Should I consider a prop firm? Or just trade my own funds? ($2 mil)
- Thread starter SpreadOption
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With 2M Cash you might want to think more about your lifetime goals rather than how to trade it.
1) How much do you *need* as income on a monthly/yearly basis
2) Do you have any large purchases you need in the future (house, education fund for children, etc.)
Then you will want to diversify accordingly. To be perfectly honest, there is nothing wrong with taking 1M and just sticking it into a couple of good ETFs (even just SPY) and leave it there for 30+ years. You could then take 500k and place it in some long term stock investments. And the final 500k can be what you 'play' with to generate regular income.
To take all 2M and try to use it to generate large annual returns is a high risk strategy that you may regret if it an undesirable event occurs. So you must consider how much you are willing to loose should something bad happen, and restrict your investment accordingly.
1) How much do you *need* as income on a monthly/yearly basis
2) Do you have any large purchases you need in the future (house, education fund for children, etc.)
Then you will want to diversify accordingly. To be perfectly honest, there is nothing wrong with taking 1M and just sticking it into a couple of good ETFs (even just SPY) and leave it there for 30+ years. You could then take 500k and place it in some long term stock investments. And the final 500k can be what you 'play' with to generate regular income.
To take all 2M and try to use it to generate large annual returns is a high risk strategy that you may regret if it an undesirable event occurs. So you must consider how much you are willing to loose should something bad happen, and restrict your investment accordingly.
"My family can't live on $50k, but we can certainly live on $150k. We don't spend lavishly. We live in a fairly expensive city and moving isn't an option."
12,500 monthly nut sounds a little extreme to me. Tell me more about your expenses ? Daycare ? Paying for college for kids ?
Current debt load ? If you really want to walk away I would focus on cutting expenses as well.
If were you I would buy some rental properties to diversify your investments. Focus on finding properties that pay 1% per month on your investment. With this strategy, even after taxes, insurance, maintenance and assuming 90% occupancy you should generate 5-6% return on your investment.
12,500 monthly nut sounds a little extreme to me. Tell me more about your expenses ? Daycare ? Paying for college for kids ?
Current debt load ? If you really want to walk away I would focus on cutting expenses as well.
If were you I would buy some rental properties to diversify your investments. Focus on finding properties that pay 1% per month on your investment. With this strategy, even after taxes, insurance, maintenance and assuming 90% occupancy you should generate 5-6% return on your investment.
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op your problem can be solved by placing your orders where you can gain positive slippage, that way your gobbling up all the market as its goin against your intended position. know its far over the head of people on this forum but it's how you fire off 500 to 1500 contracts without getting your ass handed to you.
example identify a short term trend and use statistics like quartiles as measurement to tell you an approximation of when you can enter counter trend. thus gaining positive slippage.
ps on 1mm i made 30k a week easy day trading using tt, kaufman's book "smarter trading" and members clearing rates just trading only the emini sp futures. focus on one market and kill it.
ps i only traded about 1 week a month sometimes two weeks and i shopped till i dropped for ten years. lost my tail in the exotic car business but i am like ford i know how to make money so next time i get wild hair i will probably lose it all in the yacht or copter business. lol
ford said you can take everything from me and i can make it back because i understand how to make money. or something like that.
example identify a short term trend and use statistics like quartiles as measurement to tell you an approximation of when you can enter counter trend. thus gaining positive slippage.
ps on 1mm i made 30k a week easy day trading using tt, kaufman's book "smarter trading" and members clearing rates just trading only the emini sp futures. focus on one market and kill it.
ps i only traded about 1 week a month sometimes two weeks and i shopped till i dropped for ten years. lost my tail in the exotic car business but i am like ford i know how to make money so next time i get wild hair i will probably lose it all in the yacht or copter business. lol
ford said you can take everything from me and i can make it back because i understand how to make money. or something like that.
