Ideas for establishing a capital base to begin investing - getting past first base

[tech/a]

Its pretty clear from many threads like the housing threads and also in the shares sections that there are many who are struggling to get to first base.

Establishing a Capital base so they can invest in all those things that some of us take for granted because we have a base from which to start from seems like a pipe dream.

Most know the saying
"There are those who work for money and those who have money work for them"
Great how do I get enough money so it works for me in a meaningful way!

I thought this thread would be a good place for ideas,perhaps experiences in how you can build that base---you know its like going for that first job and the interviewer says---so what experience have you had!---Employ me and I'll get the experience---wont I.

How do you get that deposit for that house---should I use it immediately for a house or should I build my capital base elsewhere?
What are my options.

If I have 5k and thats all I have what are ideas I can use to make that money work for me?
How much is enough to get into each suggestion.

What have you done to get past first base and beyond? What are your stories/experiences/practical suggestions?

I decided when 20 that if I worked for a boss (I had for 3 yrs) he determined to a large extent my earnings,particularly in a large organisation --I was lost in the clock cards---nothing but a number.
So with nothing but a $1500 loan from my Father (Who charged me interest!!!) I went to work for myself.
So I could govern my own destiny---bloody hell now I had 80 bosses!

More in my next post --but please join in there are plenty here who would benifit from the wealth of experience 14000 members here must have.

[cuttlefish]

On your deathbed the amount of noughts behind the 1 won't matter.
Who you are will.

Focus on whats important and don't focus on money. Contentment, happiness, family, friends, well being, creativity, contemplation, inner satisfaction, achievement.

And while you're about it put 10% of your earnings, however they may come, aside ... or not.

When you have achieved wealth that enables you to live freely you will realise how little you know about life. You will also realise how much everybody, everywhere in the world, focuses on money, and how unimportant it is to happiness.

[wayneL]

On your deathbed the amount of noughts behind the 1 won't matter.
Who you are will.

Focus on whats important and don't focus on money. Contentment, happiness, family, friends, well being, creativity, contemplation, inner satisfaction, achievement.

And while you're about it put 10% of your earnings, however they may come, aside ... or not.

When you have achieved wealth that enables you to live freely you will realise how little you know about life. You will also realise how much everybody, everywhere in the world, focuses on money, and how unimportant it is to happiness.
A drink for that man!

Money is fun, but if a person is not happy when broke, he/she won't be happy rich either. (So says a wise man I once knew).

On the other hand, nothing wrong with attaining wealth (in $$ terms), but what is the cost?

Balance.

[w.m.buch@bigpond]

cuttlefish, I agree with your sentiment but life without cash can be a pretty miserable existance and although money dosnt buy happiness it sure as hell buys comforts.
As to getting started, I believe its more the person than the ideas ie you can lead a horse to water etc .
My first real cash was made in the heydays of the 80s , I stagged every new issue and punted on the speccies, made enough to buy a couple of units in a couple of years but lost the lot, plus more ,on black Monday on futures. I was 17 at the time That was a huge reality check and still acts as a deterrent to big punts on the market. Point is you can make it lose it and come back again but its the determination of the person.

[nizar]

Money is fun, but if a person is not happy when broke, he/she won't be happy rich either. (So says a wise man I once knew).


Im not argue the popular opinion that money doesnt buy happiness.

But I sure as hell would rather be unhappy and rich -- than unhappy and poor.

[cuttlefish]

cuttlefish, I agree with your sentiment but life without cash can be a pretty miserabe existance and although money dosnt buy happiness it sure as hell buys comforts.
As to getting started, I believe its more the person than the ideas ie you can lead a horse to water etc .
My first real cash was made in the heydays of the 80s , I stagged every new issue and punted on the speccies, made enough to buy a couple of units in a couple of years but lost the lot, plus more ,on black Monday on futures. I was 17 at the time That was a huge reality check and still acts as a deterrent to big punts on the market. Point is you can make it lose it and come back again but its the determination of the person.

Yeah - I completely agree - but what I'm trying to point out to anyone starting out is - if you are chasing $$$$ you are chasing hot air, fairy floss, paper tigers, puff the magic dragon.

Put the $$$ in its box and focus on what is important in life - who is important to you - what is important to you - how do you like spending a day - what makes you feel good, satisfied, content, ecstatic, euphoric. What doesn't.

And do that, while putting the $$$ aside - or using the $$$ to build up and establish your own vision of happiness/contentment/the good life.

[numbercruncher]

Its pretty clear from many threads that some people cant help but barrack for the direction of their bets.

If they are shorting stocks theyll post " markets definately going down today "

If theyre swimming naked in the RE game theyll claim everyone else is stoopid and struggling to save two bob.

No use being the richest man in the graveyard as pointed out already.

Happy Investing all :)

[wayneL]

Im not argue the popular opinion that money doesnt buy happiness.

But I sure as hell would rather be unhappy and rich -- than unhappy and poor.
Non sequitur.

The point was not that one should stay poor, but that there may be a price for becoming rich and that a balance of effort between training the mind to be happy, and chasing money should be struck.

Let's leave the cliche's well and truly out of it please.

[Timmy]

Wow, this thread went OT after the first post :D

Tech - when starting out with let's say zero capital, or near enough to it, an alternative to having one job is to have more than one, this can kick start the process of building a stake. Or get a job where there is potential to earn beyond a somewhat fixed salary (a sales job can provide this, for example, but there are others). Starting a business with very little capital is another option, as you point out. A specific suggestion may be to buy and sell products using low-cost distribution networks such as ebay and ebay-like structures (Craigs List for example). There are plenty on ebay, for example, who sell refurbished computers and components, and of course other products/niches.

Even if you have a small stake, actually getting into the market in a 'trading' capacity (as opposed to an 'investment' capacity) with little capital and working full-time is a challenge. If you are working during daytime hours and unable to access Aust. markets then trading offshore markets is an option. (Of course I am conveniently ignoring such challenges here as knowing what to trade and how, but thats a subject for other threads I am sure).

[cuttlefish]

Wow, this thread went OT after the first post :D



The myth continues. Capital base - irrelevant - tuppence a bag.

[Bill M]

Hello tech/a, establishing a capital base is very very hard, I would like to tell you my story.

I started off as an apprentice in a factory in Adelaide, it was nothing but an ordinary job. On the 1st weeks wages I wondered what to do with my money. From nothing I went to something. This is where the crowd gets lost. How come they survived well without working then they can't survive with working? I could never understand this massive shift from day 1.

The real thing is that every single person must save, save hard and save everywhere they can. I don't mean forgo a pizza on a Friday night with your mates I mean, give some money to your Mum for board, put some in the bank and keep some for fun. The problem in my days of youth is the same as now, as soon as they get their money it is destined for spending within the week, this is wrong.

So 1st. base is save some money, 2nd base is don't rack up depreciating debts and 3rd base is if you are going to borrow, then borrow for appreciating assets.

As a young fella I noticed a lot of old Italian families always had a house and the old Papa of the family still worked. The secret is no matter how unskilled you are you must work. All our immigrants to this country have been successful why can't we? Anyhow I gathered from my early days that real estate is a must, not many Italians were renting in my youth. Why pay rent when you can own for nearly the same money? Anyhow my goal was to have my own home. Today unfortunately people want everything now and aren't prepared to sacrifice time off for it.

I was a bit of a dummy during my apprenticeship but it paid off in the end. Whilst I had to do a repeat term through failure I locked myself in my bedroom to get it right while all my mates were out getting pissed in the pub, my time was at home studying but my ticket was in the mail.

This is how it worked for me, study and get your certificate, save your money, buy a property, pay it off ASAP, then save for your investments. This is where the capital base comes into it. It takes years and years of "real" hard yakka to get it but if you prefer Friday nights in the pub and living from week to week you will never get there.

In my later years I had heaps of overtime offered to me and I took it. All the other guys used excuses like "the tax man will get my money", "I'm going out tonight", "I can't be bothered", "I've given enough time to this place" and many more. But hey tell me, who was the smarter punter, the guy getting double time money or the guy in the pub?

You don't have to forgo fun as such, I had plenty of that, just save those $$$$ for investments, work hard and then the capital base will follow, hope that helps.

[cuttlefish]

I would strongly recommend reading the "Petit Prince" written by somebody that faced the reality of fate ,,, or not. But don't be the man counting the stars is my advice. (I've been him ... might still be him :o;) I'll get there).

[Timmy]

The myth continues. Capital base - irrelevant - tuppence a bag.

Sorry, what's the myth? I enjoy Mythbusters ... might be a subject for examination!

[Bill M]

When you have achieved wealth that enables you to live freely you will realise how little you know about life. You will also realise how much everybody, everywhere in the world, focuses on money, and how unimportant it is to happiness.

Some people are mentally deranged over money but to say it's unimportant is not right. You should check out some 3rd world countries where there is no hope of education, no hope of bettering yourself and no hope of getting a decent meal for the night, try telling those people money is unimportant, just an observation been O/S for many years myself.

[wayneL]

Some people are mentally deranged over money but to say it's unimportant is not right. You should check out some 3rd world countries where there is no hope of education, no hope of bettering yourself and no hope of getting a decent meal for the night, try telling those people money is unimportant, just an observation been O/S for many years myself.
Depends on whether the society is "money based". I've visited people who live in mud huts who have more happiness than we westerners ever achieve. Missus was born and raised amongst Nandi tribes-people and makes the same observation. But on the other hand, living in squalor in the slums of Calcutta is an entirely different story.

All depends on context, and on what context money is relevant to that third world society.

Oils ain't oils Sol.

[Bill M]

Depends on whether the society is "money based". I've visited people who live in mud huts who have more happiness than we westerners ever achieve. Missus was born and raised amongst Nandi tribes-people and makes the same observation. But on the other hand, living in squalor in the slums of Calcutta is an entirely different story.

All depends on context, and on what context money is relevant to that third world society.

Oils ain't oils Sol.
Yes that's true mate, I've met people like this too, they are very lucky to be happy with what little they have, cheers.

[tech/a]

Thanks Bill and Timmy.

Wayne,Numbers and Cuttlefish.

Why dont you give the thread a chance.There are young people who are out there on this board who are asking this question all the time perhaps even some not so young.

Of course money isnt the be all and end all.

But we live in Australia not Bangladesh we live in a capitalist society,we are encouraged to put as much as we can into Superannuation so WE can look after ourselves.Day in day out you see stories of pensioners who cannot buy food nor can they afford appropriate health care.I look at the MAJORITY of these people and I see people sitting waiting for death.Bloody morbid.If they had more financial freedom they would have most of those things you and I take for granted,better health,could afford to socialise,eat well,and have some comforts that they deserve at that age.Starting at 20 will give more opportunity to your retirement years than at 40---or NEVER

Give the thread a chance.

Its a genuine topic.

Surely you guys have some positive input particularly you Wayne,your self made arent you---whats the Wayne story,how would you do it all again?

[wayneL]

Thanks Bill and Timmy.

Wayne,Numbers and Cuttlefish.

Why dont you give the thread a chance.There are young people who are out there on this board who are asking this question all the time perhaps even some not so young.

Of course money isnt the be all and end all.

But we live in Australia not Bangladesh we live in a capitalist society,we are encouraged to put as much as we can into Superannuation so WE can look after ourselves.Day in day out you see stories of pensioners who cannot buy food nor can they afford appropriate health care.I look at the MAJORITY of these people and I see people sitting waiting for death.Bloody morbid.If they had more financial freedom they would have most of those things you and I take for granted,better health,could afford to socialise,eat well,and have some comforts that they deserve at that age.Starting at 20 will give more opportunity to your retirement years than at 40---or NEVER

Give the thread a chance.

Its a genuine topic.

Surely you guys have some positive input particularly you Wayne,your self made arent you---whats the Wayne story,how would you do it all again?

I appreciate what your trying to do here Tech, and I'm not being negative, merely advocating balance. You'll see that if you examine my posts carefully.

My story? Started a business in an industry in which Messers. Keating & Co. decided to unlevel the playing field (while claiming to level it). Sold that business with enough profit to buy a few cheap nags to flog around Flemington plus got my farriers ticket to pay for groceries in the lean times.

That basically meant getting up at 3am and riding trackwork till about 8 am, then getting under 500kg of bad tempered, poorly trained mongrel thoroughbred and trying to hang a bit of iron off it's toes... repeat 6-8 times, nurse wounds, collapse into bed, repeat the next day.

Won a few races and built up enough dough to trade for a living when my body packed it in.

I enjoyed it (apart from dealing with thieving jockeys, poaching trainers, idiot owners and corrupt stewards) but that was the price for me, a ####ed back, worn out knees and a cynical disposition.

If I had my time over, I'd have gone into 'puters/software etc. I could have been a nerd AND make heaps.

[numbercruncher]

Ok I'll play the game too, my original dismissal of the thread concept is because so much of your work Tech is aimed at telling people rather than inviting discussion or debate from what I read.

Anyway, reaching first base for me was when I adopted the concept that reducing costs can be much more effective than Increasing income.

I acheived this by contracting to the Cruise line Industry, I went from an average wage to an above average salary - but the real juice lay with eliminating ALL cost of living expenses - Food, Accomadation , utilitys , travel etc were then a thing of the past - 12 months later made it to base one.

Base two - Leverage.

Base three - recognise when the economic cycle is turning.

Remember wealth doesnt equate to happiness, throughout my Travels some of the most happy people with the biggest broadest smiles would fit most peoples here definition of living in poverty. If your pursuit of wealth is making you unhappy step back and take a new approach.

Debt doesnt equal wealth, especially in the current enviroment. The cost and value of money can both Decrease and Increase. By this I mean prior to this ongoing correction I liquidated virtually all of my stock porfolio, I can now buy back everything at a 30pc discount, essentially making my money worth 30pc more TAX FREE. This ongoing correction has got many many people a Eddy Grove, Leverage in a rising market rocks, in a falling one it can destroy you.

My last piece of advice is use Google and use it prudently, Instead of just typing into google " House prices to rise for years " or " Commodities supercycle " also try some bearish phrases such as " Realestate Crash " or " Commodities bubble " and then thoroughly examine both sides of the debate, then make informed decisions based on the most likely scenario. Knowledge is power.

Cheers.

;)

[tech/a]

When I was 18 I had 2 jobs like most did then.Worked Saturday mornings pumping gas as well.

A Latvian guy GEORGE who I never had a conversation with taught me some extremely valuable lessons.

I'll tell his story then would be interested in what others get from it.

