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Early retirement strategies
- Thread starter hobbes
- Start date
I'm not a programmer but have the same idea as you. Just being able to spend more time with kids in general is a big factor. Are you able to talk about the pros and cons so far. How long have you been doing it? What strategies do you use? Are you able to generate enough income from options? Thanks.
DISCLAIMER: Trading is a great way to turn a large pile of money into a small pile of money. Seriously. I've done that before, as have most who have success trading.
I started trading to pay the bills in early September, and have experimented with several strategies. The strategies that have been working to generate steady income are:
* Watch for technical entries on the 1-minute to 15-minute chart, and buy or sell highly leveraged options, stop loss at 50% loss, exit within the day, on a technical signal, or at 100% gain (unless there's a good technical signal for more gain, but set a new stop loss at 50% gain when holding for more).
* Sell weekly put spreads, roll if they get close to breakeven, close at 50% profit (or just hold with a rising, profitable stop loss).
* Early on I had success with buying straddles, strangles and iron condors, but I think that was just a particularly volatile period (even by Tesla standards) and haven't seen those opportunities lately.
* I've also, when the opportunity presented itself (eg. on inclusion announcement day), traded shares after hours to make a buck.
Strategies that have lost:
* Covered calls... Srsly. Almost every one I've sold has ended up costing me. I started trading initially to earn back money I lost on a bad covered call.
* Positions other than the put spreads mentioned above held overnight. For me, day trading is primary.
* Doubling down on losing options positions. Don't do it, no matter how much it lowers your basis and seems like it might help. Don't.
Other lessons:
* Start small, make sure you understand the max risk of every trade, and give yourself plenty of chances to lose. Trade smaller when you're losing and go bigger gradually when you're winning.
* Set a weekly goal, and then stop trading for the week... unless the golden god perfect trade drops in your lap. This one is really hard for me - there's always money to be made, but I don't need all of it, and the whole point was to spend time with my family, not glued to a chart.
* Don't force a trade. It's OK to look for a trade, but if you don't see one, you don't see one. Don't try to pretend a chart looks like something it's not. I don't care if you haven't made your goal this week yet. I don't care if you really want to buy your wife/kid/dog/cat/mouse/fish that present. Don't force it.
Pros: I set my own schedule, I can do my new job on IBKR Pro app from bed, sometimes finishing my work before anyone else wakes up. I'm making as much as I did as a programmer in fewer hours, and with less stress.
Cons: I find it way too easy to stare at charts even when I've met my goal, there are no good trades, the options market is closed, etc. When I _have_ let trades sit overnight, the stress has been worse than a job. I have to start paying estimated taxes, blech.
If you do decide to get further into trading: I learned technical analysis from Tone Vays (mostly from watching _way_ too many hours of his Trading Bitcoin videos while I should have been programming). I learned the basics of options from the Roundtable, and then from some of the Option Alpha videos that folks there recommended.
How far out were the covered calls that you were selling and how high above the then current share price were the strikes?
Worst was 3mo, 60% above. Also lost on a 2mo 40%.
My strategy is 6 more days like today.
So, maybe by the end of next week?
So, maybe by the end of next week?
These are all questions one really has to dig into for ones own situation.
First off, one has to well define what the goals is. Ask the common man in the US, they would quit work at 1M assets. I don't think that is enough because I have done the math and read a lot. I accept that assets of about 25 times annual expenses are sufficient. In order to know annual expenses one has to keep track. Then one has to consider adding in for extra things like a margin of safety, taxes, and in our case health insurance, all of which drive the number higher. So one arrives at a figure for annual expenses, herein called "X". 20-30X minimum needed to retire.
From there, we can attack the problem of retirement by having large amount of money, or smaller X, or by having some form of recurring stream flow of money from a pension or government retirement plan like SS, each of these decreasing X.
So a focus of efforts can be made to
1. Increase your money pile
2. Increase your recurring revenue, not at risk kind of stuff like pension and social security
3. Decreasing your life expenses.
For us, having a greater recurring revenue bucket helps to withstand market gyrations. I would argue if you have more fixed sources of income you can better handle uncertainty in the market. By age, we were able to retire early with a single pension. But we lacked peace of mind. So we purchased a large annuity to provide a recurring monthly revenue stream until age 70. These two things helped us have peace of mind that basic needs would be met AND ALLOWED US TO KEEP TSLA MONEY IN THE MARKET! The money has grown many times over! We would be better off if we had not purchased the annuity and kept it all in TSLA but our emotional state would have been labile! Fact is, having base needs covered allowed me to put MORE money in TSLA...
Another peace of mind factor was building up a large reserve fund, albeit in TSLA. Early savings were all in retirement accounts or used to pay down debt. I realized that these were not things that provided easy freedom, what really mattered was having a larger taxable account! So we cut back on saving and focused on growing taxable account. Many people say to have an emergency fund of 3-6 months expenses (0.5X). I preferred two years. So we worked hard, remained focused on the goal. The money is readily available for anything that comes up though we would have to pay capital gains.
This reserve fund plays a LARGE role in our planned withdrawal strategy. There are many strategies to employ, again one has to determine for themselves. I think a lot of work is required in this area. You can accept a 4% method but fail to recognize the pros and cons of it compared to others. What works for us is a planned variable percentage withdrawal method. In good times we pull out or spend more, in bad times we pull out less. We pull out a percentage of assets, same percent if good or bad times. Percent is based upon historical studies and what asset classes we are in. We can tolerate high equity/low bond classes so get to withdraw a higher percent. (I view our recurring revenue streams as a safe bond). If the funds withdrawn are enough, great, if there is extra (there is and will always be extra) we add to emergency fund. If times are bad, ie market meltdown or Musk death, we pull out less and use the emergency funds. This allows the bulk of the "nest egg" to stay sufficient.
