Hey Hester. I'm in a similar situation and probably similar mindset so I'll try to contribute from my experience. I'm 22 in college, have 5 houses (dad passed away; I rent four, live in one), similar amount liquid but I trade with around $30k (just above PDT limit, which is dumb because if I drop under $25k I have to deposit more, but it's smart so that I can't take excessive risk and do real stupid stuff). I don't know you, but if you're anything like me, the first thing to think about is the easy lifestyle. Trade in the morning, take lunch whenever you want, see a girl or two in the evening, hit the casino on Friday night with the boys, take out the main chick Saturday night, back to trading. Man, that would be the life. When I first deposited $30k in my IB account I was like "oh shit, I'm gonna be rich".....Yeah right. My first trades were real stupid shit, like all-in margin RIMM longs/shorts for 2-minute time frames, rofl. I still remember myself saying "come on motherfucker!" yelling at RIMM candlesticks on the chart. I know I know I know, you aren't going to be 'that n00b trader', but I'm telling you, at our age, when you see those dollar signs, you will do dumb shit like that. The thing about this game is that there are no barriers to entry and no 'real' barriers protecting you from risky positions except for yourself, and at 18-22 we're invincible, until you see your P/L moving against you and it's like 'what the fuck bro.' But back to the houses, I would say rent them, but the situation doesn't sound that easy. The four other houses are within a 10 minute drive of my house so I can handle them. But, say, the 1800 mile away house....no way bro. If you HAD to rent it, you would be best off with a property management company, which will charge you a small % of the monthly rent payment. But the real problem comes in when there needs to be repairs, like A/Cs (I had to replace 3 old AC units this year), plumbing, electric, people want a new fridge, the stupid ceiling fan sways too much, etc. Getting a phone call from tenants about repairs is enough of a hassle, but mine are only 10 minutes away. But 1800 miles away? That means you gotta trust the property manager to find the repair guy, and handle the payment and all that garbage. Then of course you still gotta pay property taxes every year and homeowners insurance. Bro, I would try to sell that one. That way your thoughts literally stay close to home, and not something like "I wonder how Mr. and Mrs. Smith are doing with the house?" The one that is close and in a large lot but is unlivable....boy do I have stories. ALL of my houses were unlivable, except the one I live in lol. I spent 2-semesters and over $50k on remodeling. It's a lot of fun working with contractors (especially Mexican guys, those guys know their stuff and work hard), you know, getting new tile, drywall, paint, fences, appliances, but it is time consuming and a lot of dough. At least you can claim it on your taxes. If it is in a really good neighborhood and close to where you live, I would consider doing a remodel and renting it for the time being. Get some estimates from contractor guys in the phone book/mail flyer/people you know. Nothing like rent income bro, it's easy. It's a heck of a lot easier income than trading. With renting, you know your position, 'x = make sure the house is in a livable condition for the tenant, y= tenant pays me rent'. Real simple. I wanted to sell. My dad passed away in 2005 (month before I turned 18) and I sat around for a 2 years not knowing what to do. Looking back, selling at the height of the market probably would have been a wise choice. Hell, everybody thinks that as a monday morning quarterback. But this market is whack, and I don't know what type of value you can get for that house. Is it debt free? Make sure your relative didn't take out a Home Equity Loan or any of those shenanigans. Now that I rent though, the income is great. I get a couple grand every month from 4 houses. At this rate I might start my own REIT one day along with trading and shit. Back to trading......man. There's so much to learn bro. I'd say at first, put the money in some very conservative positions that are a small percentage of your total account. If I was a real new trader at 18 right now, the first thing I would look at are the big movers, i.e. FAS/FAZ/SKF/USO, all the big moving ETFs. That's where the big money is, and being 18 and starting to trade is all about big money. STAY AWAY FROM THEM. In fact stay away from all Financials at this point, honestly. BAC/C/GS/JPM. Those things can gap and your position is gone man. You might look back a couple years from now and say, "bro If i just put a couple grand in that position I'd be up so much right now", but at the same time, if they gap the