG after they drop below 200 days moving average to avoid lose more. I used the proceed to purchase more of CITIBANK and Wachovia. I didn't know sub prime problem would be that serious. When CITIBANK hit $18 Merrill Lynch strategist suggested financial stocks were still too expensive. I lose my mind of selling partial of CITIBANK at $18. I thought I would purchased them back at $15. It bounced back in four days. I've never have chances to buy back so far. I blow out my accounts in these three months. It is really a big lesson for me.
I was optimistic last year as full time "investor and trader". While NJ home price was going down and down, I thought about selling it to avoid further housing downturn, and used the proceed to add more capital in my portfolio. I can be more focus in "investing" than "trading". After I sold it, I found the economic was in recession. I don't have any idea in investing in recession. I can only put the sale proceed in the bank saving account for a very low interest rate, not mention US dollar is still depreciating. I realized that I should be a trader, not an investor in the recession. As a trader, I only need a small amount of capital. I should learn trading technique, not picking up good stocks. I should be an active trader or even day trader. I don't need to sell my NJ home. I should rent it out for a few more year. At least I have 5% return and the anticipation of bounce back of housing price. I sold the house in the very down market for a even below market price. It was completely a wrong decision. That's bothered me and drove me to the anxiety depression.
As for getting a job to make living, that would be my last choice. When you are approaching 50, it is not a good idea to get back IT field, especially after leaving for 4 years. There are plenty of young and smart new graduates with newer technology to compete with you. The employers are not interested in your old technology experiences. Of course, if I can't make money as a full time "investor and trader" in the coming recession years, I have no choice to find a job."
Let me explain in simple terms how the market works, contrary to the opinion of some here. The big traders use two terms to describe ALL investors and traders... Smart Money & Dumb Money. They love it when you don't know/think you are trading aginst them and every failed move you have described above is exactly as they set it up.
You made 15% in a short period so 25% in a year should be a breeze; only problem was you blew up. Here's a reality check: if you can be a trader/investor making 25% a year, quit what you are doing and start managing other peoples money - they will throw it at you gladly. You'll be among the very best performers who have decades of experience trading various market scenarios. And you will do it with an exceptionally short learning curve. Then you can write a book on how you did it.
While being around the top of the investor performance tables is one thing and 25% PA will put you up there, at the same time being able to cut it as a trader is quite another. But some here will tell you you are not trading against the most ruthless, cunning competition, just yourself. Friend, when it to comes to money, you are in the lions den and you are dinner.
Just keep thinking as you do, doing as you have done and watch what happens when the market does it's next, "Well I didn't expect that!" move. No harm in dreaming so long as you don't think it's real... you have not paid you dues but one way or another if you continue you sure will.
"Thanks for all your responses. I am really touched by so many enthusiastic people in this forum. However, my question is for serious full time stock investors not for traders.
Here I want to point out is that I actually mean "Investing for living" or make stock investing as my full time job. Ideally combing investing and trading will get the best result and minimize the risk. I want to be an investor and trader in the same time. I don't want to gamble my money. I don't want to be a day trader. I try to avoid short strategy. I diversify my portfolio and only purchase quality stocks. All my stocks can be a long term investment. I follow the rule. Many of you suggest that I should start with very small account to see if it would work for me. A small account is really for a trader, not for an investor. If your capital is $200K, an yearly return of 25% would be $50K. If your capital is $50K, you need to have 100% return to make $50K. Don't you have to take more risk to get 100% return? I think 25% return is not unrealistic in the year of 2005, 2006 for an "investor and trader". Unfortunately I was not in the market at that time. I don't know if there is any investing strategy to have 25% return in the recession, except gambling in very short term trading. I post my exact asset figure is trying to get advises from a full time conservative "investor and trader", who are only doing equity, not future.
I made 15% in the period of June to October last year as I had CHL, LFC, RIO, SID, RIMM, AAPL, GOOG, MON & etc. I made mistakes of selling high flying RIO, SID, MON & etc to purchase CITIBANK and Wachovia bank at price of $35 and $40. I thought financial stocks were in the bottom. I always followed technical chart to make buy and sell. I made exception for CITIBANK and Wachovia. It is a big lesson for me. In January I sold AAPL and GOOG after they drop below 200 days moving average to avoid lose more. I used the proceed to purchase more of CITIBANK and Wachovia. I didn't know sub prime problem would be that serious. When CITIBANK hit $18 Merrill Lynch strategist suggested financial stocks were still too expensive. I lose my mind of selling partial of CITIBANK at $18. I thought I would purchased them back at $15. It bounced back in four days. I've never have chances to buy back so far. I blow out my accounts in these three months. It is really a big lesson for me.
I was optimistic last year as full time "investor and trader". While NJ home price was going down and down, I thought about selling it to avoid further housing downturn, and used the proceed to add more capital in my portfolio. I can be more focus in "investing" than "trading". After I sold it, I found the economic was in recession. I don't have any idea in investing in recession. I can only put the sale proceed in the bank saving account for a very low interest rate, not mention US dollar is still depreciating. I realized that I should be a trader, not an investor in the recession. As a trader, I only need a small amount of capital. I should learn trading technique, not picking up good stocks. I should be an active trader or even day trader. I don't need to sell my NJ home. I should rent it out for a few more year. At least I have 5% return and the anticipation of bounce back of housing price. I sold the house in the very down market for a even below market price. It was completely a wrong decision. That's bothered me and drove me to the anxiety depression.
As for getting a job to make living, that would be my last choice. When you are approaching 50, it is not a good idea to get back IT field, especially after leaving for 4 years. There are plenty of young and smart new graduates with newer technology to compete with you. The employers are not interested in your old technology experiences. Of course, if I can't make money as a full time "investor and trader" in the coming recession years, I have no choice to find a job."
Let me explain in simple terms how the market works, contrary to the opinion of some here. The big traders use two terms to describe ALL investors and traders... Smart Money & Dumb Money. They love it when you don't know/think you are trading aginst them and every failed move you have described above is exactly as they set it up.
You made 15% in a short period so 25% in a year should be a breeze; only problem was you blew up. Here's a reality check: if you can be a trader/investor making 25% a year, quit what you are doing and start managing other peoples money - they will throw it at you gladly. You'll be among the very best performers who have decades of experience trading various market scenarios. And you will do it with an exceptionally short learning curve. Then you can write a book on how you did it.
While being around the top of the investor performance tables is one thing and 25% PA will put you up there, at the same time being able to cut it as a trader is quite another. But some here will tell you you are not trading against the most ruthless, cunning competition, just yourself. Friend, when it to comes to money, you are in the lions den and you are dinner.
Just keep thinking as you do, doing as you have done and watch what happens when the market does it's next, "Well I didn't expect that!" move. No harm in dreaming so long as you don't think it's real... you have not paid you dues but one way or another if you continue you sure will.