Managing a 100k portfolio to a $1,000,000 at 23yrs old (accounts, fee, percent)
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I think if your trading plan is scaring you so much you should rethink your plan. I would park the 75k in some vanilla heavily diversified fund (one with exposure to bonds, equities, treasuries, commodities, international and domestic). Then I would seriously work on my trading plan until I got consistent results. Then roll that 75k back into my portfolio.
Placing big bets with such small capital (25K) is a good way to go bust.
I'm still confused by the OP. He said he wants to park 75-80k in a diversified fund and only trade with 20-25k. If the diversified fund kills it, it might return 70% over 7 years. So now you have 128k in that part of your fund.
He would have to return roughly 100% year over year with the remaining 25k to hit 1 million by 30.
Is there an investor that has ever averaged returns of 100% over a 7 year period? I've never heard of one.
well the sad truth is this is pretty much me. Asian 23yr old male living at home still. Most of my money goes straight back to the market after I cover living expenses. I work at an investment advisory firm so I won't be having any firms manage my money and take a chunk of it from commissions/fees. Already went to college but finance wasn't as good as computer engineering, etc from a non-target.
However once I take the CFA test this June, I plan to move out and thank my mom for helping me save a crap ton while I commuted to college.
I know in American customs, this sounds ridiculous...but I feel like this is pretty normal for asian culture.
I'm Chinese so I can understand your situation a bit.. also here in California, living at home as an adult isn't as uncommon since housing prices, especially in the Chinese communities, are absurdly high (thanks to the notion that a man must have a house before marriage and the practice of both families pooling together their decades of hard earned wealth to buy their children a house.)
Saving money isn't too hard if you don't buy into the fad of keeping up with the Jones. For example, I still drive my '99 Civic (which I took my driving test in when it was bought new) to my investment analyst job everyday where even the janitor drives a better car.
Another thing you may need to take into consideration in your investment portfolio is how correlated is it with your future earnings? Put it this way.. if another downturn like 2008 (or maybe even that severe) occurs in the near future, how will your portfolio turn out? Will you still have your job and even so, how will your bonuses look? You may need to think a bit outside of the box to structure your portfolio so that it delivers returns that are NOT very correlated with your income from your job while still providing real returns in the long run. Read the book "Fail Safe Investing" from Harry Browne if you'd like deeper insight on this.
As for the CFA exam, I'd want to caution you that even Level 1 is no cakewalk (I've taken multiple attempts to pass it despite having a Masters in Finance.) The concepts are not too difficult but it's gonna take a month to internalize the ridiculous volume of information tested and to get used to the test format. I could not have passed lvl 1 and lvl 2 without shutting down my entire life outside of work in the month of May each year to study (and hopefully this will be the last time I need to do this if I pass lvl 3 this year.)
I'm Chinese so I can understand your situation a bit.. also here in California, living at home as an adult isn't as uncommon since housing prices, especially in the Chinese communities, are absurdly high (thanks to the notion that a man must have a house before marriage and the practice of both families pooling together their decades of hard earned wealth to buy their children a house.)
Saving money isn't too hard if you don't buy into the fad of keeping up with the Jones. For example, I still drive my '99 Civic (which I took my driving test in when it was bought new) to my investment analyst job everyday where even the janitor drives a better car.
Another thing you may need to take into consideration in your investment portfolio is how correlated is it with your future earnings? Put it this way.. if another downturn like 2008 (or maybe even that severe) occurs in the near future, how will your portfolio turn out? Will you still have your job and even so, how will your bonuses look? You may need to think a bit outside of the box to structure your portfolio so that it delivers returns that are NOT very correlated with your income from your job while still providing real returns in the long run. Read the book "Fail Safe Investing" from Harry Browne if you'd like deeper insight on this.
As for the CFA exam, I'd want to caution you that even Level 1 is no cakewalk (I've taken multiple attempts to pass it despite having a Masters in Finance.) The concepts are not too difficult but it's gonna take a month to internalize the ridiculous volume of information tested and to get used to the test format. I could not have passed lvl 1 and lvl 2 without shutting down my entire life outside of work in the month of May each year to study (and hopefully this will be the last time I need to do this if I pass lvl 3 this year.)
Hey man you sound just like me, we should be friends haha.
And I am basically a student of the 2008 market crash. My portfolio will always be closely monitored technically for those turning points. In fact my active portfolio during a similar 2008 scenario can probably return at least 60%+, and I would probably go back to bonds/cash for the passive side of the portfolio, or any relatively strong stocks during 2008 like NFLX acted during then.
And I know CFA is no cake walk..I got 46% on the mock just now.
I haven't had the time to go out with any girls or my friends this year.
Provided I haven't finished reading fixed income and derivatives ..I need to brush up on Schweser Qbank and CFAI EOC for any chance of passing in June.
If you some how manage to generate a 1000% return over 7 years, you'll easily be able to find a job where they'll pay you $1 million in salary alone. You would have absolutely destroyed the best hedgefund managers out there.
You would have to pretty much pick all the best stocks using extensive leveraging to pull that off.
Honestly, you probably have better odds just going to Vegas and hoping for black to come up 6 times in a row.
25k->50k->100k->200k->400k->800k->1.6M
There you go, a "safer" investment strategy that gets you to $1.6M. Sure, you're putting it all on the line, but that's what you would be doing if you were investing to try and get that high of a return. You're talking options and margin trading to pull this off. The high risk/reward type bets that could easily leave you with nothing. Might as well just speed the whole thing up.
Hey man you sound just like me, we should be friends haha.
And I am basically a student of the 2008 market crash. My portfolio will always be closely monitored technically for those turning points. In fact my active portfolio during a similar 2008 scenario can probably return at least 60%+, and I would probably go back to bonds/cash for the passive side of the portfolio, or any relatively strong stocks during 2008 like NFLX acted during then.
And I know CFA is no cake walk..I got 46% on the mock just now.
I haven't had the time to go out with any girls or my friends this year.
Provided I haven't finished reading fixed income and derivatives ..I need to brush up on Schweser Qbank and CFAI EOC for any chance of passing in June.
I'm still confused by the OP. He said he wants to park 75-80k in a diversified fund and only trade with 20-25k. If the diversified fund kills it, it might return 70% over 7 years. So now you have 128k in that part of your fund.
He would have to return roughly 100% year over year with the remaining 25k to hit 1 million by 30.
Is there an investor that has ever averaged returns of 100% over a 7 year period? I've never heard of one.
Actually about 69% compounded return from 25k in 6 years. With derivatives, anything is possible. But comes at the cost of much higher risk which could wipe out that 25k capital in a matter of seconds.
0%.
I graduated high school that year and after the stock market crash in 2008, I became very interested in the market because I wanted to know exactly why it happened as well as how I could have known it was coming beforehand. There were head and shoulder patterns on many of the stocks while the indices were exhibiting lower highs as well as lower yields in bonds.
Then once I learned that I could have made fortunes even while everyone was losing money...I became really interested. Hence years like 2011 or 2010 are very fun for me. However I missed last year's tremendous rally
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