My second job was in a machine shop working the 6-10pm shift.Knocked of my main job at 5 then straight to the 2nd.
On my first day a Wednesday---my supervisor asked do you have a dollar.
He had a plastic bag filling with dollars.
"What for?"
"There is a tradition here which has been going on for 10 yrs.Pay day is Friday and each Friday GEORGES wages are raffled off,his pay is $120/week (At the time my total earnings----all jobs---- were $45)."

"Who gets the $s I asked"
"GEORGE---its OK even management get involved--and yes they did!"

Some quick calcs had me realising that George pocketed around $350-400 each pay day and had been getting 3x his wage for 10 yrs.

I later found out it was more like $500+ as many paid much more than $1 for a better Odds opportunity.Particularly those who had won the raffle.

I learnt a lot from George.
Interested in what others gain from this true story.
It was stopped I heard about 10 yrs later by the UNIONS---so much for entrepeneurship!
George introduced me to "Out of the Square thinking".

[Trembling Hand]

Some quick calcs had me realising that George pocketed around $350-400 each pay day and had been getting 3x his wage for 10 yrs.

I later found out it was more like $500+ as many paid much more than $1 for a better Odds opportunity.Particularly those who had won the raffle.

George introduced me to "Out of the Square thinking".

Love it!! That's a classic. And exactly the thinking needed. :D:D

[numbercruncher]

Cool story Tech.


Id ask, why did management sanction this ? George must of been well connected or something ? kickbacks perhaps ....


Did you ever win his wages ?

[nizar]

When I was 18 I had 2 jobs like most did then.Worked Saturday mornings pumping gas as well.

A Latvian guy GEORGE who I never had a conversation with taught me some extremely valuable lessons.

I'll tell his story then would be interested in what others get from it.

My second job was in a machine shop working the 6-10pm shift.Knocked of my main job at 5 then straight to the 2nd.
On my first day a Wednesday---my supervisor asked do you have a dollar.
He had a plastic bag filling with dollars.
"What for?"
"There is a tradition here which has been going on for 10 yrs.Pay day is Friday and each Friday GEORGES wages are raffled off,his pay is $120/week (At the time my total earnings----all jobs---- were $45)."

"Who gets the $s I asked"
"GEORGE---its OK even management get involved--and yes they did!"

Some quick calcs had me realising that George pocketed around $350-400 each pay day and had been getting 3x his wage for 10 yrs.

I later found out it was more like $500+ as many paid much more than $1 for a better Odds opportunity.Particularly those who had won the raffle.

I learnt a lot from George.
Interested in what others gain from this true story.
It was stopped I heard about 10 yrs later by the UNIONS---so much for entrepeneurship!
George introduced me to "Out of the Square thinking".

LOL what a legend!!

I will be telling this story to my mates.

[nizar]

Ok this post may seem off-topic but its not really.

Isn't it interesting how most established traders seem to say that having an adequate capital base is so important -- and i dont disagree -- but then you go and read about some trading legends, and they built their fortunes having started with so little?

Take Richard Dennis for example. He started with $400, but yeh it was in the late 60s so now maybe its a few thousand. Still not much.

Now did these guys (Market Wizards contains a fair few of their stories) do so well from such a small capital base solely because they were at the extreme epitome of trading excellence??

Or does it have to do with luck/chance and the effects of randomness?

Is it possible that someone starting with $400 trading futures in the late 1960s with the same strategy as Dennis ended up with much less.

So why is it that we require decent capital when they didn't?

And what is a decent capital base for investing/trading?
Is it $30k? Or $50k?
(When my friends ask me I tell them $10k.)

Some discussion here would be much appreciated -- maybe this requires a new thread.

[wayneL]

Now did these guys (Market Wizards contains a fair few of their stories) do so well from such a small capital base solely because they were at the extreme epitome of trading excellence??

Or does it have to do with luck/chance and the effects of randomness?

From such a small base, a bit of both I reckon. One early hit and their capital would have been down the toilet.

A bit of luck goes a long way, as the famous casino example shows.

[Tysonboss1]

Contentment, happiness, family, friends, well being, creativity, contemplation, inner satisfaction, achievement.

.

It's true that having wealth doesn't guarantee the above, Being poor doesn't either.

All te tings listed above are easier to get when you have wealth.

[prawn_86]

Im not quite sure if im at base one yet or not...

I would lean towards not, although for a person of my age i think i am doing better than the vast majority.

I have always been clever in an academic sense and was lucky enough to gain some scholarships for my studies. I also worked flat out in my gap year to save a decent capital base for uni.

I study a degree full time and am also just about to begin a full time diploma also, as i feel that for my desired job, education is of vital importance, and i enjoy learning. I also work part time 2 days a week.

Having said that though, putting money into the market has taught me much more than i could hope to learn in my time at uni.

i am lucky enough to have been taught sound financial management by my father, and am really thankful for that.

Whenever I am worried about my small capital base i think to myself:
"How many people my age who are studying full time, can travel overseas at least once a year, enjoy their life, and still SAVE 3 - 5k per year?"

Most people my age are busy trying to survive due to the fact they lack good financial management and would rather spend it all at once on weekends.

So my plan now is to continue chipping away at building a capital base and when my studies are complete i will re-evaluate and set a new direction. :)

[julius]

It's so tiring listening to the same people harp on about the evils of money...move on

You can demonise 'wealth' all you want but the fact is that $money$ makes life easy in a market economy. It's simply a means to an ends.

Back on topic... investing in stocks comparitively requires very little capital, which is the real beauty of the share market. If you were going to look at launching a serious start up, which is not the same as buying yourself a job, I'd say you're looking at $200K+ minimum.

Almost all of the financially successful people I've spoken to who have made it in business agree that accumulating a meaningful capital base is the biggest obstacle. The same people will also tell you that todays environment is much more competitive than the one that gave them their 'break', this mostly from people who made it with very little capital base.

To start with you need 1. cash flow, 2. experience, 3. contacts, which all lend itself toward a salary position. These days this generally requires some kind of education to get you a place in the job queue...be it uni, apprentice, etc. - then you also have something to fall back on. That's my plan for the time being :rolleyes:

[nizar]

It's true that having wealth doesn't guarantee the above, Being poor doesn't either.

All te tings listed above are easier to get when you have wealth.

True that.

[nizar]

Whenever I am worried about my small capital base i think to myself:
"How many people my age who are studying full time, can travel overseas at least once a year, enjoy their life, and still SAVE 3 - 5k per year?"

LOL have you heard of YT?

[Wysiwyg]

I don`t see many other ideas apart from working for a wage to establish a capital base.It is good for self esteem and learning how the system functions. One could thieve but this would be detrimental to ones health and freedom.My personal experience was to deposit money into a bank and when it reached 2 thousand put that into a term deposit.This is a painstakingly slow process because after one year there was $160 more.I read that fixed interest, shares and property were the go and bought my first shares in CBA at 300 for $11 in `97.(sold 6 months later in desperation, dohhh)

For me, building a capital base in a permanent 5 day week job was slow and my bro. told me he was making more working heaps of o.t. through contract companies.I resigned from the slow, boring permanent, getting nowhere job and signed up with some contracting companies.Nothing secure or pretty about this type of work, it is long days and you get to meet some of the worlds nastiest people.
It was the o.t. i worked that gave me a capital base to invest and now trade the markets.

[MRC & Co]

I am only 25 but have a decent capital base 100k due to some inheritance and some "lucky" investing! ;) Traded my first stock when I was 12 (Gold Mining Australia) and lost everything. Used money received from presents to stay in News Corp which did very well in that time. This was my first entry into the stockmarket all those years ago and has continued and grown ever since.

I plan to take out a loan when I go back to work (curently trading full-time). Also, this should coincide with the bottom off all this mess. Use some dividends and leftover disposable income to help pay off the loan and keep any capital gains I make. Basic wealth creation strategy.

Sell covered calls against my "value stocks" to generate income, setting strike price around "fair value". Trade the current trends, anything inflationary at the moment, namely base and precious metals.

I have 2 degrees in economics/management which help investing and have worked as an economist and financial analyst recently for about 2 1/2 years. Currently studying my DFP just for further credentials to move into funds management, which I then plan to help me further develop my capital base. Though, obviously, recognise the power of compounding rates of return and plan to use this as my easiest way to increase my capital base over the long-term.

Good topic Tech.

Cheers guys and good luck!

[julius]

Nizar how old is YT ? Same age as prawn ?

[ormond]

My capital base came via taking a redundancy package 10 years ago which gave me enough money for a house deposit and was lucky enough to be re employed 3weeks laterby the same company.
Four years later used equity in home to take out an intrest only loan with dividend payments more than covering intrest payments.
Since then i've built sufficient equity in my shares to easily meet intrest payments and have sufficient equity to take some additional risks with some spec stocks
The moral of the story is i was prepared to take a risk in life otherwise i would have no assets and no prospect of acclumating any on a crappy wage.

[tech/a]

There is some great stuff here already


(1) Trade the current trends, anything inflationary at the moment, namely base and precious metals.

(2) It was the o.t. i worked that gave me a capital base to invest and now trade the markets.

(3) investing in stocks comparitively requires very little capital, which is the real beauty of the share market.(I'll add that you can buy and sell at the click of a mouse).

(4) To start with you need 1. cash flow, 2. experience, 3. contacts, (Ill add Initial Capital base---in business there is much more)
I have always been clever in an academic sense and was lucky enough to gain some scholarships for my studies. I also worked flat out in my gap year to save a decent capital base for uni.(Become an expert in something doesnt matter much what it is but when your an expert then people will beat a path to your door for YOUR expertise---you found a way to make the income required).

Sorry Ive probably missed some.

I have more to offer if only people would lay off this crap about chest beating.What I offer up are life experiences---snippets from all walks of life that have placed me in a position to enjoy what life has to offer---I make no apologies for making my life as enjoyable as I can. I sincerely want people to go beyond their fears---I have failed twice and finally succeeded. Its damned fun.

I'm hopeful that here some ideas may well fast track this situation.


So my plan now is to continue chipping away at building a capital base and when my studies are complete i will re-evaluate and set a new direction.


I don`t see many other ideas apart from working for a wage to establish a capital base.

To the quote above.
The story above taught me a great deal about the mindset above---which was of course mine at the time.It appears that it hasnt taught or indicated anything to anyone other than it was clever.

Any comments before I bore you all with what I learnt from it?


So why is it that we require decent capital when they didn't?

Because its far far easier,it took me a while to understand the much touted
"Money makes Money" adage,but it is very true.
Without it you cant gain leverage and without leverage you cant turbo charge return--on anything,business,property,trading,collectables--you name it.More on this topic later.


Nizar how old is YT ? Same age as prawn ?

Personally I think YT is a very clever cookie who may not know what it is that makes him so clever---other than his copious amounts of dedicated research into a company
Hint
Its the end of town he works in.---well in my view.
I think he and people who make a success of trading in the pennies are right out of the square many without knowing why---again in my view.

[MRC & Co]

Who is YT?

Interesting to hear some of the opinions and life experiences of some of the real experienced and astute traders/investors here, such as wayneL, Tech, number etc.

Keep it up guys. Im enjoying this thread!

My success so far has been to take a little of everybodies trading strategies and put the best together to form my own. So far, appears to be working nicely and without this site, I would be way behind the 8 ball! Great book recommendations and advice, and most importantly, the continued quote of DYOR!

Up about 25% so far this year in a time when the market has moved down. Thanks fellas!

[disarray]

there is also intellectual capital. opportunities begin to present themselves as your education base expands, the more skills you learn and concepts you grasp, the more areas you can enter and try and profit from.

it is especially important when you are working for a company because you are being financed to improve - if any new tasks come along you should get involved in it and learn what you can about it, then stick it on your resume. once you have a new skill/concept, take it for a ride somewhere interesting. playing games taught me pc's which let me learn windows which gave me an opportunity to learn unix which led me to linux and following this path has made me very employable while just riding the trend. currently i prefer to work for myself because i'm lazy, but whenever a door opens for me, i take it.

formal education is all well and good but i think best results come from chucking yourself into the deep end with a bunch of books and google. in my experience you don't need to be a guru in any particular field, and memorising all sorts of arcane stuff to pass exams for courses is not really the best "education". imo best education comes from an understanding of broad concepts (most easily obtained on the job) which makes it easier to study more in depth components if required.

so recently i was thinking that the world is modernising, its going to need a ton of resources, australia has heaps of them, so how could i get involved? that led to stocks, which led to this board, which led me to FX which will lead me elsewhere. i read what people here say about things that interest me and i take their ideas and add them to my thoughts - just being present on this message board provided the opportunity to make real money while showing me the doors to a dozen different vehicles (and even make me consider property).

with just a bit of discipline i reckon the system will give anyone the opportunity to make their own success.

[julius]

"no one ever got rich working a job; they only got time poor"

just a stepping stone

[MRC & Co]

Disarray, I completely agree with your statements.

I have been thinking the same things lately.

No need for me to say more.

[BBand]

For what its worth - here is my experience -----

If you want to build capital, I believe its possible to do for anyone who is willing to do what it takes.

Sometimes having an understanding wife helps :)

I do not understand people who say - they can't save money (probably have a job with a fancy title and little else) or they can't get a suitable job locally that pays well.

Well the job market is much the same as the stock market! your return to a large extent is determined by the effort you put in and the risk you are willing to accept.

Initially in my early years as a qualified engineer, I went from company to company - primarily just to gain experience in different aspects of the profession ie maintenance, sales, design, contruction and commissioning of new plant, primarily in the petro chem business. I travelled the length and breadth of the UK to get it

Once I had the experience, the steady 9 - 5 job became meaningless and I ventured into the world of contracting - being my own man and hiring my services (experience) for $$$$$

I was willing (with my wifes approval) to go where the money was - within reason.

I am retired now, but in my contracting days I was willing to accept risk, because I had belief in my capabilities. - and I was always employed, even during the time of the 3 day working week (in the UK when there was not much work around). In fact this was some of my clondyke years. I was working contract offshore in the North Sea working all hours god sent to help construct/commission oil platforms.

So the moral to my story is - do not be afraid to accept risk - nobody knows everything, you will never learn if you do not put yourself in the position to learn something new
Have a positive outlook in life - have a plan

Money is the natural end product

Peter :)

[pepperoni]

"There are those who work for money and those who have money work for them"
Great how do I get enough money so it works for me in a meaningful way!


Work for it.

Ignoring inheritance (you either have it or you dont) 99% of people get rich from personal income. There many people making 200k plus, or contracting for 1k 2k a day, or running a successful low risk business. With that, and some discipined saving, its easy to save 120k a year every year. Every 5 years is another 600k.

