I have 220K of my own money to trade with. I wasn't planning on touching my wife's money any time soon after what happened. I'm not as emotionally attached with my own money. But getting a steady job would probably serve my interests better. One thing I keep on beating up myself about is that I was thinking of buying $5k in deep OTM on Freddie and Fannie at the end of August, but then decided to put it off to the end of Sept. Missed a great opportunity but it was still a high risk play. Also angry that I didn't hedge myself with put options on my equity holdings - but by then VIX was already so high I was afraid to buy overpriced options.
I would recommend staying away, it will eat at you unless you commit 100%... I am talking 100% committed or don't do it at all.
committed to trading you mean. So you mean trading will keep me from focusing on anything else - like a 9 to 5 job?
If you want only to beat inflation, build a diversified portfolio of hard assets. Buy precious metals, agricultural commodities and real estate. With the portion that you keep in cash, hold the USD, euro and yen rather than 100% USD. Don't trade the markets. Be smart, you don't need that.
What sort of education and experience do you have? That should enter in to any advice that you are given, imo. And how understanding is your wife about your slow start as a portfolio manager (very important)? Stosh
I agree! Btw, to another poster, I am an INDEPENDENT Investment Advisor, and CFP. I do agree, RUN from traditional wirehouses, traditional brokers, etc., I'm not a traditional broker by any means. My job is putting together a step-by-step plan of action for Clients that when implemented helps them achieve their goals, for the reasons that are important to THEM. To the OP, I don't believe you're ready to make financial decisions with ALL of your $$$. Too much emotion involved, and I can sense you are somewhat emotional form what you've typed. Don't worry, you're not alone in this. I have 3rd party managers handling some of my retirement assets. I manage about 15-20% of my own. Yes, that's right. An Investment Advisor who hires other Managers to manage some of his retirement $$$$. That's the discipline. You and your Wife are Accredited. That opens many doors for you that are closed to so many. I would have to ask what your tolerances for risk are, and create an Investment Personality Profile before telling you any certain plan is for you. However, here's an example Portfolio I created two weeks ago for a Couple who have a tolerance number of 3 (1 = cash, and gold under the bed, lol! 6 = 100% equities, Opportunistic HF's, etc.,) Ages: Him 52, Her 41 LNW $5,120,000 Goals: 1. Retirement for Him (she doesn't work) July 17, 2015 Wants $15,000/month 2. College Education for three children starting with the 1st child in August 2012 3. Donating to three charities ongoing 4. Purchase of third vacation home needing $800,000-950,000 now- end of year. Without getting into Charitable Remainder Trusts, a Trust, and the advice needed to get them there, I'll list the Portfolio Model to be brief: 15% 3rd Party Money Managers- All caps, bonds, ETF's, etc., (Tactical) Why 15%? NEVER invest all your $$$$ with one money manager. "Made-off" is an extreme example, but relevant. The main reason is what heppens to you if the managers blow up, and lose 50%+??? The 15% number fits these particular Clients, and is only an example. 15% 3rd Party Money Managers- (Quantitative) 15% 3rd Party Money Managers- (Traditional Asset Allocation) 5% Private Real Estate Partnership yielding 8%, and is ALL CASH. 3% Oil and Nat Gas drilling Partnership ("Piggybacking" with the big boys like Chesapeake, BP, St. Mary's, etc., seeking a total return) 2% Oil and Nat Gas Partnership yielding 16.5%, monthly income, with principal back at year four. (66% return) 4% Equipment Leasing Partnership program which is a pseudo-hedge against rising rates/inflation. Yields 9.5%, monthly income, and liquidation phase at end of program which seeks an additional 10-30%, depending on inflation. (Major companies don't replace equipment when rates and inflation are soaring. They keep what they have, and the Fund does well with that scenario!) 2% Fx HF 7% among two-three HF's that meet "the profile" for what you need from them. 5% Managed Futures 5% Precious Metals 2% State-Sponsored 529 Plan. (No Fed, BUT also No state income taxes if you choose a state-sponsored plan. Check w/ your state first to make sure.) 15% Cash, CD's, etc., Again, this is just an example. I hope this helps you in modeling a portfolio. You can always trade with 10k, etc., but I would focus on the bigger picture right now, and that's your future. What do you want the 1.8M to do for you and your Wife? Ask yourself, "what's important...about money...to me?" Best of luck to you!
Economics degree at Cornell University and have been trading on and off for 10 years(was mostly in cash because I bought into the whole Prechter deflation scenario which finally happened last fall for a short period). Ended up programming at a major financial firm for 7 years. My wife has been understanding and realizes that we have done better in the past year on a relative basis compared to others. We were 80% in cash when the deleveraging occurred last fall.
The single best investment you can make at your age is the home you live in. Start looking now for a great property with a distressed seller. There are plenty everywhere. If it needs a little work, all the better. Buyers with cash have a golden opportunity that won't come along again. (Your dad has probably already told you this.) Move in, then trade up every few years as inflation kicks in (it will) and prices naturally appreciate. Your gains are TAX FREE. That's a huge advantage. Take the time to get a real estate license in your state, and you can save a lot in commissions. Rinse and repeat every few years, and you'll be very well off. I live in a resort area with many retirees. And the vast majority of them built their worth from real estate, and from the homes they've lived in. Don't count on the market to provide you with a living, because the odds are strongly against you and you'll be inviting unnecessary risk. With your assets and your age, you have many other opportunities. Time is on your side. Use it.
lindq is right on the house part. As for the portion to put into the market, considering your experience, just let this guy manage it...www.hussmanfunds.com He's very risk averse (you can sleep well at night and will make you good money when market eventually recovers). Then get back to your career and enjoy life!
A few comments from a 65 yr. old who has been there: I would consider that economics degree as a great foundation for a lifetime of learning, not to mention lessons you have learned from occasional trading. I have heard it said that the worst thing that can happen to a young man is for him to be highly successful in his first business venture.......often that sets him up to lose everything in his 2nd or 3rd venture. A quote from someone I respect: "Always act within the limits of your ability, but keep expanding that ability 'til the end of your life." I would suggest a widely diversified portfolio....you can balance it based on common sense and your training. Some real estate is fine.....I've owned all kinds of it....with profitable results. But I hate owning real estate.....dealing with tenants, taxes, vacancies, maintenance, deadbeats, leaks, emergencies, insurance, mortgage companies, etc. etc., but some people like it. You can afford less mgt intensive options. You could buy or start a small business....or finance someone else, but again mgt intensive. Raw land is okay, except for taxes and illiquidity. Managing your total portfolio, could be fun if you keep it as simple as possible.....study the world markets and rotate among sectors with the main focus being to avoid being caught holding the bag after a year like we have just gone through. Oh, and don't believe anything you hear........stay informed and make your own decisions. It is also nice that your wife believes in grading on the curve. Stosh