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'.

Say you invest in T-bills. One year later, you've made a 5% return. Congratulations.

The government taxes away 35% of your 'profit', leaving you with a 3.25% 'gain'.
Over that year, the CPI rises 4.25%.
I still can't understand why most people consider that a 'gain', when you've actually lost purchasing power. $100 in 1997 bought more goods and services than $127 does in 2007.

Sorry for the brief hijack... and now back to our regularly scheduled thread...
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You're assuming real interest rates are always negative. That's simply not true, most of the time they are positive. You can easily invest in TIPS, or if you don't trust US govt inflation figures, foreign govt bonds, or a mixed fixed income/equity income portfolio. Or, more sensibly, buy annuities sufficient to cover living expenses, then put the rest in a growth portfolio for the long-term.

Not to mention, what's wrong in consuming 1-2% of capital per annum? If you got $5 mill in the bank, who gives a f*ck about interest, just live off the capital baby.
 
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.
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Disagree, unless you mean "perceived low- risk", instead of "low-risk". Real estate and G7 stocks are low risk about 90% of the time (any time there has not been a recent speculative orgy, basically), and they massively outperform inflation.

Now, assuming any kind of value-investing ability, you can actually find stuff most years that is low-risk *and* high return. As an example, with 50k you can buy about 150k of German real estate, which has suffered falling prices and depression for 15 years. This will most likely be worth at least 500k in 10-15 years maximum. The chance of you losing money, assuming you take property & title insurance, is less than the chance of you dying within that period. The risk of permanent capital loss is far lower than investing in US T-bills, yet it will pay 5-10 times more per annum in return on capital, as well as cash flow from rents in excess of mortgage & maintenance payments.
 
Quote from Cutten:

Not to mention, what's wrong in consuming 1-2% of capital per annum? If you got $5 mill in the bank, who gives a f*ck about interest, just live off the capital baby.
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The trouble with all these calculations of what-number-must-I-reach-so-I-can-kick-back is that if you are a youngster, it is very sensitive to the assumptions for RoR and inflation. Move the needle a bit to the left or right and you get wildly different results if you have 70 years more to go (a distinct possibility if you are aged 30 today).

In short, the calculations have massive variance and are pretty much inaccurate. And this is just with bonds.

If you are talking about estimating returns from risky assets, it's even worse. You got path dependency to deal with, which is a whole different kettle of fish.

I generally think the naive approach is best for 'risk-free assets'. Fix a horizon, multiply your cost of living by the horizon, and add a margin of safety.

If you think your lifestyle costs $100,000 a year and you want to have the next 10 years covered, have $1,500,000 in bills n bonds, a 50% margin of safety. Keep your portfolio diversified across countries, keep your maturities within your horizon and hope the real interest rate averages positive.

Your biggest problem is getting stuck with obligations of a deadbeat govt and revolution.

Preferably you have an extra $XXmm where XX equals the amount necessary for a rich-man's visa in some pleasant property rights respecting country. If for some reason the country falls apart you want the means to rapidly establish alternate residency. This might seem ludicrous to people living in the US, but it's a common precaution for inhabitants of many other countries to have ready means to redeploy.
 
go back to school

if your slacking/partying around @ school

just quit and focus trading

no point wasting time learning what does not interest you

IMHO it is not wrong to get a degree @ 40

knowledge is useless without wisdom :cool:
 
(RM: You're missing the point- There's no way to gain net purchasing power with low-risk investments. It's not possible.)

Quote from Cutten:

Disagree, unless you mean "perceived low- risk", instead of "low-risk". Real estate and G7 stocks are low risk about 90% of the time (any time there has not been a recent speculative orgy, basically), and they massively outperform inflation.

Now, assuming any kind of value-investing ability, you can actually find stuff most years that is low-risk *and* high return. As an example, with 50k you can buy about 150k of German real estate, which has suffered falling prices and depression for 15 years. This will most likely be worth at least 500k in 10-15 years maximum. The chance of you losing money, assuming you take property & title insurance, is less than the chance of you dying within that period. The risk of permanent capital loss is far lower than investing in US T-bills, yet it will pay 5-10 times more per annum in return on capital, as well as cash flow from rents in excess of mortgage & maintenance payments.
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No, I was only including true no-risk investments- The kind that never has a drawdown. AAA bonds, T-Bills, CD's, money market, etc.
 
There's no reason why you should not be able to do both. If you're of average intelligence and pick a major that doesn't have a huge workload you should be able maintain a sufficient GPA while spending about 25 hours a week going to class and studying.

Next, pick an instrument that allows you to trade during the evenings.

Trading has more potential in earning power then any college degree will give you. For this reason alone you'd want to focus on trading first, college education second.
 
Don't underestimate what you can learn from a university degree and from a job that may provide you with experiences that further your personal trading career.

Depending on your current trading capital, I would compound it as much as possible before you can extract some of it out and earn "passive" income out of it.

Trading is still an earned income, though obviously far more lucrative than other professional jobs, but you should not rely your living expense on trading alone.

As such, my advice is to develop a trading strategy that allows you to finish off school and maybe get a job in trading firm and still give you enough time to do your own trading and build up your capital.

When you have accumulated enough money and that it provide a respectable amount of passive income through any kind of investment (with little risk), and essentially become financial free, then you can devote 100% of your time back to trading again.

This is just a less risky path.

Obviously, you can opt to go trading full on and be fully committed and grow your capital while minimising your expense to achieve the same thing.
 
I am 20 and trading part time, my personal opinion is to do both. Try to trade part time while going to school, classes pretty much run all morning, afternoon, and evening. You shouldn't have trouble doing both, If you really put your mind to it.
:cool:
 
Quote from bigbrent701:


I really want to trade for an investment bank and honestly i have really no other interests at this point. Sounds to me like you have have solid results. Think about it from this point of view, you have went into a open market and made money. That has to provide quite a sense of security.
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You want to trade for an investment bank.... and you transfered to a community college? You are done. Not in the sense that the trade is done, but that you now face the same exact chance of getting into investment bank front office as that of a street begger... still not impossible though: eddy murphy did it in Trading Places!
 
i'd go to school.

your edge will be there in 4 years.

well then, what if your edge ISN'T there in four years? all the better you decided to go to school.
 
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