A couple of those and then you have the type of money that will work for you ... but working for it will still yield more than it working for you until you are a multimillionaire. But continuing to work when you dont need to is when you really start to get somewhere.

Conclusion ... work hard or smart but work as much as you can stomach. There are no short cuts or easy ways out barring extreme lotto like luck.

[julius]

You are deluded mr. pepperoni.

99% of people got 'rich' from personal income? Meaning salaries? BS in my opinion...

How many positions do you think there are paying $200k ? After how many years experience ? (1K/2K per day :rolleyes: )

Saving 120k with a gross income of 200k p.a? er :o?

[niknah]

Here're my ideas to get more capital...

Compound interest is really magical, save up lots "now". Not tomorrow, later, etc.

If you're in one of the higher tax brackets, take advantage of tax reductions, investment loans, health insurance, etc.

In the capital cities accommodation is probably a large cost, go for some shared accommodation or rent out a spare room to someone.

Don't buy the stuff yuppies buy, fancy cars, ipods, cafes, etc. it's a never ending chase for nothing. Cakes in cafes are a health hazard, they just sit there at near room temperature for days/weeks.


I've done alot of stupid things with my money, but I've gotten a good capital base mainly from not spending much, here's the list...
* Leaving my money in the bank for years earning plain old bank interest.
* Invested for 8yrs with a financial planner who invested in a master fund who invested into other funds. All three of them took a % commission!
* Not paying interest in advance when I received large lump sums/capital gains in a year.
* Recently moved moneys into the US to put into their stock market and the USD has since gone down even more & the US stock market has also gone down. On top of that I saw the US interest rate going down and I took out a margin loan to invest and lose even more!
:banghead:

[snabbu]

Time is everything.
look at your cash flow from your salaried job at an early age and prepare a budget. Reverse engineer the budget if necessary to make sure you have $100 per week spare, sustainable. If that means you have to live with your folks for a couple of years and cut back on booze so be it.

Because you are going to use this $100 for investment purposes there will be tax deductions probably in the 30 cents in the dollar bracket. So after you have set up your investment vehicle apply to the Tax department for a reduction in your weekly rate rather than wait till the end of the year.

We now have $130 per week to invest. This will service a 72,000 interest only loan at 9.25%. Historically if you invest this in blue chip growth stock over a diverse portfolio your return will be 7.8% per annum plus inflation. so that's going to be around and average of 10 to 11 percent.

Calculate the projected dividends for the stocks you have picked for the year, after taking into account franking credits you will have a number that you will have to pay tax on. Because the aim is to build a capital base use this dividend amount to fund margin lending to increase your stock holdings.

The object of the exercise is to break even on the share portfolio as far as income is concerned by converting it to greater capital growth.
You will probably find a gearing ratio of 60% achieves this.

You should now have around a $180,000 portfolio which is dividend neutral and after varying your tax down you have an ex wages commitment of $100 per week. In this calculation I have used stocks paying 6 percent divs and returning 5 % growth. If the growth is higher the gearing should be lower EG a stock paying 4 % divs and 7 percent growth would gear at 40 Percent.

Each year on the 180 K port folio I have used expect to average 5% growth
compounding. In five years this gives an excess over borrowings of $61,000
to which you have contributed $26,000 ( 100 per week for 5 years). If you continued for another two years you would add another 24K to your capital at a cost to you of $10.4 and so on each year the pace quickens.

I haven't spread sheeted the numbers to check them absolutely but they are there and there abouts.

Cheers

Gary

[cuttlefish]

Wayne,Numbers and Cuttlefish.

Why dont you give the thread a chance.There are young people who are out there on this board who are asking this question all the time perhaps even some not so young.

Of course money isnt the be all and end all.

But we live in Australia not Bangladesh we live in a capitalist society,we are encouraged to put as much as we can into Superannuation so WE can look after ourselves.Day in day out you see stories of pensioners who cannot buy food nor can they afford appropriate health care.I look at the MAJORITY of these people and I see people sitting waiting for death.Bloody morbid.If they had more financial freedom they would have most of those things you and I take for granted,better health,could afford to socialise,eat well,and have some comforts that they deserve at that age.Starting at 20 will give more opportunity to your retirement years than at 40---or NEVER

Give the thread a chance.

Its a genuine topic.

Surely you guys have some positive input particularly you Wayne,your self made arent you---whats the Wayne story,how would you do it all again?

Tech - I'm overseas at the moment and really should stop posting after a couple of bottles of wine like I did the other night - some of my comments probably don't make a lot of sense!

I'm about to hop on a plane so I'll post with some history and clarifying comments when I've got more time.

The simple summary and it is commonly acknowledged statistical fact is that THE MAJORITY of people in Australia do not like their job and if given a choice of going to work or not, would elect not to.

That is a very sad situation, and it is largely driven by the misconception that 'success' is the size of your bank balance and the type of car you drive and house you live in. The reality is that success is not that. I'm not advocating laziness, or short cuts, or easy paths - I don't believe that there are any. But I am advocating that people invest as much time in understanding what they enjoy, what gives them satisfaction, and pursuing a 'career'/life path that brings them closer to that.

If you enjoy playing or being associated with sports - then don't get a job sitting behind a desk. If you enjoy manual labour and working by yourself then go for that. If you love reading and analysing and spending time indoors then do that. When given the tools - and this thread is about helping people obtain them - achieving financial success is actually not that difficult - but achieving true success - contentment, spending every day in a way that is satisfying, being around people that are important to you and having constructive, positive relationships - is a far more complex thing to achieve and far more important.

[tech/a]

The simple summary and it is commonly acknowledged statistical fact is that THE MAJORITY of people in Australia do not like their job and if given a choice of going to work or not, would elect not to.

That is a very sad situation, and it is largely driven by the misconception that 'success' is the size of your bank balance and the type of car you drive and house you live in. The reality is that success is not that. I'm not advocating laziness, or short cuts, or easy paths - I don't believe that there are any. But I am advocating that people invest as much time in understanding what they enjoy, what gives them satisfaction, and pursuing a 'career'/life path that brings them closer to that.

If you enjoy playing or being associated with sports - then don't get a job sitting behind a desk. If you enjoy manual labour and working by yourself then go for that. If you love reading and analysing and spending time indoors then do that. When given the tools - and this thread is about helping people obtain them - achieving financial success is actually not that difficult - but achieving true success - contentment, spending every day in a way that is satisfying, being around people that are important to you and having constructive, positive relationships - is a far more complex thing to achieve and far more important.

Job satisfaction is extremely important not only for the employee but for the employer.
Your right---when you genuinely enjoy what you do and take pride in your work and results--the money does come.---infact as you say the money doesnt become the primary reason.

Back to George
Did anyone take anything from my story on George?

[theasxgorilla]

Back to George
Did anyone take anything from my story on George?

Yes...selling HOPE to enough people brings synergistic returns.

Sorry to be so curt. Ponder the thought.

We all know that lotto is so pathetically unfavourable in it's odds yet stacks of people still enter it on HOPE alone. It's not worth their investment, but they do it. I don't see anything fundamentally different between this story and lotto. So George sold tickets instead of buying tickets. Is that your moral? I can't really see another to be frank.

ASX.G

[nomore4s]

Yes...selling HOPE to enough people brings synergistic returns.

Sorry to be so curt. Ponder the thought.

We all know that lotto is so pathetically unfavourable in it's odds yet stacks of people still enter it on HOPE alone. It's not worth their investment, but they do it. I don't see anything fundamentally different between this story and lotto. So George sold tickets instead of buying tickets. Is that your moral? I can't really see another to be frank.

ASX.G

Was his name George Tattersall?:p::D

[BBand]

George - he would make a good trader

1 He had the courage to accept risk - trying something new with no track record - BUT he understood the psychology of the crowd, so it was a risk worth taking

2 He had a system that worked - and kept using it

3 His system had a high probability of success with relatively low risk( if he for some abscure reason had a losing transaction - he would have (should have) the financial backing to cover his loss.

4 His risk /loss ratio was pretty good

5 His venture had a positive expectancy

6 etc etc etc

Much the same as trading really

Peter :)

[nizar]

Back to George
Did anyone take anything from my story on George?

YES. I did.

Dont be the punter -- Be the casino.

SHIFT the odds in your favour.
George was carrying no risk, and he made 3x his salary every year for several years.

As for the others -- well, they were the punters.

[nizar]

I don't see anything fundamentally different between this story and lotto. So George sold tickets instead of buying tickets.

BIG difference actually.

The punter has to be lucky to win. And very lucky, just look at the odds.
George almost always wins. Look at his odds.
Much more favourable wouldn't you say.

[Wysiwyg]

My second job was in a machine shop working the 6-10pm shift.Knocked of my main job at 5 then straight to the 2nd.
On my first day a Wednesday---my supervisor asked do you have a dollar.
He had a plastic bag filling with dollars.
"What for?"
"There is a tradition here which has been going on for 10 yrs.Pay day is Friday and each Friday GEORGES wages are raffled off,his pay is $120/week (At the time my total earnings----all jobs---- were $45)."

"Who gets the $s I asked"
"GEORGE---its OK even management get involved--and yes they did!"

Some quick calcs had me realising that George pocketed around $350-400 each pay day and had been getting 3x his wage for 10 yrs.

I`m surprised that others contributed to his higher income unless it was for sentimental reasons (war, car accident victim, abused etc.) or the obligation factor where everyone including management are involved.You would be surprised what you will do, because everyone is doing it.;)

[BBand]

Hi Nizar,
Your comment "Don't be the punter be the casino"

I think George had better odds than that of a casino - but I understand what you mean

Also George was carrying risk - he could lose his wage for that week - but he understood the risk and was willing to accept it.

What I do not understand is why he had a monopoly - where was his competition (everybody usually wants to jump on board "a good thing").
I think he must have carried some "heavies" as insurance (an additional cost of doing business)

In trading language - a stop loss

[mort52]

To numbercruncher.

You hit the nail right on the head!!! Reduce your expenses, that is the one thing we all have control over. It doesn't mean going without fun or even entertainment, but perhaps --take lunch to work instead of buying it!!!
Not buying new clothes evry second week!! It does add up.

[tech/a]

Was his name George Tattersall?
No Dresmanis.

BBand
As this thread goes on I'm sure you'll be able to relate pretty well most aspects of business with Trading.But at the time I knew nothing about trading.

Nizar Yes true

ASX Yes true also but---Is that your moral? I can't really see another to be frank.--- no no morals here just observations.

Whether he identified these things or not doesnt matter

(1) The power of win win. He obviously won,Every punter won by having a small risk investment for a high win return no matter how slim the odds were---they saw VALUE.
Winners won they went home with twice their pay.

(2) He made 3 times his wage from being entrepreneurial.
He made this infinantly quicker than he did working for his base wage.

(3) He was the first and only one to do it---infact it was presented to newbies like us as a tradition! So he dominated his market.

(4) He captured near enough to 100% participation with low entry cost and a "percieved" high gain.

(5) He had a devoted network---everyone including management found Georges raffle as clever as many of you did here--no body copied--his originality protected his market share.

Which leads me to the continuation of my story.
By 20 I realised that my earning capacity was limited by time and that which my boss thought I was worth.
Working for myself was the best option-- in my mind.
Due to low capital and with a little help from family my choice of business was a Lawn Round.

Low entry,busy people,good demand,good earnings placed me at around $200/week clear when all my mates were on $80-125/week.

I found simple letter box drops along a street I was already cutting in gave me new clients often next door to old existing clients so time---my enemy--wasnt as much of an issue I could condense my round down often cutting a 3rd more than competition because I wasnt travelling as far.I could also then be more competative.

Business grew and grew and grew often working weekends if rain stuffed up a cut day.

Pretty soon I reached saturation.

Then a BLINDING light of the entrepreneurial kind.
Getting clients wasnt a problem servicing them was.The OBVIOUS was to employ more people.Which at times I did---hardly a blinding light moment!

But this was

Clients paid $5-$15 a cut.If I sold these clients on the open market they were valued at $15 in the Dollar 15 cuts worth nearly a years return.
So rather than employ someone to cut lawns I employed someone to go and sign up clients. Every cent I could muster went into letter box drops.

As a Lawnie I met others doing the same thing (Cutting lawns) I selected 2 who were switched on told them I had a guy signing up and delivering box drops and suggested that between us we could make up half a round each sell all our old equipment and sell a round every quarter.They paid 1/3rd wages and pretty soon we had 3 guys.
Soon I had 2 rounds going selling a 1/2 every quarter with each.
My own round was becoming so condensed I was doing 50% more turnover than the average---keeping those that were best payers and closest together. The others were doing the same.

One Zeek was more into the idea than the other and we pooled funds ($5000 each from each sale) and bought our first Industrial property.
The next stage of win win began here.

3 yrs in total.

Now after we had been doing this for 5 yrs Bill Viss who owned V.I.P car sales got onto the idea and V.I.P Lawn mowing was born.Bill was way ahead of us in marketing skill and at one time held the biggest franchise in Australia.His success was/is far beyond our wildest dreams but gee we had some fun and gave us the capital for stage 2
Jims Mowing and everything else that goes with it is an amazing success.

I still employ some of these ideas learnt then today in my own Construction Business---more later.
Just let me know when you get bored. I get passionate about this stuff (The way of thinking).
I'm hopeful that there maybe some taking things they recognise as worth while to employ in their lives.

Its simple and ANYONE can do it! Just ask Bill or Jim!

[robots]

hello,

thanks tech.

keep it going

thankyou

robots

[julius]

A+ tech/a, can't wait for more.

here's one I like;

The Million Dollar Homepage is a website conceived by Alex Tew, a then 21-year-old student from Cricklade, Wiltshire, England to help raise money for his university education.

The index page of the site consists of a 1000×1000 pixel grid (one million pixels), on which image-based links were sold for US $1 per pixel, in minimum ten by ten blocks. The purchasers of these pixel blocks provided tiny images to be displayed on them, a URL to which they were linked, and a slogan displayed when hovering the cursor over the link. The aim of the site was to sell all of the pixels in the image, thus generating one million dollars of income for the creator.

On January 1, 2006, the final 1,000 pixels left were put up for auction on eBay.[2] The auction closed on January 11 with a winning bid of $38,100.00, bringing the final tally to $1,037,100 USD in gross income.

http://www.milliondollarhomepage.com/

[BBand]

Hi Tech,

Good post.

"But at the time I knew nothing about trading"

So? I thought we were talking about George

I think I have misinterpreted the object of the thread - Sorry

I'll just wander back and pull more weeds from the front lawn

Another losing trade!!