other way, you won't even have enough money to be trading a couple years from now. If going the options route (which takes a lot of reading and understanding) do spread trades, nothing where you have unlimited risk. But first you gotta read a lot, books, ET (yes you can learn shit from here, read the Journals, Options, Psychology), heck I even read Yahoo message boards, they are a real circus, but you do get some small insight from the few real posters. If you are investing and not trading, that's a good way to go. Just make sure you have protection (buy puts on long stock or whathaveyou) so that you can rest easy when you are not looking at your monitor. The few times I put on overnight unlimited risk positions (i.e. just long calls) and the underlying moved against me in Afterhours, bro, doodoo in my pants. You can't even sleep cause you are dreading opening up IB TWS in the morning and seeing your P/L. SO DEFINITELY PUT ON PROTECTED POSITIONS. I don't really daytrade anymore, but 'tight-stops' seems to be the mantra, if you are going the daytrade route. I apologize if this thread sounds like a ramble but I spent the last 2 years of my life doing what you are about to begin, and all the memories (not in a gay emotional way, just remembering all the shit I did) are coming back to me, so my thoughts are all over. Hopefully you'll find something of value. In conclusion 1) Rent income is easy money if you can rent them easy (duh?) Try selling the house 1800 miles away, that is too far man! Evaluate your options on the nearer house!! Rent the apartment. 2) Trading is hard money. Learn first. Oh, I forgot to say, PAPER TRADE. Interactive Brokers paper trade account is as real as it gets, practice with that first!! 3) Hopefully one day you will be able to live that investor/trader lifestyle all us young guys dream about. Drinking a Heineken around 11pm, watching Sportscenter, fine girl resting by your side after you just put it on her, dog is outside sleeping, Aston Martin (or luxury brand of your choice) in the driveway, earlier in the day your position moved in your direction for another $2-3k, futures look good, next day you're gonna watch the game with your boys, gotta call two or three girls back that have been trying to get your attention, you know the deal. It really is the dream man (at least my dream....though it sounds like I'm more about girls than trading lol), next to being a rockstar/pro ball player. Hopefully I'll be at that point one day, and you as well my man! Best of luck to you Hester!! Oh, one thing I'll add, limit your daily expenditures. At first I used to buy shit all the time thinking the money will always be there, and then the first time my bank account dropped to less than $100k, I thought "oh shit I spent that much!?!?!". Now I got girls to pay for me when I goto movies and shit, lol. Of course I pay when we go to dinner though, that's just a guy thing to do, I think. But yeah, eat cheap, dress good but not too expensive, don't spend too much on chicks. If you're gonna spend on a chick, she's gotta be real bad!!!! A model chick that shows you her latest work in magazines and shit (I got one of those on my roster right now, but she's got so many dudes chasin her, competition is deep) Only spend on the type of chick that turns heads, don't spend dough on a regular chick bro, you can get that easier, just invite her over to watch a movie or something. Unless she's like your high school sweetheart, then I can understand spending. Alright I'm typing too much shit now, live your life Hester!!!
I can't believe some of you guys are encouraging this kid to start trading stocks... Imagine if you received a relatively large ($50,000) sum of money when you were clueless and first started trading. You may have thought you were smart then, but after many mistakes, I hope you realize your growth. As a 18yr kid, he has no business speculating in the market yet, especially with all the volatility. Let him finish college first and then maybe open up a $10,000 maximum swing account.
I would also advise you to do a lot of chilling. Get used to having the money. The bigger numbers will feel like candyland for a while. Dont jump into anything. Scale into your first 200 share position on your 10k trading account. Theres no rush.
I understand your point monty, but when you're 18 you aren't going to listen man!!! When I first started at 18 I blew up small accounts and turned away from trading, but that has definitely helped me now that I came back to the market and understand hedging risk. How are you going to know for yourself if you don't try for yourself? Of course you are going to lose money at first, I think that's just part of the game. If you are winning from the get-go, give that man a Rookie-Trader-Of-The-Year trophy.
