10k post

[terp]

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put away as much as you can. time does wonders with investments.

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I always feel like I am a super savings nit, I think I save like 90%+ of my poker winnings.

What % is everyone else saving?

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18BBs at a time, minus rake, sure adds up fast!

[ahnuld]

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the big plus in property is leveraging your capital.

for eg. you own a property that you had to make a 20% initial deposit on adn the rest is paid for with a loan.

when the value of the property increases, you get the full capital gain and not just the (20%+whatever you've paid off).

disclaimer: i haven't seen any of the papers you mentioned where equities vs property is discussed

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this is true but you can also leverage your investments by trading on margin. Both loans will cost you about 7% interest. It is true though that you can only get 50% margin in stocks and up to 90% margin in real estate.

[ahnuld]

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ahnuld, for those of us youngsters making low-mid 6 figures from poker (and theres probably a ton of us here) what would you recommend as a starting point for a long-term savings/retirement plan? put away 10k a year? 20k? where would you put it? thanks for the advice.

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wow, if you are only putting away 10k a year you must be living way more baller than I am [img]/images/graemlins/smile.gif[/img]. Im putting away all the money that I made but didnt spend this year. there is no reason not to. My roll is big enough that I dont need to grow it (unless I want to try to move up to 5k nl which I dont for now), so other than my living expenses which are maybe 35k for the year the rest is going into my investment account.

[ahnuld]

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nice post, this should be good. I'm pretty much completely clueless when it comes to investing so bear with me if you can.

retirement lump sum for 25, 30? 50k, 100k a year taken out? (assuming no income after "retirement") I wouldn't plan to completely stop working but would like to be set, you know, just in case. Even if you can give a ballpark of what you think is roughly enough that would be great.

investing in the things you mentioned - can I do this at my local bank or do I have to go to some sort of a company to do this? (havn't read the articles yet so if it's mentioned there forgive me)

know anything about international banking/swiss accounts? I'm looking for something outside of canada where I don't specifically need an address.

thanks

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This is very easy to do with a financial calculator. Im going to assume you retire at 50, and live for 40 years. im also going to assume that your real rate of growth on your savings is 5% a year (8% nominal, 3% inflation.)

Therefore you would need 428,977$ to take out 25k a year, 857,954$ for 50k a year, and 1,715,908$ for 100k a year.

[ahnuld]

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Its funny, when this poker thing dies out, I wonder how many players will try and convert to trading and the like to build a steady income.

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trading is a negative sum game after commission costs and much harder to make money at than long term value investing. Of course so is poker but still.

[ahnuld]

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im not even convinced that real estate is a better investment that the stock market. This article ]http://ezinearticles.com/?Returns-on-Real-Estate-vs.-Stock-Market&id=639801[/url] explains that real estate returned 12% from the period 1926-current while stocks returned 11% in the same period (standard cera used for long term comparions in finance).

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you are forgetting about the much greater ability to leverage in real estate. if i buy an investment property with 20% down you can multiply my return on what % the house appreciated by about 5 since i didn't have to pay cash for the house. there are a lot of other benefits you get as well.

as far as it being as passive, no, but the better return, yes

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you can also leverage yourself in the market, so that is not a good reason to buy real estate. In conjuction with 50% margin that I spoke about earlier, you can also buy mega ETFs that are leveraged themselves and will just double whatever return the index its matched to offers.


However, real estate is different in the sense that you can actually do things to create value. Whereas in the stock market you dont participate (unless you are Carl Icahn) in real estate you can break up your property of convert it from one type of property to another. Alot more room for finding market inefficiencies in RE.

[ipp147]

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Good post, one thing though:

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This brings us to index investing and ETFs (exchange traded finds).

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Anyone know the equivalent of these in the UK?

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They are called the same.

Barclays run the most well known - look at the ishares website. You can get them through pretty much every online broker.

If you are UK based then obviously use up your isa allowance first.

If you are employed and pay higher rate taxes then a stakeholder pension is probably even more efficient.

John Kane. Your position on compounding interest is v v wrong.

[Irish Mafia]

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snowbank, I love RE and plan to have investment props myself, but you cannot compare it to investing in index funds - its apples and oranges (and u should have both anyways).

Also snowbank's link is a v good read

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matthew,

i totally agree, i was just replying to the part where he mentioned he thought stocks might be better than real estate. i don't agree or disagree, it will all depend on the person and what's best for them. just wanted to point out the leverage side of real estate which heavily tips the scale on returns compared to buying with cash.

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This is a X-post (to snow banks 3 year anniv real estate post).

Anyway, Snowbank - I enjoyed your real estate post. I'm mulling the idea about buying my first condo/house whatever:

This is a little unrelated, but I'm a full time poker pro. Right now i'm renting (which obviously is lighting money on fire)... but anyway, this is my first year as a pro... what kind of difficulties (if any) do you imagine I'll encounter in trying to get a mortgage on real estate? Obviously banks/lenders have preconceived notions about professional "gamblers". If you don't mind (don't know if you know anything about this) - I would really like to hear about your thoughts on this issues.

Thanks.

[ahnuld]

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snowbank, I love RE and plan to have investment props myself, but you cannot compare it to investing in index funds - its apples and oranges (and u should have both anyways).

Also snowbank's link is a v good read

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Yes. As you can see in the link on passive investing I included, one of the funds that is suggested is a real estate ETF to be about 10-20% of your portfolio.

Also, renting isnt necessarily lighting money on fire. Often cities will have rent caps which in a few years can allow you to get a redic. cheap deal that would be impossible through owning. I know people renting apartments for 500$ a month when the market rate is 1500$

[ArturiusX]

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Its funny, when this poker thing dies out, I wonder how many players will try and convert to trading and the like to build a steady income.

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trading is a negative sum game after commission costs and much harder to make money at than long term value investing. Of course so is poker but still.

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Exactly, so is poker. Trading is very beatable.