I discussed this topic with a few people a few days ago. Some people have been asking me under what circumstances can investors quit their jobs and concentrate on investing. Everyone’s situation is different, and my own ideas encompass two aspects.
But I would like to advise everyone, unless you think thoroughly, do not easily want to be a full-time investor, because it is not as good as you think.
You need a portfolio size sufficient for retirement: In Taiwan, I personally think that a single person should have at least NT$8 million (US$288,000) of net wealth, which of course is the “minimum material requirement” estimated in 2021. I want to emphasize that it is the “minimum material desire”, that is, not competing with the world, no extra desire; only keeping “simple” clothing, food, housing, transportation and entertainment.
There is no point in arguing about whether this number is enough, because everyone’s living standards are different. If you want to travel around the world from time to time after retirement, move to the center of the city to buy a new house, and have a servant to serve you, of course, it is another matter. And you must own your house. If you are not single and have no your own house, NT$15 million ( US$500,000) should be very dangerous.
Again, don’t underestimate the power of inflation. For this topic, please see my blog post “Inflation and rate are the most two serious killers to investors“.
Your investing performance
I think this part is easier, the best is:
- More than ten years of investment experience: There can be no interruption in the middle. The reason is very simple. If you invest more than ten years, you will definitely go through a 40% crash and many major corrections. Without this experience, it would be very risky to switch to a full-time investor. This is why Buffett said “Every decade or so, dark clouds will fill the economic skies, and they will briefly rain gold. “
- The annualized rate of return is greater than 15%: This means that your investment assets can be doubled in less than 5 years, and it is not easy for those who can have an annualized rate of return of 15% in ten years. If the annualized rate of return is less than 10%, it is recommended to buy an ETF tracking broader market. Buying an ETF tracking broader market belongs to the lazy and no-brainer investment method and does not require full-time investment. And everyone has to remember one thing, the salary growth rate will only get lower and the cost of living will only get higher and higher; this means that the inflation is getting higher and higher, and investors with an annualized return rate of less than 10% in the future. Life in old age is worrying.
- The investment portfolio size must be large enough: at least there must be an investment portfolio equivalent to US$300,000, which is the minimum requirement; more than US$500,000 is safer.
This part is not a hard demand. Investors should face themselves honestly and measure whether they meet the following factors:
- Personality and interest are suitable: Most people are not suitable for stock investment, let alone full-time investors. Modern people live a long life, without self-motivation from the heart, it can’t be long.
- Self-control: Self-discipline is a personality that a successful investor must have. No one will urge you to report after retirement. Whether you can spur yourself, do the necessary homework, and maintain a certain rate of return is a very basic requirement.
- Family support: Family does not support, all this is empty talk.
Daily life is not as common as people think
Investment is boring
Tesla’s Musk commented on Buffett in this way, but I very much agree with Musk’s view. “Let me take Warren Buffett for example,” Musk said in 2008. “To be totally frank, I’m not his biggest fan, but he does a lot of capital allocation,” referring to the process of distributing a company’s financial resources to better its long-term growth. “He reads a lot of annual reports and accounting, and it’s pretty boring really.”
Musk described Buffett’s job as an investor as trying to “figure out, does Coke or Pepsi deserve more capital?” Later, Musk said but “I mean, that’s kind of a boring job if you ask me, but it’s still a thing that’s important to figure out,” Musk said. “Like, which company is deserving of more or less capital? Should that company grow or expand? Is it making products or services that are better than others or worse? If a company is making compelling products or services, it should get more capital. If not, it should get less.”
In his 2008 letter to Berkshire Hathaway shareholders, Buffett wrote “Beware the investment activity that produces applause; the great moves are usually greeted by yawns.” Buffett emphasized “It is not necessary to do extraordinary things to get extraordinary results.” He suggests that the best successes in the workplace can come from those who are consistent. Flashy ideas and grandiose plans only take you so far. In the end, the results speak for themselves.
Long-term repetitive tasks
Stock investment is actually a very boring job. I myself now spend at least 12 to 15 hours a day on investment homework. Everyone’s situation may be different, but it is necessary to invest most of your time. Investment is a long way; in the end, those who succeed have experienced long-term loneliness and must be different. Suffering, coupled with the necessary patience, but modern people are becoming more and more impatient and lack curiosity and patience as they grow older. These are all disadvantages. Most people only see the good side and imagine the beautiful prospects of making money, but the reality is cruel. Think clearly!
These things are important
Patience, time, and discipline are three important things; I suggest you refer to my following blog posts for instructions:
- “Patience, an indispensable element of investment success“
- “Time, discipline and patience are the three elements of successful investment“
- “Inflation and rate are the most two serious killers to investors“
- The content of this site is the author’s personal opinions and is for reference only. I am not responsible for the correctness, opinions, and immediacy of the content and information of the article. Readers must make their own judgments.
- I shall not be liable for any damages or other legal liabilities for the direct or indirect losses caused by the readers’ direct or indirect reliance on and reference to the information on this site, or all the responsibilities arising therefrom, as a result of any investment behavior.