Keep smiling
Peter :)

[chops_a_must]

Job satisfaction is extremely important not only for the employee but for the employer.
Your right---when you genuinely enjoy what you do and take pride in your work and results--the money does come.---infact as you say the money doesnt become the primary reason.


"Just as the horizon remains when things that surface within it and fall back into it again are constantly changing, so it is with this manifestedness of the world in its entirety..."

But this is perhaps the best thing I've read in a long time, from Cuttlefish:


But I am advocating that people invest as much time in understanding what they enjoy, what gives them satisfaction, and pursuing a 'career'/life path that brings them closer to that.

I always wonder why people want an early retirement, and work towards that. I couldn't dream of doing nothing. And I always ask people who want to retire early, "why the hell are you doing what you are doing now then?"

I have a similar story to tech, in that I no longer wanted to be a ****kicker. So a number of years ago, I decided to start TAFE training to be able to work for myself, while still at uni. The goal being to pay my way through uni, so I can spend as long as I want there. I wouldn't have been able to do this extra training however, without centrelink.

I now work weird hours and go without appropriate sleep perhaps. But, the point being I love what I do, so I don't really think about the drawbacks. And I'll work more if I can. If you enjoy what you do, you'll work harder and longer without noticing, and the money will come as a side affect of that.

There are a couple of other things I am involved in now. One I wont mention for bragging, but the other is a poster printing operation to service said business. ;) I scalp concert tickets occassionally now as well.

I'm luckier than most, in that I enjoy a lot of simple things, and don't need luxuries. As long as I have a book I am happy. I listen to a hell of a lot of music, but I don't even have an ipod. I can't even remember the last luxury I bought.

Find something you love, and the rest will be easy.

My POV is that if you are working towards something completely different to what you are doing now, there is something wrong.

I only have a few goals in life. Namely, to leave enough money for a yearly scholarship at a University. Would be great if I could get to that well before I die. Make sure the brother is well off if I become well off. To have my then thousands of books donated to a library on my death. And to own and fly a P-51. That wont cut me up if I don't get there... but it'd be sweet. :D

But how many people have thought through these things? How many are just going through the motions because it's what they think they should be doing? We aren't robots, we are humans. People should live like it.

Cheers.

[tech/a]

Hi Tech,



"But at the time I knew nothing about trading"

So? I thought we were talking about George



Keep smiling
Peter :)

Meaning what I learnt from George's Wage raffle I couldnt relate to trading.
I wasnt really talking about George more about the way his brilliance worked and how simple things like this can be implimented by us all.Even on a small scale can have a huge result.

Just se Julius's post above.
Something out of fresh air!

This guy
http://www.graffitiremovers.biz/
John Rose owns an apartment next to mine in Moana Beach here.
What an amazing story his is.Talk about power of the internet.
In 2000 he developed a single formula for removing graffiti---he used to have a van and remove it (Graffiti) in Adelade.Typical small business.

He now sells underlicience his remover to most of the world.His typical day is opening his order book in the morning to see what was sold in the US and UK and ending his day doing the same in Aust and NZ.He makes around $5/litre sold anywhere in the world.Needless to say his company is a multi million enterprise run basically from a computer. A more down to earth guy you wont meet.

Chops
Man retirement scares the hell out of me.
I'm certain life is prolonged if your actively involved in what you love---for some that may well be retirement!

To me though if I can do what I want when I want with who ever I choose and if thats working at whatever I'm interested in then----I'm actively and perminently retired from the "Rat Race".

[BBand]

Since retiring, I've had time to reflect ------

Does having a Uni Degree restrict your entrepeneurial opportunities and making real money?
i.e. having a degree, and the time,effort and study involved in obtaining it, more or less sets your destiny.

Having good qualifications along with experience more or less guarantees you an above average income.

However, it also sets tram lines within which we operate.

Would you have the foresight to give up your well paid job to take on say Techs mowing round? - you would have to be street smart to take that on.

Probably 99% of professional people will never make real money.

As I said earlier, I have always earned "good" money - but was always restricted to top dollar due to the going rate for the job xxx$/time

Also we have had a good life style and I did not care too much about saving for a rainy day as I knew I could always make more.

When I was working, I did a bit of trading on the side.
Pity I did not make trading my main source of income and retire to some exotic location and pass my time of day hitting the buy/sell buttons

Its not that hard to take money consistently from the market - its keeping it thats the problem :cool:

Trade what you see - not what you want!!

We still have a comfortable lifestyle and if I had my time again, I would still live life to the max. and spend as we go

I would never have been super rich - whats the point?

I earned more than my parents, and my kids from what I see are earning at least as much as I did - thats life!

Peter :) :)

[tech/a]

In the examples presented above the common denominator/s in placing Joe Average in a position to get to first base (create a decient capital base) in fact to set a foundation for better than average financial security is.

Entrepreneurship.
Innovation.
Creativity.
Control of Their our/own DESTINY.

There are those who will work for money all their life and those who will find ways for money to work for them.

Anyone can be average most of the population are eminently qualified.

[tech/a]

First base hints while developing the above as I think of them,sorry a bit disjointed.

(1) Reduce and avoid debt.
(2) Do what you love--even if thats study.
(3) Work with Passion.
(4) Choose who you work for with more care than they use to choose you.
(5) Negotiate reward for over achievement.
(6) Dont be afraid of taking quantified risk--particularly early in your career---you have nothing to lose literally.
(7) Learn and APPLY the Pereto Principal in all you do.--(Google it)
(8) Learn all you can about RISK and how to mitigate it in all you do.
(9) Save---salary sacrifice--you'll be suprised what you can live on ---ask any Uni Student!
(10) Learn balance in life there will come a time when you will be able to apply it!
(11) Many will recognise opportunity,Few will know what to do with it,and hardly any will take advantage of it.
(12) If your told it cant be done---he who is telling you probably cant!
(13) You get one shot at this life---dont stuff it up.--dare to be different.
(14) Listen to everyones story---you'll be suprised what you learn.
(15) Seek Mentors and become a friend.
(16) Minimise the control others have on your Financial outcomes.
(17) If it takes more than 30 min to devise then its not worth further investigation---KISS.

Enjoy.

[wayneL]

The Million Dollar Homepage is a website conceived by Alex Tew, a then 21-year-old student from Cricklade, Wiltshire, England to help raise money for his university education.

The index page of the site consists of a 1000×1000 pixel grid (one million pixels), on which image-based links were sold for US $1 per pixel, in minimum ten by ten blocks. The purchasers of these pixel blocks provided tiny images to be displayed on them, a URL to which they were linked, and a slogan displayed when hovering the cursor over the link. The aim of the site was to sell all of the pixels in the image, thus generating one million dollars of income for the creator.

On January 1, 2006, the final 1,000 pixels left were put up for auction on eBay.[2] The auction closed on January 11 with a winning bid of $38,100.00, bringing the final tally to $1,037,100 USD in gross income.

http://www.milliondollarhomepage.com/

That's what you call out of the box, in the box thinking. $1,000,000 for a box of ads! Fantastic.

[trinity]

(1) Reduce and avoid debt.
(2) Do what you love--even if thats study.
(3) Work with Passion.
(4) Choose who you work for with more care than they use to choose you.
(5) Negotiate reward for over achievement.
(6) Dont be afraid of taking quantified risk--particularly early in your career---you have nothing to lose literally.
(7) Learn and APPLY the Pereto Principal in all you do.--(Google it)
(8) Learn all you can about RISK and how to mitigate it in all you do.
(9) Save---salary sacrifice--you'll be suprised what you can live on ---ask any Uni Student!
(10) Learn balance in life there will come a time when you will be able to apply it!
(11) Many will recognise opportunity,Few will know what to do with it,and hardly any will take advantage of it.
(12) If your told it cant be done---he who is telling you probably cant!
(13) You get one shot at this life---dont stuff it up.--dare to be different.
(14) Listen to everyones story---you'll be suprised what you learn.
(15) Seek Mentors and become a friend.
(16) Minimise the control others have on your Financial outcomes.
(17) If it takes more than 30 min to devise then its not worth further investigation---KISS.

tech/a, I enjoy the wisdom that you guys impart. Thank you.

I'd like to add one to your list, which is in addition to point#9. Buy only what you NEED, not what you WANT. Learn how to distinguish between a WANT and a NEED.

:cool:

[mikat]

to make money in the stock market requires what min capital ?
everyone has an idea , and theer are 100,000' s of investors in the market, but of the full time traders, who rely on the income to live off, what capital is required.

this would be the first step in working out how to get past first base.

you have to set a goal. think of the analogy of throwing a ball. you are holding a ball and want to throw it over a fence some distance away.
do you A) close your eyes, spin around and just throw in any direction
B) take aim, work out how hard you need to throw and let loose with all youve got in the right direction.

success is all about taking option B.
the trouble is though that sometimes after taking B, and hitting your target, ie you get over the fence. that you also lose the ball, and have to start over again with a new ball.

money is extremely easy to get and make. money is very hard to hold onto.
ask Eddie Groves. he has gone from being worth approx $200m to worth only a few $m in a matter of weeks.
if i had every dollar that ive lost in bad decisions, i wouldnt have to work again, but that also makes you more determined.

so how do you get the ball? unless you are lucky enough to win, inherit, find, or steal the capital, you have to work . set down a savings plan and either A) be conservative, save for many years and use that capital later in life, or B) save a little at a time, and leverage that money in the market to get a boost.

[Timmy]

I thought this might be an interesting thread ... but wow, the stories of lateral thinking & execution/application, the common and uncommon sense - this thread is getting better and better! Really great stuff thank-you everyone.

[MRC & Co]

Good list tech.

But what does 17 mean? If what takes 30 minutes to devise?

[MRC & Co]

That's what you call out of the box, in the box thinking. $1,000,000 for a box of ads! Fantastic.

ha ha ha, I reckon!

Incredible! Thats most definately thinking out of the box!

[nioka]

The concentration of thought with the contributors to this thread seems to be "how to get there in a hurry". That is not the name of the game. For the young there is plenty of time. If you are young you DO NOT NEED a great capital base. You just need patience. All you need for a capital base is $1000.
The hardest $1000 you will ever have to save is the first one. Save it, invest it wisely without too much risk and add 10% of your income each month to the pool and you will make all you will ever need in this short life time. Why hurry and risk spoiling the party.

[mikat]

your making the assumption that the person investing wants to work a job their whole life to fund a retirement. if your goal is to quit your job working for somebody else, and live off the stock market , then you need a large base capital to work with. i would suggest approx $50,000. its not about getting there in a hurry, its about having enough capital to sustain a healthy income.


The concentration of thought with the contributors to this thread seems to be "how to get there in a hurry". That is not the name of the game. For the young there is plenty of time. If you are young you DO NOT NEED a great capital base. You just need patience. All you need for a capital base is $1000.
The hardest $1000 you will ever have to save is the first one. Save it, invest it wisely without too much risk and add 10% of your income each month to the pool and you will make all you will ever need in this short life time. Why hurry and risk spoiling the party.

[nioka]

your making the assumption that the person investing wants to work a job their whole life to fund a retirement. if your goal is to quit your job working for somebody else, and live off the stock market , then you need a large base capital to work with. i would suggest approx $50,000. its not about getting there in a hurry, its about having enough capital to sustain a healthy income.
The simple answer to that is to find a job you like to do. Surely there is one out there somewhere. I have a fishing mate that won't retire because he likes his job too much and I reckon a bad day's fishing is better that a good day at work.

[freddy2]

your making the assumption that the person investing wants to work a job their whole life to fund a retirement. if your goal is to quit your job working for somebody else, and live off the stock market , then you need a large base capital to work with. i would suggest approx $50,000. its not about getting there in a hurry, its about having enough capital to sustain a healthy income.

You are off by a factor of 10. To live off the stock market you need about $500000. With only $50000 you would need to consistantly make 8% per month to have an average standard of living. If this was possible, there would be 1000's of people with more capital who would be making billions and this clearly isn't happening. 8% per month compounded for 10 years will turn $1 into $10000.

[Trembling Hand]

You are off by a factor of 10. To live off the stock market you need about $500000. With only $50000 you would need to consistantly make 8% per month to have an average standard of living. If this was possible, there would be 1000's of people with more capital who would be making billions and this clearly isn't happening. 8% per month compounded for 10 years will turn $1 into $10000.

If you are an investor sure but if you are a day trader especially a futures trader you need nothing like that amount. $50,000 for an experienced trader would be fine. Only catch is to get to be an experienced trader you are probably going to blow a $50,000 account a couple of times over :o

[freddy2]

If you are an investor sure but if you are a day trader especially a futures trader you need nothing like that amount. $50,000 for an experienced trader would be fine. Only catch is to get to be an experienced trader you are probably going to blow a $50,000 account a couple of times over :o

How actively you trade doesn't change the math, you are still saying it is possible to consistantly make 8% per month.

[Wysiwyg]

I like the fish connection.Some are allowed to slip through the net while most of us are targeted for consumption.Are your finances monitored and regulated?

I know...cause i`ve been targeted and no matter where i turn, each escape route is blocked.:mad:

[Trembling Hand]

How actively you trade doesn't change the math, you are still saying it is possible to consistantly make 8% per month.

What I am saying is many successful traders take consistent $$ out of the market by trading a couple of contracts at a time. That requires no more than $15,000 margin. This argument that people always bring up about compounding returns at a certain amount per month is rubbish. My aim is not to compound $50,000 at 5% to 10% per month for 10 years, My aim is to take money out of the market every day trading a couple of contracts that is how I pay the bills.

[nizar]

You are off by a factor of 10. To live off the stock market you need about $500000. With only $50000 you would need to consistantly make 8% per month to have an average standard of living. If this was possible, there would be 1000's of people with more capital who would be making billions and this clearly isn't happening. 8% per month compounded for 10 years will turn $1 into $10000.

What is possible to the 5% is much different to what is possible for the masses.

Trade frequency actually makes a huge difference, and can turn a mediocre expectancy system into a money making machine.

[MRC & Co]

Out of interest Nizar (BTW, I thought I noticed on your blogs that some prices of your stocks were actually below the stop, why is this?), wouldnt trade frequency really just help limit risk? A form of diversification or hedging if you will.

Further, leverage increased risk, for example, if you had 15k + leverage, if you were stopped out on a few consecutive trades would end up with no capital base? Any % based stop is sure to be a far larger % of your capital base. So you had better make profits quick! I mean one futures position held overnight could mean a margin call. Not saying leverage is a bad thing, as I am planning on using it in the future, but it is of course, far more risky and can lead you in one direction a lot quicker!

