Is my plan feasible?

[Ponks]

First off, I'd like to say that I don't know too much about stocks.

Alright, I'm 20 years old now and looking to invest. I've got about 40k saved up right now to start investing. I'd like to invest in something med-high risk (Is a 10% return possible doing this?). I predict over the next 2.5 years (till I graduate college) to make about 250k-300 from poker. This is with taxes and expenses taken out. I'd like to have something I could keep putting in money every month (maybe 8k-10) or every few months. So when I graduate college hopefully I'll have somewhere between 350k-400 invested. I'd continue to play poker a few more years and keep on investing it in the same thing. Hopefully by the time I'm 30 I'll be able to have over 750k invested with a house and a car and whatnot. Is it possible then to just keep this 750k invested and just live off the return? I don't think I would retire, but could I if I wanted to?

I was thinking about putting it in mutual funds. My friend told me this could get 10% over the long run. What's my best bet here? I also plan to do the Roth IRA thing as well. Assuming I can make the money in poker (don't worry I'm still getting my degree too), is my plan risky at all? Is this possible? It really seems too good to be true.

Thanks
Ponks

[lastsamurai]

My advice to you is to do your research...

Buy this book called "how to make money in stocks" by william oneil.
Read the 20 signs on when to sell... if you follow this fourmula you should be living large by the time you are 30.

[gvibes]

10% may be a little optimistic. I think you can project 8-9% for a diversified portfolio. These numbers are over a long (25-30 year) timeframe. The market can be anywhere in a couple of years, and there are no guarantees that the market will go up even over a 10 year period. 8-9% may even be a little optimistic.

If I were you, I'd pick up the Malkiel, Bogle, and Bernstein books (check out the books thread), and read those through. They are pretty persuasive. You will see the way of the index funds.

Things are going to be a little bit more difficult for you, as the investments won't be tax-sheltered. Large-cap domestic stock funds are usually pretty tax efficient, but international and small-cap funds can get dicey. Bond and REIT funds generate a lot of tax liability.

A simple starter portfolio (vanguard funds):
Something like 60% in the Total Stock Market (TSM) fund
20% Tax-managed international
20% in tax-exempt bonds


You couldn't really retire comfortably on 750k. Assuming 9% return (once again, a little optimistic), and 3% inflation, you would be able to withdraw 45k (in less valuable 2015 dollars) per year. This assumes no withdrawl of principal, but I think the real number would be very close to that.

I'd put the "Fukc you" retirement level at about 1.5-2M in todays dollars.

[Ponks]

Well, the thing is I dont think I would have much to pay for. I would guess I might spend 25k-35k a year after I get the house and car, but this is a rough estimate. Guess I could always play poker for a few more years after that then. Thanks for the help, I'll definitely check out those books. My friends uncle is a financial advisor and I called him today, and he said 10% was definitely probable over the long run, but I do understand what you are saying about the markets volatility in the short term.

Guess I need to get 1.5 mil as soon as possible!

Ponks

[gvibes]

[ QUOTE ]
Well, the thing is I dont think I would have much to pay for. I would guess I might spend 25k-35k a year after I get the house and car, but this is a rough estimate. Guess I could always play poker for a few more years after that then. Thanks for the help, I'll definitely check out those books. My friends uncle is a financial advisor and I called him today, and he said 10% was definitely probable over the long run, but I do understand what you are saying about the markets volatility in the short term.

Guess I need to get 1.5 mil as soon as possible!

Ponks

[/ QUOTE ]

I'd be really leary of financial advisors. Some of them are barely better than thiefs. Read those books I recommended (or at least one of them), and you should be able to spot the scammers yourself.

I think I may have more expensive tastes than you.

Enjoy getting your Bucky-ass handed to you by Northern Iowa!

[Ponks]

Oh I'm definitely a huge Illini fan. I lost the Open Challenge for February so my opponent got to pick my Avatar/Loc for a week and he stuck me with this crap. I'm a sophomore at UIUC right now.

Ponks

[tech]

[ QUOTE ]
I dont think I would have much to pay for. I would guess I might spend 25k-35k a year after I get the house and car

[/ QUOTE ]

I thought the same thing. Then I got married. /images/graemlins/smirk.gif

[gvibes]

[ QUOTE ]
Oh I'm definitely a huge Illini fan. I lost the Open Challenge for February so my opponent got to pick my Avatar/Loc for a week and he stuck me with this crap. I'm a sophomore at UIUC right now.

