Cashing out plans?? do they work

[Bonafone]

Well the past few months I've been tyring to build my roll and haven't cashed out a dime of my profits. Now that I have a healthy roll (Over 200 buy ins) I want to begin to invest and bring out some spending money for trips and such. I was just wondering if any stt'ers did held a plan like this or if they just cashed out as needed. Heres my plan:

After taxes:

Invest 35% of my monthly winnings
Cashout for spending money 10% along with full rakeback.
Let the rest add up in my Neteller account.

I have a healthy bankroll as well. I keep 100 buyins. Every week I cashout whatever is above that (plus rakeback).

Seems to be working... I know I should probably work on building up my bankroll but I have a $4000 debt to pay off which I plan to pay off in 2 months (or less depending on how much I can play) /images/graemlins/smile.gif

Cheers

[Apathy]

You are smart to be planning for this sort of thing.

This isn't really the right forum for good answers on this but I'll help you anyone.

Read Ed Miller's series of articles about becoming a pro and money management, he has some good idea's. The articles can be found in the 2+2 internet magazine on this site.

Also for liquid investment (which is important as a poker player imo) I highly reccomend ING Direct as a safe way to save money, earn interest etc.

[tshort]

I would invest all of your winnings in the London stock market. Party Gaming might be a good choice.

Why on earth would you keep large sumps of money in neteller? At a minimum there are several internet based banks that offer a mild return on savings. There are many other ways that are both profitable and more secure.

edit: I like the idea of your plan otherwise though. Very disciplined.

[Maulik]

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Also for liquid investment (which is important as a poker player imo) I highly reccomend Emmigrant Direct as a safe way to save money, earn interest etc.

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FYP they have higher interest rates. If you are serious about investing. The best way to go about this is getting a ROTH IRA with a firm like Vanguard and dumping that money into an S&P500 index fund. 10.5% annualised returns since 1900s.

[1C5]

S&P better than the DJI index?

[Maulik]

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S&P better than the DJI index?

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by a margin since 1955.

the margin (http://finance.yahoo.com/q/bc?t=my&s=%5EGSPC&l=on&z=m&q=l&c=&c=%5EDJI)

[Phill S]

[ QUOTE ]
Why on earth would you keep large sumps of money in neteller? At a minimum there are several internet based banks that offer a mild return on savings. There are many other ways that are both profitable and more secure.

edit: I like the idea of your plan otherwise though. Very disciplined.

[/ QUOTE ]

Neteller is more secure than most seem to think.

Its FSA regulated, and whilst i admit it wont be as safe as a big bank would be, its certainly safer than keeping your money in a poker site; i accept this is less true nowadays, esp with party and empire being listed, but its still an argument with merit.

Phill

[mosdef]

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The best way to go about this is getting a ROTH IRA with a firm like Vanguard and dumping that money into an S&P500 index fund. 10.5% annualised returns since 1900s.

[/ QUOTE ]

we're from canada, eh. we don't have roth iras. we only have rrsps, which are roughly equivalent to iras. and their limits are lower.

[Maulik]

[ QUOTE ]
[ QUOTE ]
The best way to go about this is getting a ROTH IRA with a firm like Vanguard and dumping that money into an S&P500 index fund. 10.5% annualised returns since 1900s.

[/ QUOTE ]

a) take advantage of any tax free growth possible.
b) canadians can enjoy the power ofthe S&P500
we're from canada, eh. we don't have roth iras. we only have rrsps, which are roughly equivalent to iras. and their limits are lower.

[/ QUOTE ]

[Scuba Chuck]

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If you are serious about investing. The best way to go about this is getting a ROTH IRA with a firm like Vanguard and dumping that money into an S&P500 index fund. 10.5% annualised returns since 1900s.

[/ QUOTE ]

Great. The blind leading the blind. You're right on the Roth IRA though.

[Maulik]

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[ QUOTE ]
If you are serious about investing. The best way to go about this is getting a ROTH IRA with a firm like Vanguard and dumping that money into an S&P500 index fund. 10.5% annualised returns since 1900s.

[/ QUOTE ]

Great. The blind leading the blind. You're right on the Roth IRA though.

[/ QUOTE ]

/images/graemlins/confused.gif


those who are not interested in handing over their funds to a stockbroker are best served by the aforementioned idea.


please explain otherwise.

[Moonsugar]

Ok, not to be a nit but this stuff kills me. You have no idea if this guy should put money in a ROTH, you don't even know if he is eligible to have a ROTH.

Also, the Vanguard SP500 index fund was created in 1974 so it hasn't returned 10.5% since 1900s. SP500 hasn't been around that long either. I think it is a great product, but it doesn't have the attributes you posted.

Investmentment advice was my profession for the last 11 years. How it is delivered in America totally sucks but if someone really wants to learn about investing the best book on the subject I have ever seen is The Intelligent Asset Allocator (http://www.amazon.com/exec/obidos/tg/detail/-/0071362363/qid=1124201335/sr=8-1/ref=pd_bbs_1/104-9067089-8166349?v=glance&s=books&n=507846) It is thorough, is relatively easy to understand and the method of investing it gives is simple, cheap and easy to follow.

Financial planning questions, such as if someone should/could open a ROTH, how much of their poker winnings they should invest, should they get a 20 or 30 year mortgage etc. are very dependent on the financial situation and personality of the person and his family and it is extremely difficult to give good advice to someone given the info we typically have on a board such as this. Sometimes it could do more harm than good. For instance some joker with only poker income could open a ROTH, a violation of the tax law or someone could put 'all' their savings in tax deferred accounts such as a ROTH, which would not be prudent at all.

[fnord_too]

I don't like the letting the rest sit in neteller part. I think that is fine up to some amount, but if you continue to succeed, you will end up with a lot of dead cash there, and that is a terrible fate for capital.