I forget the phrase, but a significant risk to long term survival is high withdrawals in early retirement. That problem is solved by our above plans. I suggest one should be prepared for bad times early in retirement.
Another large tech company has done well long term after found death. I'd suggest an 80% drop in an SP500 company makes it a buy!
So I view risk management is key, before the risk happens. Don't deal with risk when it happens, plan for it in advance. Otherwise one becomes emotional and forced to liquidate at low prices.
For some people 1M might be enough if recurring revenue is good and if expenses are low enough. I will add that talking about the actual amount of money is not important for the discussion, what is pertinent, and understandable to everyone as it pertains to them, is what "X" is, what percentage of withdrawal is, but not the specific asset base.
Variable percentage withdrawal - Bogleheads
Withdrawal methods - Bogleheads
Safe withdrawal rates - Bogleheads
First off, one has to well define what the goals is. Ask the common man in the US, they would quit work at 1M assets. I don't think that is enough because I have done the math and read a lot. I accept that assets of about 25 times annual expenses are sufficient. In order to know annual expenses one has to keep track. Then one has to consider adding in for extra things like a margin of safety, taxes, and in our case health insurance, all of which drive the number higher. So one arrives at a figure for annual expenses, herein called "X". 20-30X minimum needed to retire.
From there, we can attack the problem of retirement by having large amount of money, or smaller X, or by having some form of recurring stream flow of money from a pension or government retirement plan like SS, each of these decreasing X.
So a focus of efforts can be made to
1. Increase your money pile
2. Increase your recurring revenue, not at risk kind of stuff like pension and social security
3. Decreasing your life expenses.
For us, having a greater recurring revenue bucket helps to withstand market gyrations. I would argue if you have more fixed sources of income you can better handle uncertainty in the market. By age, we were able to retire early with a single pension. But we lacked peace of mind. So we purchased a large annuity to provide a recurring monthly revenue stream until age 70. These two things helped us have peace of mind that basic needs would be met AND ALLOWED US TO KEEP TSLA MONEY IN THE MARKET! The money has grown many times over! We would be better off if we had not purchased the annuity and kept it all in TSLA but our emotional state would have been labile! Fact is, having base needs covered allowed me to put MORE money in TSLA...
Another peace of mind factor was building up a large reserve fund, albeit in TSLA. Early savings were all in retirement accounts or used to pay down debt. I realized that these were not things that provided easy freedom, what really mattered was having a larger taxable account! So we cut back on saving and focused on growing taxable account. Many people say to have an emergency fund of 3-6 months expenses (0.5X). I preferred two years. So we worked hard, remained focused on the goal. The money is readily available for anything that comes up though we would have to pay capital gains.
This reserve fund plays a LARGE role in our planned withdrawal strategy. There are many strategies to employ, again one has to determine for themselves. I think a lot of work is required in this area. You can accept a 4% method but fail to recognize the pros and cons of it compared to others. What works for us is a planned variable percentage withdrawal method. In good times we pull out or spend more, in bad times we pull out less. We pull out a percentage of assets, same percent if good or bad times. Percent is based upon historical studies and what asset classes we are in. We can tolerate high equity/low bond classes so get to withdraw a higher percent. (I view our recurring revenue streams as a safe bond). If the funds withdrawn are enough, great, if there is extra (there is and will always be extra) we add to emergency fund. If times are bad, ie market meltdown or Musk death, we pull out less and use the emergency funds. This allows the bulk of the "nest egg" to stay sufficient.
I forget the phrase, but a significant risk to long term survival is high withdrawals in early retirement. That problem is solved by our above plans. I suggest one should be prepared for bad times early in retirement.
Another large tech company has done well long term after found death. I'd suggest an 80% drop in an SP500 company makes it a buy!
So I view risk management is key, before the risk happens. Don't deal with risk when it happens, plan for it in advance. Otherwise one becomes emotional and forced to liquidate at low prices.
For some people 1M might be enough if recurring revenue is good and if expenses are low enough. I will add that talking about the actual amount of money is not important for the discussion, what is pertinent, and understandable to everyone as it pertains to them, is what "X" is, what percentage of withdrawal is, but not the specific asset base.
Variable percentage withdrawal - Bogleheads
Withdrawal methods - Bogleheads
Safe withdrawal rates - Bogleheads
You use [ s ] and [ /s ] (without the spaces) around what you want to strikethrough. Like
Code:
So when editing like this: [s]strikethrough[/s]Excellent, and I'm quite relieved.
In general, when presented with a stock with such massive appreciation likely in the years and decades ahead, it is far, far better to take advantage of decades-low interest rates by borrowing essentially "free" money, vs. using money that would otherwise be invested.
Sadly, nearly all of Dave Ramsey's followers have really, really missed out on what could have been life-changing, generational wealth accumulation.
SMR covered this, tangentially, in a video here, but the real issue is that Ramsey just doesn't begin to understand Tesla's reason for existing, or TSLA as a life-changing investment. Sadly, I suspect he's likely beyond the point of understanding these factors either:
LOL I'm afraid to try. I've uglied this thread up enough already.
pz1975
Active Member
Weird. I retired 7 years ago. Somehow, now, I'm full time employed at 65, doing research on the side, and moderating this zoo. Must be purgatory.