Ponks

[/ QUOTE ]

Ouch. '01 alum, CompE.

[WarDekar]

Junior in CS right now. Go Illini!! Headed to Indy for the first 2 rounds to watch them and UC play, then headed to the Bahamas for SB05!

[natedogg]

I think you have totally overestimated how much you will make from poker.

natedogg

[BradleyT]

[ QUOTE ]
I would guess I might spend 25k-35k a year after I get the house and car, but this is a rough estimate.

[/ QUOTE ]

Car gonna last you from age 30 to 80?

[wickedgoodtrader]

You don't have a car now? Your best bet is to invest it in a house in a growing area and pick up some land.

[Ponks]

[ QUOTE ]
[ QUOTE ]
I would guess I might spend 25k-35k a year after I get the house and car, but this is a rough estimate.

[/ QUOTE ]

Car gonna last you from age 30 to 80?

[/ QUOTE ]

Nah, but I'm not at all worried about that. It'll last long enough.

Ponkers

[Ponks]

[ QUOTE ]
You don't have a car now? Your best bet is to invest it in a house in a growing area and pick up some land.

[/ QUOTE ]

My other friend suggested the same thing. However I'm 20 years old and away at school (3 hours away). I think this would be too much responsibility for me.

Ponkers

[GeorgeF]

1) 750k will not buy much in 10 yrs. see www.bls.gov (http://www.bls.gov) inflation calculator. $1 mill today will produce about $40k in US treasury income (with alot of inflation/currency risk). Or abour $25k if you invest short term.

2) If you are 20 I suggest that you use your cash to acquire valuable job skills. For example go to China and learn Chinese. Join the plumbers union. Hire a carrier counselor. You really need to concentrate on eraned not unearned income.

3) Why not put your cash into various currencies and hope that the US$, stockmarket and economy collapses. Then buy in.

4) "250k-300k" I personally doubt you will make 8-12k/month, but you could be the golden boy. Just curious, what is the profile of the typical person that loses money to you?

[DesertCat]

[ QUOTE ]
My advice to you is to do your research...

Buy this book called "how to make money in stocks" by william oneil.
Read the 20 signs on when to sell... if you follow this fourmula you should be living large by the time you are 30.

[/ QUOTE ]

That was the worse advice you will ever get. Here's some better advice...

You should decide how much cash you need for short term and emergency use, and put that into short term bond funds. All the rest should go into index funds. If you keep investing over time, you'll beat the market through dollar cost averaging.

Don't buy actively managed mutual funds. Most don't beat the market and even those that do aren't likely to do it in the future.

The exception is that you might want to think about investing part in foriegn mutual funds. This is because the dollar is likely to continue to depreciate while we are running big deficits., If you can't find foriegn market index funds an actively managed mutual fund with a good long term record is probably just as good overseas.

[contentless]

For the index funds part, you might want to look into this thread, which links to an asset allocation plan, probably one of the easiest ways to stay consistent with, or in some cases, even beat the market:

http://forumserver.twoplustwo.com/showflat.php?Cat=&Number=1840046&page=0&view=colla psed&sb=5&o=93&fpart=1

Plus, if you really are making 8-12k/month, the commission fees will work out quite nicely for you, percentage-wise.

As for your estimations, don't forget about things like insurance and whatnot. There are hidden costs that come and bite you in the ass all the time.

[Bluff Daddy]

This has nothing to do with investing but my question is if you could make 250-300k in the next couple of years WHILE your in school then shouldnt you make alot more than this after you graduate? I assume you will graduate around 22? Then you should be able to make over a million by the time youre 30 from poker alone.

[Ponks]

[ QUOTE ]
This has nothing to do with investing but my question is if you could make 250-300k in the next couple of years WHILE your in school then shouldnt you make alot more than this after you graduate? I assume you will graduate around 22? Then you should be able to make over a million by the time youre 30 from poker alone.

[/ QUOTE ]

Well, yes I could, sasuming that the games stay as fishy as they are. The reason I'm not investing too much between 22 and 30 is because I would be buying a house and car. Hopefully I'll be able to get both those fully paid off buy the time I'm 30 and still be able to save a nice chunk to invest. We'll see how it goes. I already know I'm gonna try, just trying to get the best advice to make it work.