Compounding rates of return are a powerful, poweful thing! Good on you for trading full-time though TH, I have been doing it also now for a couple months and will continue for AT LEAST a couple more!

[wayneL]

What I am saying is many successful traders take consistent $$ out of the market by trading a couple of contracts at a time. That requires no more than $15,000 margin. This argument that people always bring up about compounding returns at a certain amount per month is rubbish. My aim is not to compound $50,000 at 5% to 10% per month for 10 years, My aim is to take money out of the market every day trading a couple of contracts that is how I pay the bills.
'zactly.

And those two contracts have a face value of a quarter of a million smackeroos. The notional return, lets say if you make 50k (to pluck a number out of the air), becomes 25% per year. Nothing out of the ordinary.

But because you're trading on margin, you don't need the $250k.

Simple as that really.

[tech/a]

Good list tech.

But what does 17 mean? If what takes 30 minutes to devise?

If you have an idea,business,trading,property,Around the house,whatever.
If it takes more than 30 mins of thought to crystalize it into a format then its probably to complex--Refer then to (7) the 80/20 Rule.
You'll spend 80% of your time on things that return 20% of Enjoyment/Profit/Work Result/Cost Savings/Time management.
Look to work on the 20% which return the 80%---time flies ask any 80 yr old!

You know some of the greatest ideas have been written on the back of Envelopes,Business cards and drink coasters!

[nizar]

Out of interest Nizar (BTW, I thought I noticed on your blogs that some prices of your stocks were actually below the stop, why is this?), wouldnt trade frequency really just help limit risk? A form of diversification or hedging if you will.

Further, leverage increased risk, for example, if you had 15k + leverage, if you were stopped out on a few consecutive trades would end up with no capital base? Any % based stop is sure to be a far larger % of your capital base. So you had better make profits quick! I mean one futures position held overnight could mean a margin call. Not saying leverage is a bad thing, as I am planning on using it in the future, but it is of course, far more risky and can lead you in one direction a lot quicker!

Compounding rates of return are a powerful, poweful thing! Good on you for trading full-time though TH, I have been doing it also now for a couple months and will continue for AT LEAST a couple more!

I have little idea about how leverage works -- Ive never used it -- In anything.

Regarding your comments about my blog, it is due to slippage.
It is a weekly system. So if the price I actually exit (almost always on the monday) at is lower than my stop level (which would have been breached on the friday), then I will lose more than I had intended to.

This would have been taken into account during testing.
That said -- Ive tested the system with and without slippage and it doesn't make a whole lot of difference. That's because half the time the slippage was positive.

Sorry for the off-topic. Any other questions please PM me.

[2BAD4U]

Best piece of advice given to me was to remember that with time, it (money) gets cheaper - time value of money.

I also don't think enough people are prepared to make sacrifices. Go without the booze, smokes, new car, big screen tv, parties, etc, etc, etc. I maxed myself out on my first house, then lost my job the day after the pad went down. Didn't know how to make ends meet and for the first 4 or 5 years it was a battle but we hung in there. By the time we sold the house we were making double payments and a healthy profit. Kept applying this philosophy, but reducing the level of risk each time.

Sacrifices + leverage + time = a bit of pain now for a lot of gain later.

[MRC & Co]

'zactly.

And those two contracts have a face value of a quarter of a million smackeroos. The notional return, lets say if you make 50k (to pluck a number out of the air), becomes 25% per year. Nothing out of the ordinary.

But because you're trading on margin, you don't need the $250k.

Simple as that really.

And if you are stopped out a few times in a row?

You would loose a lot more than if you were without leverage? I have 100k and am looking to leverage, so would appreciate any advice.

Cheers

[tech/a]

And if you are stopped out a few times in a row?

You would loose a lot more than if you were without leverage? I have 100k and am looking to leverage, so would appreciate any advice.

Cheers

No no
Its a contract which controls X amount.
Not the same.
A 1 pip move will have a value attached depending on what future your trading.

[trishan9390]

This topic has certainly provided much food for thought and inspiration. I can relate to a lot that has been said. Firstly a bit about myself and my story (which will become relevant to tech/a's question about capital): I am 18 y/old, studying a Commerce/Law degree and I have always been interested in the stock market.

I was first introduced to the ASX in grade 6, also my first year living in Australia. At the time we had to pick a share at random and follow its progress over the year. I then had exposure to ASX in high school as we played the sharemarket game.

I think that while I was playing the sharemarket game I got the same thrill I get today when you see a position going your way. The sharemarket is, whether you lose or make money, a lot of fun! At the time there was no method in the way I picked stocks. I subcribed to trials of stock reports (something which I would later regret) and ended up being regularly in the top 10 ranked students.

So once I got to VCE or year 11 and 12, I didn't pay much attention and focused on my studies and achieved quite well allowing me to study a degree that is in high demand in the business world. It was only after completing VCE that I would enter the stock market with "real" money.

I decided to subscribe to one of the stock reports I trialled while in high school, parting from a large amount of money for a yearly subscription. I was young and ignorant and silly and I believed the sales pitch that I would be earning a ROI that far beats interest with little or no risk. This was far from the truth as you will see in the accompanying chart.

So where did I get my starting capital? When I was younger I used to be quite the entrepreneurial type and the internet was the only place age discrimination could not affect how much money you made. I started my own search engine, made websites and earned revenue from advertisers, bought and sold domains, you name it... I had earnt 5k and now I was ready to invest.

So when I turned 18 I opened an account with a CFD provider having done much research. I then followed the trading suggestions provided in the report and as you can see from the graph, after a few good trades, things went downhill. My capital was being eaten up.

So after losing over 10% of my capital, I paused (At point 1 on the graph). I took a few weeks to research more and started finding out about technical analysis, which brought me to this site. I decided to go it myself, and occasionally entered promising suggestions from the report that turned out to be a dud (one example: point 2 on graph)

So I am constantly trying to gain more knowledge on tech analysis and fundamentals. Six months after I started trading I think I am much more wiser and as you can see by the graph, I am starting to make money consistently, which is encouraging. I am one or two trades away from breakeven.

So my motivation for trading and looking for good investments while I am still young?

Someone once said, “For all sad words of tongue and pen, The saddest are these, 'It might have been'.” I don't want to say to myself 10 yrs down the track sitting in a crappy job I should have invested more while I was young so that I could do what I want now. I want to be sufficiently well off so that I do not have to be at a job I don't want to be. I want the luxury of being able to do what I want and thats worth its weight in gold.

Also RE:Happiness/Money arguemnt - for me trading is a hobby. I enjoy the process of learning more and the thrills and physcology of the market. It also teaches good life lessons like being disciplined - which has proven handy in games like poker where I have seen a marked improvement in the game. It's just good fun!

[freddy2]

'zactly.

And those two contracts have a face value of a quarter of a million smackeroos. The notional return, lets say if you make 50k (to pluck a number out of the air), becomes 25% per year. Nothing out of the ordinary.

But because you're trading on margin, you don't need the $250k.

Simple as that really.

25% per year out of the ordinary? Consider this is what Warren Buffett has done to become the richest man on earth I would consider this far from ordinary. And to say you can make a consistant return above 1% per month is ridiculous no matter how frequently you trade.

[wayneL]

And if you are stopped out a few times in a row?

You would loose a lot more than if you were without leverage? I have 100k and am looking to leverage, so would appreciate any advice.

Cheers

Risk control still applies. So if using fixed fractional position sizing, the same still applies *to you* actual capital.

EOD trading you could easily blow up an account with that sort leverage. However when day trading, you can stay well inside your risk parameters.

[wayneL]

25% per year out of the ordinary? Consider this is what Warren Buffett has done to become the richest man on earth I would consider this far from ordinary. And to say you can make a consistant return above 1% per month is ridiculous no matter how frequently you trade.
OK, you're right and we're wrong.

Happy investing. ;)

[mikat]

so a question then to the posters to this forum, who actually trade for a living.

how much capital do you use, and how much return do you make.?

its easy to hypothesise on how much you need and make,if your not doing it to pay the bills, but merely as a hobby, but some real traders input would certainly cement the arguments

[lesm]

25% per year out of the ordinary? Consider this is what Warren Buffett has done to become the richest man on earth I would consider this far from ordinary. And to say you can make a consistant return above 1% per month is ridiculous no matter how frequently you trade.

So, what do you think is a realistic and consistently achievable return?

We await your eminent words of wisdom. :rolleyes:

[ceasar73]

Nice thread tech/a.

Lets face it when starting out you need to be super tight and avoid BIG debt. I bet my left one that guys like Buffet,Gates,Lowy,Murdoch etc were/are all super tight arses :)

Its not what you make, its what you do with it!:2twocents

Q - How come its always there poor blokes that say 'Money wont make you happy..Money isnt everything etc etc'???

ceasar73

[wayneL]

Q - How come its always there poor blokes that say 'Money wont make you happy..Money isnt everything etc etc'???

Ahem! You may find that not to be quite correct. ;)

However, in the context of our society, a certain amount of money IS required to be happy. The amount is not great however and will vary from person to person. Any wealth above this amount will not contribute to happiness... and if a person is not happy with this modest level, there is no hope of being happy with more.

Epicurus postulated upon this a few years ago.

[MRC & Co]

Tech/a, you are talking about 1 "pip", as in one point? Each future having a $$ value per point. I understand futures/options are the right to control etc

EOD trading, as in end of day? i.e. day trading?

[wayneL]

Pip

What does it Mean? The smallest price change that a given exchange rate can make. Since most major currency pairs are priced to four decimal places, the smallest change is that of the last decimal point - for most pairs this is the equivalent of 1/100th of one percent, or one basis point.

What tech means is "tick", which is the smallest price change a future can make.

A point is a whole number. eg ==>> SP500 eminis move in 0.25 point increments. So 0.25 points = 1 tick

1 point = $50
1 tick = $12.50

Of course 1 point may equal 1 tick, as in the case of Dow eminis.

[mikat]

see id have to disagree with you there.
i was happier before my first wife got $1m in divorce settlement. thats not to say i was happy with her, but until i had to part with the cash i was ok.
i was happier before a bad business deal cost me another $1m.
i find that i am happiest when i can write a cheque for any amount without wondering if theres money in the bank to cover it.
being rich doesnt make you happy... thats not really correct. being rich lets you do things others cant, and that generally will make anyone happy.
ive been up , down ,up down etc, and i was certainly happiest when up...


Ahem! You may find that not to be quite correct. ;)

However, in the context of our society, a certain amount of money IS required to be happy. The amount is not great however and will vary from person to person. Any wealth above this amount will not contribute to happiness... and if a person is not happy with this modest level, there is no hope of being happy with more.

Epicurus postulated upon this a few years ago.

[MRC & Co]

What tech means is "tick", which is the smallest price change a future can make.

A point is a whole number. eg ==>> SP500 eminis move in 0.25 point increments. So 0.25 points = 1 tick

1 point = $50
1 tick = $12.50

Of course 1 point may equal 1 tick, as in the case of Dow eminis.

Thanks Wayne. I have read up on options, now moving into futures.

What is EOD?

If leveraged then through futures, you would have to place VERY tight stops (more prone to whipsaws) to preserve your capital base yeh?

Otherwise, even trading one contract, a move against you by 10 points would hit you $500. If your base was 10k, that is 5% in one hit! Hence what you mean by "using fixed fractional position sizing, the same still applies *to your* actual capital"?

Cheers

[ceasar73]

see id have to disagree with you there.
i was happier before my first wife got $1m in divorce settlement. thats not to say i was happy with her, but until i had to part with the cash i was ok.
i was happier before a bad business deal cost me another $1m.
i find that i am happiest when i can write a cheque for any amount without wondering if theres money in the bank to cover it.
being rich doesnt make you happy... thats not really correct. being rich lets you do things others cant, and that generally will make anyone happy.
ive been up , down ,up down etc, and i was certainly happiest when up...

spot on!

ceasar73

[wayneL]

see id have to disagree with you there.
i was happier before my first wife got $1m in divorce settlement. thats not to say i was happy with her, but until i had to part with the cash i was ok.
i was happier before a bad business deal cost me another $1m.
i find that i am happiest when i can write a cheque for any amount without wondering if theres money in the bank to cover it.
being rich doesnt make you happy... thats not really correct. being rich lets you do things others cant, and that generally will make anyone happy.
ive been up , down ,up down etc, and i was certainly happiest when up...
I would look deeper than the purely monetary aspects of that. I have also been up, down, sideways etc. and the cash balance of my bank account was fairly irrelevant to my mental state. The correlation was with something else. But that's getting a long ways off topic, perhaps for another thread?

[wayneL]

Thanks Wayne. I have read up on options, now moving into futures.

What is EOD?

If leveraged then through futures, you would have to place VERY tight stops (more prone to whipsaws) to preserve your capital base yeh?

Otherwise, even trading one contract, a move against you by 10 points would hit you $500. If your base was 10k, that is 5% in one hit! Hence what you mean by "using fixed fractional position sizing, the same still applies *to your* actual capital"?

Cheers

If trading intraday, I would call 10 points a gargantuan stop. But if trading EOD (end of the day - trading daily bars), 10 points would be rather too tight.

Thus, if trading daily bars, you would need a helluva lot more capital than 10k, and you would need a much wider stop also.

Intraday however, a 2 to 5 point stop would be entirely appropriate. Capital required for both margin and cash reserves can be calculated from there.

[MRC & Co]

If trading intraday, I would call 10 points a gargantuan stop. But if trading EOD (end of the day - trading daily bars), 10 points would be rather too tight.

Thus, if trading daily bars, you would need a helluva lot more capital than 10k, and you would need a much wider stop also.

Intraday however, a 2 to 5 point stop would be entirely appropriate. Capital required for both margin and cash reserves can be calculated from there.

Yes, true. When you trade intraday, doesnt the trade only last a few minutes or perhaps shorter?

EOD, trading daily bars, is the same as position trading then yeh? (and dont you SH*T yourself overnight encase a gap opens through your stop)?

Trying to get used to the terminology for when I finally do make a leap of faith into futures.

You trade through IB yourself yeh?

[chops_a_must]

25% per year out of the ordinary? Consider this is what Warren Buffett has done to become the richest man on earth I would consider this far from ordinary. And to say you can make a consistant return above 1% per month is ridiculous no matter how frequently you trade.

Iuno.

The dad tells me he averages 25% return over the long term. Granted, given his work he gets a lot of information that investors, and stuff probably even company workers don't get, analysing different systems etc. which has led to him buying a whole stack of OXR sub 30c for instance.