Personally, I have a lot of long term financial plans, and poker is a component of them. By and large, I have the following general priorities:

1. Absolute necessities (mortgage, car payments, taxes, stuff like that)
2. Bankroll Protection
3. Elimination of short term debt. (It irks me that I still cary some short term debt).
4. Various savings (portfolio, capital for things like home improvements/additions, cash reserves, maybe other property, etc.)
5. Toys (this actually jumps up to 3 at times, since a lot of the toys I am talking about are not huge investments, things like a little vaction here, a new palm pilot there).

When my savings gets to an acceptable level, bankroll protection will move down in some sense, since it can easily be replenshed. (effective bankroll protection will still be number two, but this is really just an exercize in semantics).

[Scuba Chuck]

I'm not interested in going into depth on this topic, but I will post once.

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How it is delivered in America totally sucks

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I agree 100% Well, I agree that a large majority of FAs are in it for themselves, more than for their clients.

Unfortunately where you miss the point is the cyclicality of invetments. For example, what we all remember is that from 1981 through the end of the millenium the Dow Jones Industrial Average (DJIA) moved from 875 to 12,875. That's an incredibly exponential move. But, we all seem to fail to realize that this is trend is not permanent. It's not how the market moves all the time. The next argument, I'm sure I'll be given is that since 1925 (or pick any other 70+ yr time horizon), the market index has returned (insert any return you want here).

The argument is the following. Indexes do not move in a linear line at a 30 degree angle all the time. In fact, if you watch more closely, you'll notice that returns are flat for a period of time, and then move at a very high pace.

Specific example: (I read this for the first time in Fortune in a 2001 Warren Buffett article).

December 31, 1964: DJIA 874.75
December 31, 1981: DJIA 875.00

Here is a 17 year example where our major index failed to perform.

My final point is that for the past 20 years, almost no mutual fund could beat the indexes. That's about to change over the next secular market experience.

Scuba

[skirtus]

I had a very simple cash out plan. My wife would just spend whatever I made at the tables that week. I than had to cash out to pay the credit card.

[mosdef]

i agree that it is usually worth while to fill up all the tax-sheltered investments you can. one issue with dumping poker winnings into a tax-sheltered investment vehicle in Canada is that the limit on your tax-deferred investment contributions is a percentage of taxable earnings. so if you are a college kid not reporting your poker winnings, your RRSP maximum contribution will be too small to absorb your winnings.

[A_PLUS]

[ QUOTE ]
I would invest all of your winnings in the London stock market. Party Gaming might be a good choice.

[/ QUOTE ]

hmmm..I really need to get moving on that financial advice newsletter.

[Maulik]

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Also, the Vanguard SP500 index fund was created in 1974 so it hasn't returned 10.5% since 1900s. SP500 hasn't been around that long either. I think it is a great product, but it doesn't have the attributes you posted.

[/ QUOTE ]

this is what I was getting at...
[ QUOTE ]

The next argument, I'm sure I'll be given is that since 1925 (or pick any other 70+ yr time horizon), the market index has returned (insert any return you want here).


[/ QUOTE ]

...but I suppose I'm guilty of the terrible information that is published monthly by Forbes, Business Week, Money, Smart Money who go on & on about the latest fad. The idea was index funds are good investments for those who don't have the time to choose their own securities. Regardless, index funds serve as a better vehicle for most young poker players than most things they will come across via media, friends, etc.

And investments like poker are situational as mentioned above. Usually a standard line like a ROTH IRA is good for you... is.

[Moonsugar]

[ QUOTE ]


Unfortunately where you miss the point is the cyclicality of invetments.

[/ QUOTE ]

I haven't missed any point and I don't know what gave you the idea that I have.

[fnord_too]

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I would invest all of your winnings in the London stock market. Party Gaming might be a good choice.

[/ QUOTE ]

This was probably said in jest, but putting all your money in any one stock (or a small number of stocks) is a very bad idea. I don't know if the stock market forum is any good or not, since I don't frequent it, but there are a lot of quants and finance savy posters on these boards who can give you good advice. This is not the right forum, so I'll shut up now.

[Maulik]

Aaron Brown is a quant and his posts on math are always on point, etc.

[Jibbs]

I have a somewhat odd way (I think) of treating the money in my accounts. I treat my poker accounts as savings accounts. I put in money at the end of every week. My goal is to make a 10-15% return on my money by the end of the year, which I think is pretty modest and I have far surpassed for the years I have been doing it. Anything over the 10-15% I feel free to spend wildly on fast living /images/graemlins/grin.gif .

I don't have the pro poker player dream of many people so this plan may not be for everybody but I have had luck with it.

[Moonsugar]

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Regardless, index funds serve as a better vehicle for most people than most things they will come across via media, friends, etc.


[/ QUOTE ]

Undoubtedly.

[tshort]

Party Gaming is the parent company to Party Poker.

You are right, though. I would recommend you invest in Empire Online as well to spread your investments out. Investing in Party Poker when most of us play on Empire might be a silly idea.

[mosdef]

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Aaron Brown is a quant and his posts on math are always on point, etc.

[/ QUOTE ]

Yes. Aaron is very, very bright.

[Moonsugar]

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My final point is that for the past 20 years, almost no mutual fund could beat the indexes. That's about to change over the next secular market experience.


[/ QUOTE ]

Why? Have the laws of arithmetic changed?

Please refute this. (http://www.stanford.edu/~wfsharpe/art/active/active.htm)

And after you do that, maybe you can tell us how you can pick which of these mutual funds will outperform in the future. Not which have done well in the past, but which will in the future.

You are not the person selling the Party hole card readers are you?