Great idea. The first person to 1M wins fifty bucks? I will play. I will play the tortoise I think and let you all flame out:
Short Track 500m Crash Gives China Gold - Business Insider
Sounds like a fun contest... I have a Roth with roughly this much in it already. Are there any rules on what products we can trade?
There probably wouldn't be much rules on what you could trade, except you would have to make at least one TSLA trade a year... since this originated here. Hopefully by requiring at least one TSLA trade a year, we can keep this a part of the investors thread and this can be a learning experience for all those involved, both participating and observing.
We would have some other rules as well. Here's some off the top of my head brainstorming:
- Trading would not commence until June 1, 2014. Participants would need to open up their IRAs before that and post a screenshot with the account balance at $5500 or less.
- No other money can be added to the IRA account at any time, unless the participant withdraws from the contest.
- Each participant should post an account summary balance screenshot at the end of every month (this wouldn't show all the trades, just the amount in the account)
- Participants would be free to share trades or not, it's up to them. But for whoever reaches $1 million, we would need to verify every trade to make sure everything was done with just the starting $5500 balance and no other money was added.
- Participants are able to start over by creating a new IRA account with $5500 the following year. So, in theory one participant could have multiple entry accounts (ie., Account #1 created with $5500 in 2014, Account #2 created with $5500 in 2015, etc). The rule is though you can only set up one new IRA account every year with a $5500 max and to enter that account in the contest you need to post an account balance screenshot of the account before starting to trade. I'm not sure if we would have an enrollment period in the future or if it'll be just open enrollment based on a few rules (ie., $5500, screenshot of account, monthly screenshots, etc).
- There would be some kind of prize for the person who reaches $1 million. It might not be monetary.
- One of the purposes of the contest is to motivate and encourage participants to get better at trading/investing. It's also a learning experience for everyone involved.
Here's some additional background.
I think it's possible to take $5500 and make it into $1 million in a reasonable amount of time (within a few years). I know people have done it. But I haven't seen it done in a public, real-time and accountable fashion. For example, a person can make a blog and say that they started with $5500 in an IRA several years ago and now have $1 million. That's great. But were people really following that person in their journey and was that person held accountable (ie., monthly account screenshots)? Probably not.
I have yet to see a real-time, public contest where people start with $5500 with the express goal of trying to reach $1 million in the account without adding any additional funds. I think this would be quite fascinating. We could see how different people approach this with different trading and investing strategies. And we can see how taking big risks can pay off or give lots of pain. I think it's highly unlikely for a person to just have "luck" with no skill and reach the $1 million goal first. A person with just luck might be lucky for one or two or several trades but that's probably not going to be enough to take the account 200x. The winner will need a strategy and some real skills, along with some luck.
If/when a winner arises in this contest, it will be legendary. We will have documented, real-time, public proof that this happened and it will be a truly fascinating thread to read for a lot of people.
We might cap the contest time period to 5 years. So after 5 years, the contest is over and if no one has reached $1 million, then we'll call it quits. But if someone reaches $1 million early, then we'll still leave the contest open to see if others can reach the $1 million mark as well before the 5 year deadline.
Another reason why I like this idea is because it can be motivating to those involved. $5500 is not a huge sum of money for most people, so it's really money that can be lost. But since there's a $1 million goal, participants don't want to lose the money or else they'll have to start over the following year. Yet they need to take big trades in order to make the gains needed to reach $1 million within 5 years. This gives a concrete goal for the participants. It's kind of like how a marathon can motivate people to train for it. This contest can motivate people to get better at trading, not just by trying it out but also by investing time and resources to seek out knowledge and skills.
I also think it's possible to take $5500 to $1 million within 5 years because many of us have experienced 10x+ gains in our portfolios over the past year. If you are able to find another 10x gain with your portfolio over the next 3 years, then that would be 100x gain. Then, in the following 2 years, if you could 2x your portfolio then you would have a 200x over 5 years. A 200x gain is possible and that's what would be needed to take $5500 to $1 million.
One of the issues though with most of us is that as our portfolios increase we tend to take less risky bets. And that's probably wise and understandable since capital preservation becomes an increasingly important value as you want to preserve some of our gains. However, as we become more risk-averse this could steer us away from the looking into more speculative investments/trades. By having a separate (sandboxed) account of $5500, it allows us to seek out the big trades and to really go for it.
Some of us already might have recently started IRAs with the goal of reaching $1 million. As as side experiment, my wife and I created Roth IRAs several months ago by putting in $5500 each. My goal was to see if I could grow it to $1 million. I didn't have clear timeframe, nor did I have any accountability or outside motivation. However, both of our accounts currently are at $33k each (a 6x gain for each account). $100k is in reaching distance. And then after that $1 million is not too far away. The problem though with my personal Roth IRA I recently set up is that it's more of a sole exercise. And I think it would be a lot more fun with others involved trying to reach that $1 million goal. So, rather than each of us using IRAs that we already have $25k, $50k, $100k in, I think it's better if we all just created new IRAs from scratch and we all did it at the same time and took screenshots of the balance before we all started trading. This would make the contest fair, in the sense that everybody is starting from the same place $5500, and at the same time.
So that nobody goes out and jumps the gun, we probably need some time to finalize the rules and such. That's why trading won't start until June 1, 2014.
Anyway, discuss away.