But even with that, he seems to be incredibly good intuitively with timing buys and sells. So it can be done. For sure.

I also don't understand why active traders aren't deemed "successful" if they can't live off their trading profits. There are many of us who are active traders, that don't make a living off it, but are still profitable. I don't consider myself in the 5% of traders, but I wouldn't say I'm not successful in it either.

And personally, half of my profits are now going towards building a base for long termers, and the other half for the short term trading. But that's a reflection of my age... if I was approaching 30 and getting ready to die, it might be different. :p:

But for young people like myself, who aren't going to have access to a massive capital base (unless you're one of those parent made children), I'd actually recommend shorter term methiods such as swing trading, if you can make it work.

Low potential drawdowns, less risk of ruin. Rather than a buy and hold strategy, which can bankrupt people on margin. Speaking of which, there haven't been many buy and holders around recently... :rolleyes:

So yeah, shorter term trading may also be a good way to build a capital base (if you can work it), to build up to a position where you can adopt trend trading or buy and holding where the risk of drawdown and ruin is much higher, and where you need more capital to get the same returns.

[wayneL]

Yes, true. When you trade intraday, doesnt the trade only last a few minutes or perhaps shorter?
There's different approaches. Some scalp a few points, as per Tayser's forex thread. I like to go for bigger intraday swings and try to pick up the equivalent of 5 - 20 points at a time. There is everything in between as well.

EOD, trading daily bars, is the same as position trading then yeh? (and dont you SH*T yourself overnight encase a gap opens through your stop)?Yes & err... yes and no. Most markets are electronic and 24 hours now and you can have an out of hours stop. Position sizing is of course important when trading daily bars. Keep an eye n the underlying value and volatility of what you're trading.


Trying to get used to the terminology for when I finally do make a leap of faith into futures.

You trade through IB yourself yeh?
Yes IB... also have a phone up broker for backup and if I want to trade through the pits. (many options are still pit traded and livestock is a bit freakin thin on globex)

[MRC & Co]

Thanks Wayne.

Chops, I have also noticed the buy and holders disappearing ;) Where did they go :sly:

But I use about 25% of my portfolio for long-termers, waiting for their true value to be realised :eek:. Selling covered call options at least to generate some income out of them once I get that part active in IB.

15% is with the number one European hedge fund (according to the latest awards).

60% for position trading. Dont have the skills for intraday trading yet.

At least thats the way it is at the moment.

[resbequoi]

That's what you call out of the box, in the box thinking. $1,000,000 for a box of ads! Fantastic.


tech/a, I enjoy the wisdom that you guys impart. Thank you.

I'd like to add one to your list, which is in addition to point#9. Buy only what you NEED, not what you WANT. Learn how to distinguish between a WANT and a NEED.

:cool:

All good comments and I wholeheartedly agree.

Just wanting to my own experience of building capital. I work for my money and am very conservative - so I put that money in super, cash at the moment and property. That money represents blood and sweat and so am very conservative with it.

I play with shares but would rather use money I get from passive income to purchase them.

So for the capital base of my next round of shares, I am going to up the ante on my rental income by adding to it some income from my new website/hobby as an infopreneur. Only four months old, 25 pages in it and continuing to add content, traffic to the site is growing (now approx 30 visitors a day average), and when I'm ready will start earning money by putting google adsense ads on it, and having affiliate links to other money-making websites.
It is not get-rich-quick, I still have to work hard at writing good content, and traffic takes time to build, but when I'm done I just have to sit back and let the billions of people out there help me earn money.
The thing is that I get to write about something that I love and know a lot about, and if it earns enough for me to quit my day job, then whoohoo i cant wait. But for now my goal is for it to provide some nice change.

So this might be a strategy for people who are new to the sharemarket and want to minimise the risk to their hard-earned.

There are no ads on my website at the moment www.fond-farewell.com (http://www.fond-farewell.com), so I'm not trying to get anyone to click on them! For any would-be-infopreneurs out there it is an example of writing good free content to get visitors to the site. And if your site is a niche site, then it has a hope in hell of actually getting traffic in the massive world wide web. I will let you know how it all goes.

This might not be for everyone, but its another way of getting capital.

[alwaysLearning]

Non sequitur.

The point was not that one should stay poor, but that there may be a price for becoming rich and that a balance of effort between training the mind to be happy, and chasing money should be struck.

Let's leave the cliche's well and truly out of it please.

but what if you want money not only for yourself, but also so that you can help others. If I was good enough to get wealthy, I could give money to others who need it. Man, I'd feel so good if I had enough funds to help somone else in the community who really needed it. Like paying for a sick person's operation or something that the parents couldn't afford but then step in and pay for it. (If i had enough wealth to do that).

At the end of the day, how much is enough anyway?

I guess it depends on ones motivation for gettting into the sharemarket if you do it for a living. I'm not trading but I sure as heck am enjoying learning about it. If I was trading for a living I'd be happy analysing graphs and charts etc. And if I somehow was able to train myself up to gain big wealth, then I would really like to help people out. (a new car wouldn't hurt me either though ;))

edit: and yes there is a price that one would have to pay to lean how to be a good trader. Even if it is balance, I think it would be worth it in the long run. (as long as that lack of balance doesn't go on for too long)

[alwaysLearning]

I forgot to add my idea for getting that capital base.

I will be saving as much as I can from work each year. But while I save up, I will be studying the market very hard and learning a lot about the fundementals including, psychology for trading, technical analysis, and building a solid trading plan. Furthermore this time also allows me to systematically test various forms of technical analysis and try to be profitable from a 'paper trading' perspective.

Reading this forum is quickly telling me that rushing into trading is up there with the dummest mistakes a person can make. I wouldn't be too quick to jump in if you haven't learnt enough about the fundementals in order to be profitable. (I'm a parrot now, haha, but I'm reading lots of books which say the same thing too + it makes logical sense).

[wayneL]

but what if you want money not only for yourself, but also so that you can help others. If I was good enough to get wealthy, I could give money to others who need it. Man, I'd feel so good if I had enough funds to help somone else in the community who really needed it. Like paying for a sick person's operation or something that the parents couldn't afford but then step in and pay for it. (If i had enough wealth to do that).

At the end of the day, how much is enough anyway?

I guess it depends on ones motivation for gettting into the sharemarket if you do it for a living. I'm not trading but I sure as heck am enjoying learning about it. If I was trading for a living I'd be happy analysing graphs and charts etc. And if I somehow was able to train myself up to gain big wealth, then I would really like to help people out. (a new car wouldn't hurt me either though ;))

edit: and yes there is a price that one would have to pay to lean how to be a good trader. Even if it is balance, I think it would be worth it in the long run. (as long as that lack of balance doesn't go on for too long)

You've reinforced my point. If you can be rich AND be happy (by giving to/helping others {one of the secrets to happiness IMO}) that's fantastic. I submit that if you can remain generous and happy, while making money, you have indeed struck a the balance I mentioned.

But my observation is that not many do that... very few in fact.

Money is good, mental health (in terms of managing one's mind) is better, money and mental health is best.

The price of money is in what one must sacrifice to get and keep it and that is the rub. How many people are successful at the expense of their family life? Plenty!!

So many who waffle on about giving to others, don't after they've experienced the cut and thrust of business. Only a few hold to that ideal.

[julius]

I like to go for bigger intraday swings and try to pick up the equivalent of 5 - 20 points at a time.

wayne,

5-20 point target using 2-5 point stops ; is that correct? Which markets ?

Also, If you don't mind me asking what W% do you avg using the R:R above ?

I use 4-7 point stops for 14-21p targets on the SPI. I prefer the wider stops around the open if its choppy.

[alwaysLearning]

You've reinforced my point. If you can be rich AND be happy (by giving to/helping others {one of the secrets to happiness IMO}) that's fantastic. I submit that if you can remain generous and happy, while making money, you have indeed struck a the balance I mentioned.

But my observation is that not many do that... very few in fact.

Money is good, mental health (in terms of managing one's mind) is better, money and mental health is best.

The price of money is in what one must sacrifice to get and keep it and that is the rub. How many people are successful at the expense of their family life? Plenty!!

So many who waffle on about giving to others, don't after they've experienced the cut and thrust of business. Only a few hold to that ideal.

Yeah wayneL, I was agreeing with that you said. Also I can't argue with what you've said in your most recent post either (that I've quoted here)

The more one depends on external causes and conditions for happiness, the more easily you'll experience suffering. The simple reason for this is that we aren't actually in 'control' of our lives (in an 'absolute' sense). We can influence (and do our best to predict) what happens in life but all things are uncertain and subject to change and therefore as you say 'mental health' first and money wealth second. But both (mental and money wealth) is obviously best.

[Hakkers14]

Thanks for the discussion guys, has made for very interesting reading. I'm 21 and at uni at the moment and have been thinking a lot about the sorts of questions raised here..


The more one depends on external causes and conditions for happiness, the more easily you'll experience suffering. The simple reason for this is that we aren't actually in 'control' of our lives (in an 'absolute' sense). We can influence (and do our best to predict) what happens in life but all things are uncertain and subject to change.

I agree with your sentiments alwaysLearning...I think the point is, the only thing you truly have control over, 100% of the time, is your mind (mental state, attitudes, outlook etc.) It's your filter for the way you percieve the world...it determines the label and meaning you give to your experiences, and (i believe), ultimately the level of your happiness.

Below is a link to a talk by a Harvard psychologist on 'happiness' which I found interesting. To summarise his findings; basically most people overemphasise the actual impact of achieving certain discrete external goals (eg. getting 'THE' job/mark/house/clothes..etc) and miscalculate the effect that will have on 'real' happiness. Worthwhile thinking about I feel before one commits to a blood, sweat and tears approach to accumulating a capital base...(if that's the chosen way!)

http://www.ted.com/index.php/talks/view/id/97

[josh_in_a_box]

Hey all,
Truely a great discussion.
Keep up the good work, I wish I had found such valuable insight when I first started investing.

[pthomas]

Hey Tech/a

First of all Thanks for such an awesome thread - lots of little side comments do lose your intended purpose tho.

I find myself in the situation this thread is intended. I cashed in my trading account to move interstate - having homeloan and suddenly going from 2 income to 1 income ate through my small trading (learning) account!

The hardest thing about having no trading capital is all the time you think about what to trade, what you want from the market, all aspects from trading. To get through that i've put myself to work, reading many books (man you can get some good books (i.e new market wizards for $3.50!!!) from op' shops if you look frequently enough) & researching.

I am now resaving to get back in business. In my downtime i have been revising everything I do - i've got amibroker so I have been building and backtesting systems around my belief's in the market (and then doing hypotheticals to add options on each trade - as amibroker is stock only)


So for me having no trading account is giving me the time to throughly backtest and helping give me real expectations from my system (forward testing with paper trade also)

One thing that does scare me is talk of people with large accounts and ready to leverage to the hilt and go make some money. Leverage is such a double edged sword. I'd be very careful and have a throughly tested system before thinking like that.

Just my 2c :) Happy trading all :D

[nizar]

To get through that i've put myself to work, reading many books (man you can get some good books (i.e new market wizards for $3.50!!!) from op' shops if you look frequently enough) & researching.


Are you serious?
I think I paid around $35 for mine :banghead:

[pthomas]

Yeh, im in melbourne - in sunshine is the st vinnies state office and they get first pick of books - I'll drop past every now and then and all books are basically 3.50!

So far i've also picked up: how to make money in stocks (william oneil - canslim system), share trading & trading tactics (daryl guppy), options: trading strategies that work (eng/guppy), the winning investment habits of buffet & soros (mark tier)

I mean I have yet to see something like: technical analysis of the financial markets, or options as strategic investments - however the books I have been getting are fairly ok reads!

:D

[Stan 101]

Great thread, here's a snippet of the way I gained a capital base.

Getting closer to 30 than I really cared to believe, I was over $30k in the red on several credit cards, unsecured personal loan and other bad debts. Actually the figure was closer to $40k. I had a great job paying reasonably well in a design office yet still lived pay packet to pay packet in an area just south of Noosa.
My only assets were some furniture, a great AV setup, about $10k of scuba gear, a reasonable late model car worth less than the payout figure and my mind. The mind was slowly being destroyed by partying and blowing my pay packet from thursdays to sundays.

I did have some great experiences getting to that point. Have dived some of the best locations all over the world and enjoyed the culture of over 40 countries to name just a few things.

Enough rambling. Well this is what I did.

1. Moved from the coast. Noosa is a lovely place but prospects are limited so it was back to Brisbane for new employment.
2. New job. I said I had my mind. I secured a job in a design office with a 75% increase in my income from my old job on the coast. More hours, though.
3. Found cheap digs away from the nightlife and close to work.
4. Took a second job. I sub contracted for a gourmet pizza place delivering pizza. This did two things. I used my car to earn an income and turned it into a tax deduction instead of a straight liability. It also stole from my leisure time and therefore my ability to spend my income on booze. I became fitter and healthier than I had ever been living beside the beach.
5. Honed skills. I ended up earning almost as much on tips as I did delivering with that second job. That was through excellent customer service. I also gained some humility when "friends" realised I was delivering pizza.
6. Debt free. In 12 months or so I was debt free and in the black. I downgraded car and left the pizza delivery gig. I moved in with a girlfriend and was saving more again on accommodation. In no time I had a small capital base to start investing. From there it just grew.

Be sure to reward yourself for staying on track with your plan. It's important. Set goals and continue to monitor the situation. Downgrade your expectations if they are becoming unreasonable, upgrade if the energy levels or situation allows. You'll look back and love the journey..


Sorry for the long thread..

Cheers,

[tech/a]

Stan 101.

Now THATS a success story!!

And thats ---"You'll look back and love the journey.."
Worth more than any of your earnings!

Love it thanks for sharing.

[Timmy]

Stan 101 - that is a great story and well done! Looks like you found out who your real friends were too?

[brettc4]

I guess I have talen a more traditional approach.

I simply saved money from my day job and used the moeny to buy into the first Telstra Share offer, my first foray. This went quite well and I ended up selling at about $8 and used the money to pay off a car loan and to help with a deposit for a house.

My Wife and I then did everything in our power to pay the house off as quickly as possible, it took just over 5 years. Once I paid of the house I begun saving to get back into the market. I basically saved up enough to have a barrier in case something went wrong and then saved $10,000 and bought AMP, which I still hold (hasn't done great for growth but the dividends and capital returns have been nice).

