Go back to school or continue trading

Quote from Rearden Metal:

You're 19, so it's forgivable, but there's actually <b>no such thing</b> as 'living off the interest'.
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I appreciate the constructive criticism Rearden Metal (I mean that seriously, not with sarcasm) but allow me to further elaborate.

I have taken this into consideration. Given a 5.00% rate of return, subtract taxes and inflation, I would still be making enough. I did neglect to mention that I would be buying myself a house paid in full before considering dropping out. If I have no mortgage to pay, I can very easily live off of the interest since I will not have to obsess with putting a roof over my head. It would not be a very lavish life but it is a pretty good safety net to have - enough to let me sleep at night.

Just for the record, I would never just stop working and rely on the 5% lol. I would just use that as an addition to whatever I make working a regular job. Sorry, I should have clarified that. Anyway, no mortgage, a decent paying job and a few extra k a year after taxes and inflation makes for a fairly comfortable middle class life. It would give me the freedom to pursue other endeavors without having to obsess about finances in the event that trading does not work out (IE: going back to college). This is not the kind of thing I would retire on. It is more of a temporary fall back. Furthermore, I have no intention of touching this fund if my trading is still profitable. In that time I would be seeing enough returns to offset some of the future taxes and inflation.

Heck, I could just use the $1.5 million itself if need be. That is $50k a year for 30 years which is more than enough time to find myself a new job :).

Also, it is nice to see other traders around here my age. Although I do not really like to make a big deal out of it, it is rare to meet other profitable traders in my age bracket. In some way, it is a relief to know that I am not the only one that has to find a balance between trading and class time.
 
its not just young hot shots that wipe out, when I was at the CBOT, and the bonds rallied 10 handles in a week or two, some large pit traders kept on selling into the rally.

they were wiped out, these guys were in their 40's. The house and kids college money was at risk.

so a lapse in risk management can wipe you out at any time during your trading career.

thats why its absolutely important to have a fall back position to pay the bills then take care of basics.
 
Quote from naifwonder:

I appreciate the constructive criticism Rearden Metal (I mean that seriously, not with sarcasm) but allow me to further elaborate.

I have taken this into consideration. Given a 5.00% rate of return, subtract taxes and inflation, I would still be making enough. I did neglect to mention that I would be buying myself a house paid in full before considering dropping out. If I have no mortgage to pay, I can very easily live off of the interest since I will not have to obsess with putting a roof over my head. It would not be a very lavish life but it is a pretty good safety net to have - enough to let me sleep at night.
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You're missing the point- There's no way to gain net purchasing power with low-risk investments. It's not possible. After 'living off the interest' , you have the same amount of dollars, but those dollars buy less after factoring in inflation.

Start with a million dollars in 1970, 'live off the interest' until 2007- You still have the same one million dollars, but your purchasing power is way less than half what it used to be.
 
Rearden, I will not be using it for that long. I will only need it long enough to hold me over until I can get myself another job. Having $1.5 million collecting 5% gives me more than enough time and financial freedom to get a degree and a new job in case I need it. If you what you are saying is true, than the 5% is enough to maintain the purchasing power on the $1.5 million long enough to use the $1.5 million itself to sustain myself for a long time - net gains or not.
 
I was in the same situation brother, but decided no matter what, i was going to finish school - not for the piece paper, but the experience as well. Looking back i feel i made the right choice. Graduated w/an Econ degree @ 21 and now all i do is trade and play! In the end, its your life amigo, just like executing a trade you make the final decesion and deal with the consequences and/or reap the rewards.

Best of luck w/your future endeavors.
 
I have read through this thread and here are my thoughts...

First, read over all the stories of what happened to many traders after the crash of 1987 or from the years of 2000-2002. Google it or talk to some guys in real life who lived through those times. Most traders were completely shaken out. During some of those years, the VIX was over 40 and there were truly wild swings.

While there are many guys here on ET who seemingly made it through all these little panics seemingly unscathed, the reality is that many folks lost fortunes and were left scraping for cash. I knew of many people left jobless in the bay area in 2001-2002. The NYC area seemed just as bad during those times.

Now we are living in a world of low volatility where the indexes always seem to be going up. Making money has been easy these last few years, but things can get a lot more challenging and very quickly. That little correction February or that one last year in May is nothing as to what could possibly happen.

You wont always be 19 and if things start to get challenging then you will wish you had a regular job.

In whatever you do, always have a detailed business plan. In going to college, you should have a detailed business plan. Not all college degrees are pieces of paper. A degree from Harvard could be worth millions of dollars in the long run.

The safest piece of paper in this world is one which involves healthcare. Instant job after college and you never find yourself out of work. For example, Nursing. Its a tough job yet I have never met an unemployed nurse, never met a nurse who was not living pretty well, etc. In fact, I once met a nurse who got fired for a serious error at a hospital and then found another job within a few days at the hospital down the street. Another nurse I knew simply threw her resume up on careerbuilder and people were calling her. Not just hospitals, but pharmaceutical companies and other entities.

So what I am saying is that I wouldnt go to college for just any degree and I wouldnt go without having a detailed written business plan. Going to a state college for a criminal justice degree is, in my opinion, a serious waste of time. You should get a degree where you know you will have a good paying job when you graduate.
 
hey ... I thought you had to be 21 yrs old to be a moderator on ET ????


rateesquad
Moderator
Registered: Mar 2006
Posts: 692
07-15-07 11:50 PM
Hey man,
I am in the same boat, almost.
I am 18, still in school and trade.

:D
 
Quote from Rearden Metal:

You're missing the point- There's no way to gain net purchasing power with low-risk investments. It's not possible. After 'living off the interest' , you have the same amount of dollars, but those dollars buy less after factoring in inflation.

Start with a million dollars in 1970, 'live off the interest' until 2007- You still have the same one million dollars, but your purchasing power is way less than half what it used to be.
More...

Maybe one aspect you're missing is that if one doesn't spend all of what they make "off the interest" then the unspent portion of that income goes back into the base amount creating a larger amount to generate interest on in the following year. Whether one keeps up with inflation depends on the starting amount, their annual spending and the interest rate that generates the yearly income.
 
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