This concept keeps coming up in various threads, in the form of "I have XXX, how much can I make?" So why don't we assume 1 MM in assets. How would you allocate it so that you have income to live off of (from trading or fixed income) plus growth from investing the rest passively? Assume a decent living of 50-100k per year in expenses. I would be inclined to take 10% to trade, putting the rest in some combination of equities and bonds, maybe a percentage in a higher-risk hedgie that has low correlation to stocks. Any ideas? Traveler
heres my allocation: 30% real estate, land 40% government bonds, CD, etc. 10% stock indexes 20% active trading in futures, forex and interest. my yearly avg return in the last 10 years has been 52% and with a standard deviation of around 20%.
ASAP, that's a great annual avg return! I am assuming we are not talking about gains on a personal residence for the real estate category. Just investment property?
active trading include forex and interest trading bots and discretionary trading using US options on highly liquid assets such as GOOG, CME or SPY. I average 20% per month in all this but obviously have drawdowns. Often, by the end of the year, active trading accounts for at least half of the overall profitability. That is, my avg return on active trading is close to 130% per annum.
actually is both even though personal residence only accounts for 20% of the overall real estate investment. I invest mainly in land and hi potential residential and commercial properties in booming areas. I have been extremly lucky, I would say. Historically I have been achieving 20% or so profitablility on RE. None in the US though.
$100k in an account to trade with. $900k in a 5% account to return $45k per year off of which to live. I could live on that much knowing that I had $900k in reserve.
And if you earn that 5% tax free, even better! Muni bonds could work nicely here if you want to generate an income.