I then continued to save and would transfer $5,000 to my trading account when I could. This eventual lead to me deciding to include a margin loan and some additional funds to buy ANZ (okay not the best of the banks, but it was also going to be a long term hold).

I am now saving for as big a deposit as possible to buy a bigger family home.

Throughout this time, my place of employment closed down, but I did get a reasonable payout, my wife and I had a child and we went down to one income for a while (but still managed to open a managed fund for my little girl and add $100 per month to it). Presently we have one and a half incomes, but am still saving weekly to build the house deposit.

This has been on a slightly above average income based on our education, experience and attitude.

All in all, as a 32 year old with a beautiful and healty baby girl, a house we own outright, approx $40,000 in shares, a $60,000 new house deposit, I am very happy, but still looking at how to make the best us of my (our) money to reach financial freedom.

Good thread Tech/A
Cheers

[adobee]

I have read this whole thread and think alot of people are off topic and not really providing any ideas for helping people without a capital base establish one.. i am bit unsure about people saying forget about money its about happiness but they are on a trading forum.. are you kidding ? anyone who is on this forum obviously has some interest in generating income and requires a capital base if they wish to do so via shares and trading ..

Anyway back to the point .. I unfortunately still have not achieved the elusive capital base I require for my daily share trading to allow me to spend the rest of my day running fishing charters and diving ..

upon deciding to accumulate a capital base i felt i had to paths -
(into my second semester at uni)

1. Compete uni, work on a higher base income which should counter act the four years of low / no income whilst studying
2. Leave uni on an avg income and reduce to costs 'live within my means' so as to have the extra saving..
3. Fast track this method and enter a field where there was potential for increased income based on hard work.. ie commission based profession..

So the choice was made (3) and i decided work as a realestate agent had the potential to reap the highest rewards. After some time in realestate i discovered that whilst the sales income was great the property management income had the potential to be a safe residual income and that there was a multiplier affect if i was the business owner .. ie the rentroll could be sold on x3 basis, further i established that there was potential for leverage by way of assistants and staff who on commission had low costs and high returns..

In summary I have found that for those of us that dont have the great creative ability to come up with new ingenius ideas then a well choosen commission based job gives the ability to largely fast track your capital base..

Lastly I have found that dedicated focus on one role (ie r/e sales) will generally reap greater bennefits than trying to undertake to jobs at the same time (r/e sales & pizza shop at nights)..

[nizar]

i am bit unsure about people saying forget about money its about happiness but they are on a trading forum.. are you kidding ?

Classic :D

[diminike]

I'm only 21 and a student. I started to buy shares of companies when I was 16 with a little capital of 1500 euro's. And you can do that since my transaction costs are only 9,75 euro + 0,17% tax. Working at night and during the weekend helps me to increase my capital. Off course, the more money you have, the more easy it is to make a higher net profit.

But I don't know what the costs are for buying shares in Australia...

dimi

[jonojpsg]

I haven't read all the way back in this thread but surely the quickest way to establish a capital base to invest is to borrow? Does this qualify as capital?

I started investing pretty soon after I left Uni and started working as an engineer - got a "great" tip from a workmate that blew $5k of my money over a long and ugly buy and hold.

Only really dabbled though until I convinced my wife to let me borrow $20k on a personal loan to buy shares in 2006. Personal loans are pretty easy to get even if you are a student with part time work.

It was a great decision and I actively traded it up to $50k by probably March 2007. Of course since then things have not been so rosy - got crunched by the credit market crash as I had the majority of my money in specs.

In summary though, I have paid off the loan and still have about $20k that I'm working on building back up again.

[Ashsaege]

Im currently a part time uni student, and i have a full time job.
I took out a 15K personal loan (like many others have) and got into shares a day after the crash in August last year. Few months later i was a happy boy!

This year i have made an effort to accumulate shares while the market is down, and now I am up 5K from my initial position. Even though i have a couple stocks (ie ZFX) that aren't producing, my base is still growing. I do have the option of paying off my loan quicker, but while the market is down there are plenty of bargains to have!

Building a capital base is the first and hardest step into getting out of the rat race. And i don't feel I have reached that first step yet.

[Trembling Hand]

Lastly I have found that dedicated focus on one role (ie r/e sales) will generally reap greater benefits than trying to undertake two jobs at the same time (r/e sales & pizza shop at nights)..

Yes, you should always be thinking about getting more out of your current effort not just adding new and more effort.

[resbequoi]

Yes, you should always be thinking about getting more out of your current effort not just adding new and more effort.

Yes, In any field you choose, to be the best or perceived to be the best you need to show absolute focus/"passion" - only by having this reputation do you get headhunted, high salary, best opportunities, etc etc.
What i've learned is that when something is easy, there is more competition and you are constantly fighting to be one of the best out there in that field. When something is hard, as long as you get over the initial hurdles, then pretty much you are in a niche field and you don't have to spend so much energy proving yourself.
Either way is difficult, if you want to excel.
Which is why your energy is best spent in a field that you know you will have longevity in, or a passion for etc etc. Even better if it is in a niche field. Further, even if you hate what you are doing, best to jump to a related field so that all your experience is still relevant.
At the moment I work a 'nichey' day job and work less than half the year, earning approx $100K - I am 32 and could work more to earn more but I don't need to.
Frankly in my area of expertise, just being easy to work with and having a good work ethic is all you need. If I wanted to push myself, I would be attending courses, conferences, writing articles in journals - really putting myself out there and networking and building a really public professional profile. In some industries you have to do the extra to look better than the next guy, especially if your salary is not great.
In very competitive industries/jobs, the only good salaries are at the top of the chain, and the rest are paid crap. the hope that one day you'll make it to the top keeps you in the industry/job at a crap wage.

ok hope this made sense

[tech/a]

In very competitive industries/jobs, the only good salaries are at the top of the chain, and the rest are paid crap. the hope that one day you'll make it to the top keeps you in the industry/job at a crap wage.

I dont know about that.
There are many many people out there that will never have the acumen to reach high "Top" positions---so whats left for the "Also rands".

Firstly its as much about the employer as it is about the employee.
Employees MUST interview their employers!
If they cant provide opportunity then youve got the wrong employer.

In my business I employ a lot of machine operators.
I pay them well over award rates--in return they Look after my machinery--infact all of them treat my machines and trucks like their own--if they dont I and their fellow workers dont want them in our team.

We ALL take pride in what we do,at the very best of our abilities.
Not all of these guys have any more aspirations in life than being an operator---and a damned good one.

[Schmuckie]

I'm not a disciplined saver, and money burned a hole in my pocket when I was younger.

For years, with my pay being deposited directly into my bank account, I had $500 a month automatically deducted from that account into another savings account. Never really had possession of the money, so I didn't spend it.

My husband, an accountant, is a very good, but conservative and mostly blue-chip growth stocks, investor. He manages the bulk of my money in a brokerage account and also looks after my retirement accounts. He's greatly increased the value of my portfolio.

It's only recently that I realized I had about $20,000 worth of "fun money" . This is the small capital base that I'm using to learn about investing and it's money that I can afford to lose.

The point here is that if you haven't got the self-discipline to save for yourself, perhaps automatic deductions are a good way to go. Oh, and it helps if you live with someone who can manage your money for you. ;)

[resbequoi]

I should have said 'one of the best at what you do'. As you show, Tech, you will pay your people better to do a better job (or vice versa). I doubt you employ people who don't care about the equipment etc etc. i'm sure some of your truck drivers are being wooed by other companies, because they have formidable reputations as truck drivers.
Their attention to the job doesn't come from whatever they have in intelligence, academics, family etc but attitude.
Amend my last post as a rant about focussing on what you do best. But on top of that, if there are many truck drivers around, then it gets harder to be one of the best, given the competition.
There is no doubt that people are lucky or brilliant and wealth falls into their laps. The rest of us have to work, and it's easier if we make the right choices and go that little bit further in our efforts.

having just read this, I feel like I am posting a cliche! but here it is.

[AlterEgo]

25% per year out of the ordinary? Consider this is what Warren Buffett has done to become the richest man on earth I would consider this far from ordinary. And to say you can make a consistent return above 1% per month is ridiculous no matter how frequently you trade.

Absolute rubbish! It can certainly be done. I've made well in excess of that figure consistently over the last 3 years, and I'm sure many of the others on this forum would have as well. Just because you can't achieve that sort of return doesn't mean it's impossible.

[tech/a]

Absolute rubbish! It can certainly be done. I've made well in excess of that figure consistently over the last 3 years, and I'm sure many of the others on this forum would have as well. Just because you can't achieve that sort of return doesn't mean it's impossible.

Ah yes but 25% /year on your total nett worth?
Liquidate everything you own and go for it!
Try that!

25% on $10K,20,50 sure.

Buffett.
Totally different he CONTROLS his investments.

[wayneL]

Absolute rubbish! It can certainly be done. I've made well in excess of that figure consistently over the last 3 years, and I'm sure many of the others on this forum would have as well. Just because you can't achieve that sort of return doesn't mean it's impossible.


Ah yes but 25% /year on your total nett worth?
Liquidate everything you own and go for it!
Try that!

25% on $10K,20,50 sure.


Indeed, account size the the fly in the ointment.

You can do it with a lot bigger account than 50k on the US market, but there are still constraints. Go above a certain position size and slippage will start to seriously dent returns.

The idea is to use a 100 grand or two, to make a hundred grand or two** (that should just about be enough for the lease on the Porche... and perhaps down payment on a loaf of bread), and use the rest of the gazillions another way.

**or whatever the trader is capable of.

[AlterEgo]

Ah yes but 25% /year on your total nett worth?
Liquidate everything you own and go for it!
Try that!

25% on $10K,20,50 sure.

Buffett.
Totally different he CONTROLS his investments.

Well I was actually referring to the highlighted part of the quote - 1% per month, ie. 12% per year. But yes, FWIW this current financial year I have made far in excess of 25% (after refining my trading strategy at the beginning of the financial year), and on much more than 50K capital. Maybe not my total net worth, no, but all of the money I currently have at my disposal. I haven't been willing to take on any more risk until I have improved my trading to the point that I can make a consistent profit over a number of years. I'm just getting to the point that I think I can probably take on a low level of gearing now.

So what sort of return would you consider typical for the fairly active trader? More than 25%?

[tech/a]

and perhaps down payment on a loaf of bread

More so a litre of Gas.


So what sort of return would you consider typical for the fairly active trader? More than 25%?

Per year on capital for a profitable active trader---Yes.

But these traders are far from typlical.
The typical trader doesnt make a profit.

[AlterEgo]

Per year on capital for a profitable active trader---Yes.

But these traders are far from typlical.
The typical trader doesnt make a profit.

Well yes, maybe I should've said 'successful' trader rather than 'typical' trader.

[SM Junkie]

I've quite enjoyed reading the posts on this thread.

So here are my ideas, or rather what I live by.

1. Look at your attitude towards money. If you think it is too hard to start, then guess what, it will be. Pay yourself first.

2. Live within your means. If you can't pay off your credit card each month then get rid of it.

4. Only have good debts.

5. Set up a regular deduction from your wages into your investment account.

6. Learn to say "no". There are things you can live without.

[white_goodman]

I've quite enjoyed reading the posts on this thread.

So here are my ideas, or rather what I live by.

1. Look at your attitude towards money. If you think it is too hard to start, then guess what, it will be. Pay yourself first.

2. Live within your means. If you can't pay off your credit card each month then get rid of it.

4. Only have good debts.

5. Set up a regular deduction from your wages into your investment account.

6. Learn to say "no". There are things you can live without.


amen, especially number 5... 50% of my salary goes into investment

[tech/a]

amen, especially number 5... 50% of my salary goes into investment


Number 6

That sentence may as well be in Swahili.--My wife has no idea of its meaning!

I'll add the most expensive addition to your life is a wife.

[nioka]

A suggestion I gave to a school leaver recently:

Never spend a gold coin ,you wont notice them gone if you put them in a bottle. You will be surprised how soon you will have $500 and then you make your first investment. Keep this up until you make your next investment of $500. That's the hardest part over.

Don't try to start at the top, everyone crawls before they walk and walk before they run.

The younger you start the easier it is but it is never too late.

[white_goodman]

Number 6

That sentence may as well be in Swahili.--My wife has no idea of its meaning!

I'll add the most expensive addition to your life is a wife.

this is where casual "buddies" come in handy

[frogen]

The little old lady who taught me my trade gave me some early advice
'look after your pennies and the pounds will look after themselves'.
Being from the old school, she also told me that instead of concentrating on trying to earn more, I should try to spend less

Come a long way since then

[Trembling Hand]

instead of concentrating on trying to earn more, I should try to spend less

Come a long way since then

I couldn't disagree more. There is only so much you can reduce you spending and in most cases you are reducing some very nice things about being alive. If you continue to work on earning more then you gain even more nice things about being alive.

[tech/a]

I couldn't disagree more. There is only so much you can reduce you spending and in most cases you are reducing some very nice things about being alive. If you continue to work on earning more then you gain even more nice things about being alive.


When 20 my father said to me
"Son you have no respect for money".

He is right!

It doesnt equate to being frivolous.

[njc.corp]

Great thread-

this is what i was told by my father and also Nick radge said to me-the markets will be thier the next day and so on-

so what i did was save for the last 5 years and try and do smart things-

all jokes aside how can u go wrong if in the mean time u are getting good education on what others have done wrong-

i must admit while saving u are temped to buy what ever u see and i have noticed that the things u want were nothing but to make your mind happy-

and u look back at it and say why did i buy that for-i could have done this -at least i would have made a dollar doing that-

thats my story on how i got my captital

Hope that helps-i know some can't save-i say its mind over matter-if u look at the end result-u can say one thing which i have noticed is so hard it today's world to say"- I OWN WHAT EVER I HAVE-

Nick--(melb)

[nioka]

-u can say one thing which i have noticed is so hard it today's world to say"- I OWN WHAT EVER I HAVE-

Nick--(melb)
It is not hard at all to say " I own whatever I have" . All you have to do is spend less than you earn. If you adapt that principle it becomes easy. All it needs is a little less greed and a little patience. Often driving a second hand car you own rather than a new one which is depreciating faster than you can pay it off is a good start.

P.S. Is it too hard to type 'you'. (one of my pet peeves.)

[njc.corp]

It is not hard at all to say " I own whatever I have" . All you have to do is spend less than you earn. If you adapt that principle it becomes easy. All it needs is a little less greed and a little patience. Often driving a second hand car you own rather than a new one which is depreciating faster than you can pay it off is a good start.