You just need to keep a few things in mind.. first, you ARE a typical 18 year old. And here's why: You are 18 years old. the only thing different is that you have some bread all of a sudden, and that makes you: A typical 18 year old with a bunch of bread. ..and that is not really a great combo when it comes to wealth preservation. So.. keep that in mind. BE HUMBLE.. listen to people, and take it all in.. make careful and *conservative* decisions. There is plenty of time to blow your money. Don't do it on the first decision. Now regarding your 55k.. You do not have 700k in capital. Don't tell yourself that. You have 55k of mutual funds which you want to sell and some houses. The houses are not your capital. the 55k is. So you need to trade a *portion* of your 55k. Like someone else said perfectly above.. "what are you going to learn by losing 50k that you can't learn losing 5k?" That is exactly true, and if you don't heed anything else in this thread, HEED THAT. hahahaha you ARE going to lose the money you trade with most likely- and everyone on this board is probably going to wipe the floor with you and take that money in exchange for your "market education" So don't let them- just offer $5k tuition for your market education. Not $50k. Here's another example. I have been skateboarding my entire life- I ride concrete bowls, etc. It took alot of hard slams to be able to do what I can do now. Now a guy can sit around and read about skateboarding and watch a thousand videos of skateboarding and play Tony Hawk on the PS3 24 hours a day.. but when he shows up at my skatepark having never dropped into the 13 foot deep bowl and he puts his tail on the lip and leans in.. that guy is gonna SMASH HIS FACE into the concrete. Don't be that guy. Start slow. Start at the bottom doing the baby kickturns. I see guys show up and try to "go for it" all the time before they are very solid on their feet. These are the guys I often have to revive when they get knocked out cold cuz they arent wearing a helmet (tight stops) and are trying to do crazy shit they havent worked their way up to yet (trading big lots) These are also the guys that suddenly disappear after they break their wrist or just get sick of getting their ass kicked.. and you never see them again. The guys that show up and start out slow, and keep showing up and gradually get better and better- those are the guys that stick around and have fun. Same goes for surfing.. I learned to surf in 2001 after being a skater all my life. I thought I'd adapt quickly because "I'm good at stuff like this." No. I almost drowned a bajillion times- it sounds funny but its not really. I can remember surfing in conditions beyond my ability while on vacation in Maui (this is even after I'd been surfing a few years) and getting caught in a rogue set of waves that were suddenly like 14 feet high when they were 7 feet high 5 minutes ago... and getting held down for what seemed like forever, hugging this lava rock underwater to avoid getting smashed into a cliff face ...actually having to concentrate on my children and family and thinking that I wanted to see them again just so I wouldnt give up and drown. So what this all means is- humble yourself- know your limits, and start out small. Work your way up. And you're still gonna get caught by suprise on occasion, but if you play it smart, you won't get killed. In conclusion, my comment below: 3. I'm gonna quote myself here, " at times I will be trading with just one or two thousand, but my account will be 55k." This means that I will be trading with a small percentage of that 55k which is in turn a fraction of a percentage of my total net worth. I dont understand how this is a dumbass move. Worse case scenario, I make some horrible trades and lose 5 thousand, (which is the most I would allow myself to lose). ... Yeah, thats what they ALL say
First, you need to start off and learn everthing you can about controlling risk and bankroll management. There is no reason to start with 50k when you can start with 5k. You will blow up some cash, if you start with 5k you can blow up 10 times for the price of one. Don't go to college because its some great investment, go because its the most fun you will ever have in your life and some majors will help you become a trader on your own. Use the 55k to pay your college tuition and your market tuition..Major in CS or statistics if you want to help what you eventually want to do. If you were really smart though you would hire a professional and seal up this money until your 35 at low risk..then from now until then if you fail its a great insurance policy, if you succeed then its leverage 15 years from now. If you want to trade because you don't want to "work" then your in for a real rude and expensive slap in the face.
When I was 18 I ate more P***Y and A** then you could imagine. It was a daily thing. Hopefully, you like girls and do the same! Dont ya have friends? Play some nintendo, eat pizza, workout! Travel! Holy fukk to be 18 again, wow! Hang out with friends, enjoy life. F the money. Dont even think about it. You could have the best time of your life right now and all you care about is money? Sell a house, take the 55k and dont go crazy. Rent out a home or 2, invest the rest. What do you need money for except paying utility bills, insurance, food, gas, etc. Have fun (10th time i said it--I think). At 18 you may think you know it all but you have no clue. Give yourself a few years then re-evaluate things. Stock trading is hard as hell. But money should mean shit to you at 18. Someday you will think back and say, god I wish I was 18 and could do this or that.
as my uncle once told me..."you're not a man until you lick both holes". I held them words close to my heart. Give it a good "sniff" first, better to be safe then sorry before diving in blindly. try it someday, you'll thank me! (so wont your lady friend--if your into women!)