Pro Traders: how do you invest your money?

[6ptPrime]

I hear ya. The first thing is to get as much money out of trading and into what us traders call "safe" investments like the stock and bond market. When I was trading for a living 50% of my balance over and above what I needed to trade was withdrawn and 50% of that went into the Vanguard S&P 500 fund. So everything was growing little by little, both my trading account and my investment account. I'm use to 30% drawdowns so investing is a piece of cake, safe as milk.

Yea, my issue is I dont want the 30% drawdowns in anything I do with my money post-trading. I don't think stocks are a particularly great buy right now (when they're cheaper my risk tolerance for the stock market might change). When i distribute money from my trading account I want it to be as close to risk averse as possible. I dont need or want the upside from investments outside of trading, just for that money to grow in line with inflation. Anything more I consider gravy. I contribute to my ira each yr and I'm okay with not touching that account despite any drawdowns on it.

I also shouldnt need any of the distributed trading income for anything trading-related again, so no concern about using it again. I'm just looking for some low-risk, low upside opportunities where I can park that cash. Ideally I will not have to touch that money again.

 

[6ptPrime]

Here's my take...

I have an account that I still use for trading and running my structures. I have a set amount that I want in that account to run things and I keep it in that general range.

I have a cash reserve account that would serve to "re-fund" the main account in the event of a blowout or other unforeseen catastrophic event. My current strategies don't really lend themselves to blowouts any more, but you never know. You always need some dry powder and no one can predict what will happen in the markets or with brokers.

Beyond that I like to have investments that can yield about 5% that are as safe as I can make them. Even if you can pay cash for a large residence, get a note on the last 1M and pay 3-4% on it, which is really much less after the interest deduction.

If that "5% pot" gets crazy big...or even if you are so inclined...I'd also consider a charitable foundation...doing good with nice writeoffs.

Yea, this is in line with my thinking. Like you, I have a trading escrow account thats sole purpose is to cover any debits that occur to my trading account beyond x. What are some of the investments youve found that can yield 5% and are 'as safe as you can make them'?

 

[6ptPrime]

What's funny is if you google "low risk, low reward investments", apparently they dont exist. Everything out there is "Low risk, high reward". I've always been wary of investment advisors as they have vested interests in where your money is. My philosophy is to look around for ideas independent of my advisor and then bring those ideas up with him.

 

[amgrant]

10% Total US Stock
10% Canada ETF
5% US Reits
5% US small cap value
15% Pacific equities
15% European equities
10% US tips
10% US high yield corp bonds
20% US total bond

 

[ktm]

Yea, this is in line with my thinking. Like you, I have a trading escrow account thats sole purpose is to cover any debits that occur to my trading account beyond x. What are some of the investments youve found that can yield 5% and are 'as safe as you can make them'?

Not too many moons ago, it was US Treasuries. Hopefully we'll get there again.

Mostly bond based stuff. High grade corporates, munis and some carefully selected junk thrown in for the higher rate. I look at mostly funds for these kinds of things and I'd suggest getting a few managers/companies to follow that are good at picking solid ingredients for the mix. For a while, there were a few that were largely bond based with some securitized credit card debt making up a small percentage - those were pretty good. Nowadays, it's looking like securitized auto loans are making inroads. Again, these should be small percentages of the holdings of the fund. The good managers know how to pick this stuff so that you get some extra juice without the worry. Even if the sh1t totally hits the fan on the securitized stuff, you should still be getting north of 4%. If things go pretty well...maybe 6%.

 

[loyek590]

Yea, my issue is I dont want the 30% drawdowns in anything I do with my money post-trading. I don't think stocks are a particularly great buy right now (when they're cheaper my risk tolerance for the stock market might change). When i distribute money from my trading account I want it to be as close to risk averse as possible. I dont need or want the upside from investments outside of trading, just for that money to grow in line with inflation. Anything more I consider gravy. I contribute to my ira each yr and I'm okay with not touching that account despite any drawdowns on it.

I also shouldnt need any of the distributed trading income for anything trading-related again, so no concern about using it again. I'm just looking for some low-risk, low upside opportunities where I can park that cash. Ideally I will not have to touch that money again.

30% drawdown is in my trading, not my investment
35 years old is too young to be loaning people money, but if you insist and want to get as risk adverse as you can while still having a chance to beat inflation (now we are talking maybe 4%/yr)

here's a 50/50 portfolio for old people from the Bob Brinker news letter

akrex 5%
vdigx 5%
vfwix 10%
vtsmx 30%
dlsnx 20%
dltnx 20%
ostix 10%

think about it, should be just about right for you in 20 years when you are 55

I have kids that are 35 and I have them 80% in VTSMX and 20% outside the USA which we pay to have professionally managed

 

[Trevor Phillips]

I would like to ask you guys something.

What's the minimum amount of time you need to hold a stock to get a payout? Are there minimum thresholds? For instance, would a day trader that holds onto a stock for 12 hours get a tiny amount of dividend at the next payout?

Do funds like ETFs collect all the dividend from all the companies under that fund and divy it out to all the share holders? Do the fund managers/brokerage companies take a cut before giving it out?

Thanks!

 

[dealmaker]

Wells Fargo to Offer $1B in Preferred Stock Yielding 6%

• By Amey Stone
  Wells Fargo (WFC) has gone old school when it comes to its new preferred stock offering.
  
  Institutional preferred shares that trade at $1,000 par value and are issued as “fixed to float” have been all the rage in recent years given the outlook for rising rates.
  
  But Wells Fargo filed a document with the Securities & Exchange Commission on Wednesday outlining its offering of $1 billion in 6% perpetual preferreds. These are securities that are issued at $25 a share (a nice price point for retail investors) and that pay a 6% coupon in perpetuity.
  
  As the ultimate in long duration assets, perpetual preferreds haven’t been that popular with institutional investors lately. But the 6% yield probably sounds plenty attractive to individual investors seeking income.
  
  The filing calls for $900 million in preferred stock with potential for another $1 million over allottment. The shares would be redeemable starting in 2020. According to the filing, the settlement date for the new securities is Sept 15. The document also notes:
  
  We intend to apply to list the depositary shares on the New York Stock Exchange under the symbol “WFCPrV”. If the application is approved, we expect trading of the depositary shares on the NYSE to begin within the 30-day period after the initial delivery of the depositary shares.