Thanks all,

Ponks

[wickedgoodtrader]

I dropped out of school when I was 20 to buy a house on some land. School is for chumps. It's just a business like anything else. You can put in your 4 years min.. spend who knows how much money then get out and be sittin round jobless, only to get excited when you land a 30k/year job. The only thing I can see school being necessary for is somethign like becoming a doctor. If your in it for business.. get out.. a good business man is born one and not something you can teach. Life is short don't waste it learning chinese.

[DWarrior]

[ QUOTE ]
I dropped out of school when I was 20 to buy a house on some land. School is for chumps. It's just a business like anything else. You can put in your 4 years min.. spend who knows how much money then get out and be sittin round jobless, only to get excited when you land a 30k/year job. The only thing I can see school being necessary for is somethign like becoming a doctor. If your in it for business.. get out.. a good business man is born one and not something you can teach. Life is short don't waste it learning chinese.

[/ QUOTE ]

I think school has its role, but it seems like a lot of the successfull people dropped out of college to pursue their dreams. Of course, the school did its role to bring about their genius, but when they felt it was time to move on, they did so, but by no means was school a waste of time for them. The people I'm thinking of are Michael Dell, Bill Gates, and Steve Jobs, but I'm sure there are others.

I don't think it's wise to drop out of school merely because you're tired of the workload or feel that school isn't for you. I'm sure the three people I've mentioned could excel in college, but they felt it wouldn't be as profitable as pursuing their ideas.

[Ponks]

Alright I think I finally found something I want to invest in. I was wondering what you guys thought of this. Any advice on any of the following would be great:

Vanguard Growth and Income Fund Investor Shares (VQNPX) (http://flagship2.vanguard.com/VGApp/hnw/FundsSnapshot?FundId=0093&FundIntExt=INT)

or

Vanguard U.S. Growth Fund Investor Shares (VWUSX) (http://flagship2.vanguard.com/VGApp/hnw/FundsSnapshot?FundId=0023&FundIntExt=INT)

or

Vanguard Total Stock Market Index Fund Investor Shares (VTSMX) (http://flagship2.vanguard.com/VGApp/hnw/FundsSnapshot?FundId=0085&FundIntExt=INT)

I would be able to keep the money in here for atleast 10 years, likely a lot longer, atleast hopefully. I would also like to put in anywhere from 6-10k more each month over the next couple years, then after that 2-3k each month.

Ponks

[DesertCat]

I like the Total Stock Market Index Fund (VTSMX). Basically it assures you'll match the markets, which is a good thing. If you can buy new shares each month as you've described, your cost basis should be very low over time.

I don't like VWUSX, it has a terrible ten year record. It's actively managed, and apparently pretty badly.

VQNPX has a very good ten year record, slightly better than the Total Stock Market index fund in fact, and I would think, better than the S&P 500. But it's actively managed, so you have those problems. Even though they beat the averages so far, the mgmt may not in the future, and it may not be the same mgmt. Their results may have benifited from being a smaller fund previously and they might have grown too large to be effectively managed to beat the market.

Lastly, it's an "income fund". This usually means that they will accept lower long term growth in return for dividends and cash income. It obviously hasn't hurt them yet, but you have to be concerned about it causing lower future returns. And it sounds like you don't need any present day income.

If you do want a portion of your portfolio to generate cash income, you should put that portion in high quality short to medium term bond funds, and the rest in the index fund. That way you can change the relative percentages when you want to increase income or generate more long term gains.

[Ponks]

Thanks Desert,

I think I'll probably go with the total stock market index fund then, seems like a good bet. Thanks for the advice on the other ones as well! Good to know my fees will be low overtime, cause I really cant figure out how much I'm going to have to pay.

Ponks

[eastbay]

[ QUOTE ]
Well, the thing is I dont think I would have much to pay for.

[/ QUOTE ]

You haven't met a girl yet, have you?

eastbay

[Ponks]

[ QUOTE ]
[ QUOTE ]
Well, the thing is I dont think I would have much to pay for.

[/ QUOTE ]

You haven't met a girl yet, have you?

eastbay

[/ QUOTE ]

Well, I did break up with my girlfriend a few weeks ago. I know girls are expensive, but I think I can make enough in poker to compensate for that. I also run a website with a buddy of mine where I make an extra couple grand each month, and it's only going to grow (exponentially, hopefully!). Thanks for looking out for me though /images/graemlins/wink.gif

Ponks