P.S. Is it too hard to type 'you'. (one of my pet peeves.)

p.s-my next thread-will contain at least one you- just for you-

Nick--(melb)

[tech/a]

Yes all well and good--BUT.

Correct use of other peoples money will ensure wealth.
Most successful people gain that success not from their own money but from the use of others.
With a good accountant its not as expensive as you might think.

Good debt--Bad debt.

[njc.corp]

Yes all well and good--BUT.

Correct use of other peoples money will ensure wealth.
Most successful people gain that success not from their own money but from the use of others.
With a good accountant its not as expensive as you might think.

Good debt--Bad debt.

fair call tech-
one question for you-is their a % of successful people who make it work for them while using others money?

my view and only my view is that i would rather waste my own money if something went wrong which does happen-

Thanks

Nick--(melb)

[wildkactus]

Tech/a,
Have to agree, the only way I see it to gain substanial wealth is by the use of OPM (other peoples money).

The use of OPM which creates wealth is a good thing and should be part of anybodys investment plan. That said it has to be managed well as it can soon turn into a bad thing, if let get out of hand.

A good accountant can be of help here.

[dojara]

On your deathbed the amount of noughts behind the 1 won't matter.
Who you are will.

Focus on whats important and don't focus on money. Contentment, happiness, family, friends, well being, creativity, contemplation, inner satisfaction, achievement.

And while you're about it put 10% of your earnings, however they may come, aside ... or not.

When you have achieved wealth that enables you to live freely you will realise how little you know about life. You will also realise how much everybody, everywhere in the world, focuses on money, and how unimportant it is to happiness.

Just an interesting read to follow on from cuttle :
http://www.theage.com.au/news/business/road-to-happiness-lies-in-health-family-and-friends/2006/01/15/1137259944644.html

[dazers]

The amount of capital required is dependant on the person.

After reading through the forum I was initially disheartened by the many people that claimed a good capital base to be between $10,000 - $200,0000

I dropped out of uni and worked for Woolworths for 8 months. The amount of time I worked was enough to get a $10,000 overdraft and a $9,000 credit card. (credit crisis anyone?)

With that negative capital alone I resigned from woolies and now trade comfortably (mostly) for income, despite knowing <1% about everything there is to know. This is of course at enormous risk, but the point is - "Other Peoples Money", and that you can do it, for establishing capital base. Don't be reckless about it though, as it may ruin a large chunk of your life. I am no where near 1st base but I'm defintitely not going back to home plate.

[white_goodman]

The amount of capital required is dependant on the person.

After reading through the forum I was initially disheartened by the many people that claimed a good capital base to be between $10,000 - $200,0000

I dropped out of uni and worked for Woolworths for 8 months. The amount of time I worked was enough to get a $10,000 overdraft and a $9,000 credit card. (credit crisis anyone?)

With that negative capital alone I resigned from woolies and now trade comfortably (mostly) for income, despite knowing <1% about everything there is to know. This is of course at enormous risk, but the point is - "Other Peoples Money", and that you can do it, for establishing capital base. Don't be reckless about it though, as it may ruin a large chunk of your life. I am no where near 1st base but I'm defintitely not going back to home plate.

i was thinking bout getting a margin loan soonish after id done a good amount of back testing/ paper-trading and was fairly confident in my trading plan... only using a 50% leverage.... im jsut hoping the bears are gonna be gone in a few months....

[Trembling Hand]

The amount of capital required is dependant on the person.

I dropped out of uni and worked for Woolworths for 8 months. The amount of time I worked was enough to get a $10,000 overdraft and a $9,000 credit card. (credit crisis anyone?)

With that negative capital alone I resigned from woolies and now trade comfortably (mostly) for income, despite knowing <1% about everything there is to know.

IMG!!

So I'm sorry :biglaugh: but can you confirm for us mere mortals that you are trading with a borrowed capital of $20,000 paying compound interest over 10% making a "comfortably income".

:flush:

[pottsy44]

I am worried about my small capital base i think to myself:
"How many people my age who are studying full time, can travel overseas at least once a year, enjoy their life, and still SAVE 3 - 5k per year?"

ME :D! Like yourself i study full time at uni (4 year degree) and I'm about to begin a diploma (i am 20). However, i don't work 2 days a week, i work full time, so like yourself i consider myself to be in a pretty good position, and considering in 6 months time i will also have a company car, i would consider this to be a pretty good position. As it stands currently i can save 10k+ p.a. and in 12 months time i will be able to save 20k p.a. Which would mean in a few years time i should have my capital goal of 50k. :)

[tech/a]

I dropped out of uni and worked for Woolworths for 8 months. The amount of time I worked was enough to get a $10,000 overdraft and a $9,000 credit card. (credit crisis anyone?)

With that negative capital alone I resigned from woolies and now trade comfortably (mostly) for income, despite knowing <1% about everything there is to know. This is of course at enormous risk, but the point is - "Other Peoples Money", and that you can do it, for establishing capital base. Don't be reckless about it though, as it may ruin a large chunk of your life. I am no where near 1st base but I'm defintitely not going back to home plate.


This has to be a rev up.
Nobody can be THAT stupid.

Lets do some maths--part of the other 99% needed to be learnt.
With $20k on credit (By the way $10,000 overdraft isnt possible without security).
You'll need a minimum of $400/ week to survive living with your parents.
You'll need to pay the loans another $60/week.

So you need to return 10%/mth just to survive.
Or 120% / yr.
All this while knowing <1% of everything you need to know.
I guess the 1% you do know is that you can fool most of the people most of the time.

I started this thread in a serious vein,I'd like it to stay that way!

[dazers]

I'm trying to fool anyone or big note myself. I was just trying to give some inspiration to some of the people starting out in low income jobs. I bet lots of hopeful people look through here with dreams of better lives outside their 9-5s, and spending more time with their families, only to be disheartened.

-The overdraft was secured by being employed for several months straight. This means I may or may not lose it when the bank reviews me next year, as Im no longer employed.

-I live in country SA with my partner and only pay $75/week rent. More fortunate than most probably. You can get an idea of all my expenses then, I don't need to give you an itemised list

-I only pay interest on my funds when I draw down on them below 0. This means about $10.00/days use.

-Once I've used the money to make money, it returns to the account and I don't pay interest on it.

-By day trading and writing near expired options, the cost per day of using the money is easily covered and then some.

I should add that this is not the only source of income I live off. And there is a bank fee I haven't factored in. There is nothing amazing or unbelievable about this. I wouldn't advise anyone to do it for obvious reasons, but if anyone is thinking about accepting the fact they have to be unhappy in their jobs and life forever, take hope from the example and don't settle for less.

[Tysonboss1]

I couldn't disagree more. There is only so much you can reduce you spending and in most cases you are reducing some very nice things about being alive. If you continue to work on earning more then you gain even more nice things about being alive.

The trappings of wealth and the high spending material life style are very overated. creating a lifestyle that focuses on wasting less and investing more will lead to the ultimate prize,.... freedom.

But what happens in most cases is people earn an extra $1 and they spend an extra $1.5 locking them selves to there job.

Focusing on earning more and more just ties people to there jobs and creates bigger and bigger expectations, at the end on the day a $100,000 car just becomes the car your used to driving, $10,000 plasma becomes just the tv you watch.

You have to balance your offence ( earning ) with you defence (saving).

You should always spend less than you earn and invest the difference there by creating wealth and freedom.... if you do secure a higher pay then invest the bulk of it,.... don't increase your spending.

If you spend all that you earn and focus on earning more you'll never create wealth or freedom and instead tie yourself to your job.

[Tysonboss1]

Tech/a,
Have to agree, the only way I see it to gain substanial wealth is by the use of OPM (other peoples money).

The use of OPM which creates wealth is a good thing and should be part of anybodys investment plan. That said it has to be managed well as it can soon turn into a bad thing, if let get out of hand.

A good accountant can be of help here.


Thats right,... Debt is like Fire,... used correctly fire safely heats your home, cooks your meals, If used by someone who doesn't understand the concept though fire will quikly burn their house done and scar them for life.

Before you play with fire make sure you understand the priciples, you have a plan for how you will safly apply it and moniter it to make sure it is acting the way you need it to and that it does not get out of control.

Once you understand it and know how to use it correctly though it will change your life and give you things that you never thought possible before. an investment structure that doesn't use debt is like a V8 running on 4 cylinders.

[Trembling Hand]

The trappings of wealth and the high spending material life style are very overated. creating a lifestyle that focuses on wasting less and investing more will lead to the ultimate prize,.... freedom.

But what happens in most cases is people earn an extra $1 and they spend an extra $1.5 locking them selves to there job.

Focusing on earning more and more just ties people to there jobs and creates bigger and bigger expectations, at the end on the day a $100,000 car just becomes the car your used to driving, $10,000 plasma becomes just the tv you watch.

You have to balance your offence ( earning ) with you defence (saving).

You should always spend less than you earn and invest the difference there by creating wealth and freedom.... if you do secure a higher pay then invest the bulk of it,.... don't increase your spending.

If you spend all that you earn and focus on earning more you'll never create wealth or freedom and instead tie yourself to your job.

Thanks Tyson but you missed my point by 1000 miles. :rolleyes:

Rolling the plasma screen rubbish argument out just shows how far off your understanding is of what I am talking about. Saving is slow and restrictive, working to increase wealth can have exponential results to not only your bottom line but your experiences and opportunities.

[Sakk]

Started out working part time in my brothers pizza restaurant at 15. Watched him blow out several times, no respect for money when he had it and not focused on the current business he was in....learnt what not to do!

At 21 I 'd worked two years and had nothing to show for it. Spent on booze, petrol for the V8, partying, petrol,more partying and....petrol...Ahh the good ol days. Realized I had to change to ever get ahead.

Saved 100K over the next 4 years, got married, bought a house paid off in 2 years. Asked my dad (European background) for advice as to what to do next........son buy another house...ok and then what....I don't know buy another house.....

Spent about $10k over the next few years on investment books, seminars etc
Bought, stripped and fully renovated 3 IP's
Kids came along, worked partime and started to learn how to trade

Took 4 years to develop a trading system that I finally jelled with my view on the markets and jelled with my psych........once you develop your own system, trading it becomes easy...

Currently doing two small property developments......moving towards a strategy of purchasing and subdividing existing homes and land into three, selling off the existing house and one of the new properties and keeping one as long term rental.....repeat.
Great strategy to build instant equity, longterm wealth and passive income.

All trading profits are currently re-invested to build account.

Not a very exciting but is working for me.

However, most importantly I've been able to spend most of my time with my wife and two kids.:D

[white_goodman]

Started out working part time in my brothers pizza restaurant at 15. Watched him blow out several times, no respect for money when he had it and not focused on the current business he was in....learnt what not to do!

At 21 I 'd worked two years and had nothing to show for it. Spent on booze, petrol for the V8, partying, petrol,more partying and....petrol...Ahh the good ol days. Realized I had to change to ever get ahead.

Saved 100K over the next 4 years, got married, bought a house paid off in 2 years. Asked my dad (European background) for advice as to what to do next........son buy another house...ok and then what....I don't know buy another house.....

Spent about $10k over the next few years on investment books, seminars etc
Bought, stripped and fully renovated 3 IP's
Kids came along, worked partime and started to learn how to trade

Took 4 years to develop a trading system that I finally jelled with my view on the markets and jelled with my psych........once you develop your own system, trading it becomes easy...

Currently doing two small property developments......moving towards a strategy of purchasing and subdividing existing homes and land into three, selling off the existing house and one of the new properties and keeping one as long term rental.....repeat.
Great strategy to build instant equity, longterm wealth and passive income.

All trading profits are currently re-invested to build account.

Not a very exciting but is working for me.

However, most importantly I've been able to spend most of my time with my wife and two kids.:D

that is the dream, enough money to live very comfortable and be time rich

[michael_selway]

Started out working part time in my brothers pizza restaurant at 15. Watched him blow out several times, no respect for money when he had it and not focused on the current business he was in....learnt what not to do!

At 21 I 'd worked two years and had nothing to show for it. Spent on booze, petrol for the V8, partying, petrol,more partying and....petrol...Ahh the good ol days. Realized I had to change to ever get ahead.

Saved 100K over the next 4 years, got married, bought a house paid off in 2 years. Asked my dad (European background) for advice as to what to do next........son buy another house...ok and then what....I don't know buy another house.....

Spent about $10k over the next few years on investment books, seminars etc
Bought, stripped and fully renovated 3 IP's
Kids came along, worked partime and started to learn how to trade

Took 4 years to develop a trading system that I finally jelled with my view on the markets and jelled with my psych........once you develop your own system, trading it becomes easy...

Currently doing two small property developments......moving towards a strategy of purchasing and subdividing existing homes and land into three, selling off the existing house and one of the new properties and keeping one as long term rental.....repeat.
Great strategy to build instant equity, longterm wealth and passive income.

All trading profits are currently re-invested to build account.

Not a very exciting but is working for me.

However, most importantly I've been able to spend most of my time with my wife and two kids.:D

Sounds good :)

But do you think this will work now in current markets, the property stuff?

"Bought a house and paid off in two years", will that still work now a days with high interest rates & cost of living (inflation)?

Thx

MS

[MRC & Co]

^^^^^

Not to mention, stagnating or falling house prices over multiple years! :eek:

[Sakk]

But do you think this will work now in current markets, the property stuff?
MS
For each potential project I factor in the worst case scenario, crunch the numbers and make a decision. There's opportunity in every market condition. Subdividing land into two or more lots at the rear of an existing home creates instant value and a buffer to declining prices.

If you buy well and add value you create a much larger buffer against the downside. Just like trading, you need to be patient and wait for the correct setup, in the property market you stay cashed up and wait patiently for someone to drop their pants on price.




"Bought a house and paid off in two years", will that still work now a days with high interest rates & cost of living (inflation)?

Thx

MS
Depends on your income ;)

[tech/a]

For each potential project I factor in the worst case scenario, crunch the numbers and make a decision. There's opportunity in every market condition. Subdividing land into two or more lots at the rear of an existing home creates instant value and a buffer to declining prices.

As a developer this is a risky stratagy.Corner blocks or rear entrance blocks are best.Land currently in hammer head blocks in SA are very slow sellers.
The value isnt added until the land is sold.


If you buy well and add value you create a much larger buffer against the downside. Just like trading, you need to be patient and wait for the correct setup, in the property market you stay cashed up and wait patiently for someone to drop their pants on price.

True its like paying a larger deposit. Gearing like everything in business deminishes risk.



Depends on your income ;)

Paying off a home may not be the best stratagy for some.Gearing to positive cashflow maybe better and utilising deductions.