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This is why most Americans are broke. Give them a windfall and most will destroy with greed, trying to get rich quick etc.. I will not waste my time trying to give advice. It will just fall on deaf ears and he will end up blowing it all and then some. I say 3 years tops before its all gone, including his initial capital.
Sadly true.
We had a local PowerBall winner. His behavior was like me winning the lotto and getting a brand new gassed up stretch 747 to try out on my own. Just as I shouldn't be allowed to fly a 747 being totally unqualified, the state should never allow someone untrained with capital to control that amount. Deadly? Yes ...
He gave his granddaughter $5k per month. Three months later she fell in with a druggie and was OD dead.
Bet if he would die for the chance to give up all the money plus some and have his little one back.
Shows completely the lack of substance on the part of pols for having any real concern for the population ... not that anyone is surprised.
T
We had a local PowerBall winner. His behavior was like me winning the lotto and getting a brand new gassed up stretch 747 to try out on my own. Just as I shouldn't be allowed to fly a 747 being totally unqualified, the state should never allow someone untrained with capital to control that amount. Deadly? Yes ...
He gave his granddaughter $5k per month. Three months later she fell in with a druggie and was OD dead.
Bet if he would die for the chance to give up all the money plus some and have his little one back.
Shows completely the lack of substance on the part of pols for having any real concern for the population ... not that anyone is surprised.
T
I would be surprised if a 60k stipend caused her to fall into a bad crowd.
OP,
With $2M and a balanced portfolio that has both developed and emerging markets in it, one can probably make 6-7% a year without too much difficulty (EM bonds in local currency alone yield 5%+ plus currency appreciation, which in most years will be 1-3%). All that while staying very diversifed
Assuming a typical 2-4% inflation rate, the final real return is around 3-4%. That's $60K-$80K plus whatever extra income you can get from your trading strategy. For some guidelines and ideas on how to build and manage a balanced portfolio, check my journal posts for the last 2 months
With $2M and a balanced portfolio that has both developed and emerging markets in it, one can probably make 6-7% a year without too much difficulty (EM bonds in local currency alone yield 5%+ plus currency appreciation, which in most years will be 1-3%). All that while staying very diversifed
Assuming a typical 2-4% inflation rate, the final real return is around 3-4%. That's $60K-$80K plus whatever extra income you can get from your trading strategy. For some guidelines and ideas on how to build and manage a balanced portfolio, check my journal posts for the last 2 months
Unfortunately none of them could spell stipend ... and the granddaughter's death was not the half of the tragedy:
http://newsfeed.time.com/2012/11/28...luckiest-winners/slide/andrew-jack-whittaker/
On Sept. 17, 2004, his granddaughter’s boyfriend was found dead from a drug overdose in Whittaker’s home. Three months later, the granddaughter also died of a drug overdose. Her mother, Ginger Whittaker Bragg, died five years later on July 5, 2009. Whittaker himself is alleged to be broke — a claim he made as early as January 2007 for failing to pay a women who successfully sued him. He’s also being sued by Caesars Atlantic City casino for bouncing $1.5 million worth of checks to cover gambling losses. “I wish I’d torn that ticket up,” he sobbed to reporters at the time of his daughter’s death.
http://newsfeed.time.com/2012/11/28...luckiest-winners/slide/andrew-jack-whittaker/
This is what I plan to do, although for intellectual reasons I'd still like to learn 1-2 additional trading strategies beyond my current one. The funds to trade those strategies may come out of my $500k "trading" funds instead of the remaining long-term investment funds.
Some of the (needlessly critical--but hey, it's the internet) responses above misunderstood my original post. I would never put more than a tiny fraction of my capital into a prop firm. Nor would I ever act irresponsibly with such a gift. Silly assumptions abound. But I understand why--more than a few people have blown vast sums of wealth by making stupid financial decisions.
Case in point. You sound quite confident here. Care to wager? I'd be glad to take your money in 3 years.