- May 10, 2005
- Reaction score
That's why I raised the question of is there a target (whether in employment or as a trader) the achievement of which will indicate an easing off of effort.My first thought is that it depends on:
1) your desires and passions - are you trying to maximize your net worth or do you value freedom more?
+1.Questions I'd ask myself:
1) how much do you enjoy your job?
2) what level of income (after expenses) do you need to enjoy the lifestyle you desire?
3) what is the opportunity cost of working? What would you do in your spare time? Is it worth it to YOU.
Agree.I would also put a damper on the expectation of 25% profit p.a. While it is possible for some, the sad reality would suggest that the majority of traders struggle to achieve those results consistently. There will be years when "John" will have to access his capital to pay the bills. And it will be scant consolation that there won't be any tax to pay in such years.
Just like the ratio between returns and volatility (RaR/Sharpe) there is also a ratio between returns and cortisol. If I can have 80% of the returns with 10% of the stress, I will (and do) take it.
With your second paragraph you have exactly made my point, i.e. that any mathematical calculation alone is only part of a decision to choose employment or trading.Obviously we can't analyse life decisions on a spreadsheet (not all the time anyway). And this is not a life plan... it's simply a numerical model to highlight what may otherwise be neglected when one is considering the financial aspects of his/her decision.
To be honest had I stuck with my old profession rather than be a trader for the past 5 years, I'd be on a much higher income now (Assuming the normal speed of progression / promotion). But the stress and workload demand of that profession means that I would also have had multiple burnouts and probably be in terrible health. I also wouldn't be able to see and play with my two young kids everyday and feed them dinner at 5:30pm (I rarely finish work before 8pm in that job). That alone is worth $millions.
For some the stress will be much greater in the competitive corporate environment and for others it will greater having the responsibility of generating your own living. As someone who burned out via ever increasing demands of the job, imo the greatest salary package in the world isn't worth having if the stress ruins your life.