Ready to retire soon

[ReadyToRetire]

I just joined the forum and thought I would share my story; I'll try to keep it short.

My wife and I have always been huge savers. I've always max'd my 401k, IRA's and currently my SEP.

Our investments looked great before the 2008. We had money sitting in things like IBM and never paid much attention. But in the 2008 market downturn I was crushed to see our stocks sinking fast. So I decided to take it upon myself to closely manage our investments.

I knew that the worst times meant huge economic opportunities if one knew where to look. In mid to late 2008 I converted my mutualfund-based 401k to an IRA so I could buy stocks. I began to day trade blue-chips in our brokerage account and retirement accounts. I managed about a 30% return in a few months; good but I wanted to do better.

It was a lot of time and work but I continued my search for bigger gaining stocks. I eventually found my niche. From when I began we now have about 3000% gains from our starting capital 15 months ago. It has been stressful and stomach turning at times but well worth it.

We both were on the typical retirement path of 55-65. But now in 3-4 months both my wife and I will be able to retire at 40. We'll have income from investments larger than our current salaries combined, which is quite high. And we'll have the college funds for our young kids.

I realize my approach is not for everyone. It took a lot of my free time to study and watch things daily. And I did it without the motivational tape industry or investment guru's.

I'm not a stock picking guru. I don't give advice on stock to friends or family. Most importantly, only my wife and accountant know our financial position.

I'm new here but I praise everyone working so hard to build a financial foundation for their retirement.

Thanks for listening.. er.. reading.

p.s. I didn't do everything correct. I tried real estate and I'm doing poorly on all three properties I bought. I learned a lot from those mistakes though and I'll try real estate again.

p.p.s. I'm not sure of the etiquette here concerning numbers etc. So I've only included percentage gains.

 

[plex]

Numbers are fine. First time I have read someone actually successfully day trading. I suppose it has to do with the timing of doing it during a market correction and possibly using leveraged instruments (which can be very hair raising, pretty much involves betting your whole life savings on black, if going long, or red, if going short).

 

[Coach]

Ready, welcome to the forum!

Congratulations on your successful stretch as a trader -- I don't think very many come out of that as well as you have.

Now that you've got your retirement funding built, have your practices changed?

Again, welcome aboard.

Coach

 

[travelover]

Welcome......but...ummm...I'm waiting for the hook.

 

[seabourne]

congratulations! My only comment would be that, if you have the assets now, take your ball and go home - all the gut wrenching stress of trading, albeit in a screaming bull market for 9 months gave you what you need to walk away - don't risk blowing it by trying for a little more. Leave a little bit ot play with if you feel the need, but get your retirement off the table - you don't want to risk losing it. Don't bet what you can't afford to lose.

 

[ReadyToRetire]

I will try to answer the posts above all together.

First. No hook and I won't disclose the stocks I'm in. There are other forums for stock picking.

I only day traded for a few months and I really didn't like it. Since then all my trades have been long-term. I've now held most stocks in my accounts for more than 10 months; I want 12 months for long-term capital gains.

My trading will change once I'm done building this base. I plan to invest the majority in stable investments. My objective then is to get a 6-10% yearly return. I will keep some funds to continue more risky investments.

I started my SEP (smallest of my accounts) 6 years ago and it hit a total high of $60k in Sept-2007 and a low of $37k in Sept-2008. I day-traded from Nov-2008 until Jan-2009 at which time I changed the investments to my current strategy. Now fast forward to today. This SEP account is now at $350k. And this week I converted it over to a ROTH. I also have other IRA's of similar value and gains, one a former 401k.

This was all possible because I bought stocks that basically crashed. Picking some at .004 and now trading at .50 a share. Or buying at .07 and now trading at $2.35 six months later. These weren't guesses but involved a lot of research.

 

[eridanus]

Well, damn. If you keep on going, you'll be hanging out with Warren Buffet. Why would you stop now?

Also, considering your luck/skill, why not get into more leveraged instruments such as futures? You can get a ten-bagger in a week with futures. Forget the penny stocks.

 

[ReadyToRetire]

Don't know about Buffet. LOL But in two months I should be well over 8 figures. I plan to then go into capital preservation mode. I will still continue trading just as I am so I can grow our net worth.

And though I focus on the penny or 'pink' stocks these are not your typical penny stocks. They are all preferred stocks.

 

[eridanus]

And though I focus on the penny or 'pink' stocks these are not your typical penny stocks. They are all preferred stocks.

I've heard of preferred stocks, and I've heard of penny stocks, but I've never heard of preferred penny stocks. Or do you mean penny stocks that are preferred - researched - by you? What broker do you use?

Why do you care about capital gains if all your gains are in your SEP, 401k, and IRAs? It's all regular income when you make withdrawals, except for of course the new Roth.

 

[ReadyToRetire]

I speak of actual preferred stocks. I could make you dig but I'll give you the easy answer. Preferred's get moved to the OTC market in bankruptcy's. (Amazing and surprising things happen in bankruptcy's.. hence the need for a lot of education on the subject matter.)

I am not concerned with cap gains for retirement accounts and I've converted those all to Roth's last week. The retirement accounts we'll use when we are of eligible age.

I am concerned with cap gains in my regular brokerage account, which is the account which will let us retire. So much so that we're discussing the option of moving to a state with no income tax for a year, such as Nevada, Delaware or Florida. And there are a few others. It would be a considerable savings to us and worth the temporary inconvenience. But we also need to factor in the move for our kids, the oldest which is in 1st grade.

I currently use ETrade and TDAmeritrade. They both have their strong points and excellent tools.

 

[seabourne]

I suppose that all I can say is good luck, and be careful - a rising tide lifts all boats, and in a fast rising market the returns for big risks can be huge, but it's like driving a rocket car - you can get where you are going incredibly fast, but the faster you are going, the smaller the bump in the road it takes to throw everything off the road.

Consider the risk/reward of retiring in 3-4 months versus 9-12 months and what the different risks are. If you used classic 4% returns and the sorts of diversification retired people are supposed to use, how long would you have to keep working? If it blows up trying to do it in 3-4 months, how long will it take until you could retire if you had to start your investments from ground zero again? A well considered gamble can be smart, even if in the end it turns out you lose, but don't take a major risk without making sure that you understand what you are putting on the line.

Says the 31 year old guy who is daydreaming about moving to work on boats in Australia with less than $300k in my pocket and a pretty girl on my arm

At least I can get us there with frequent flier miles, though not back....

 

[ReadyToRetire]

Wise advice seabourne.

It hasn't been a swift or fast journey. It's been a 15 month slow climb, with some months barely nothing occurring. However, due diligence is the key and it tells one where the stock is heading.

I've already taken my principal money out so I'm protected against worse case.

There is no easy money or at least rarely and I haven't seen it. I've literally spent every waking day learning more about the stocks I've bought. Looking for tidbits of info that will tell me where they are going. Everyday I've been ready to sell it all if the need arose, but the time never came. And here I am today.

Also.. thanks to everyone who has replied.

And to share a bit about myself, for the past 10 years I've been an independent consultant, incorporated as an s-corp. For a number of years I also owned, operated, then sold a web hosting business in the '90s. I love working for myself. I could never give up that freedom and flexibility.

 

[jwkde]

Delaware has a very NICE income tax and it is definitely not zero. There is no sales tax in delaware but definitely an income tax.

I speak of actual preferred stocks. I could make you dig but I'll give you the easy answer. Preferred's get moved to the OTC market in bankruptcy's. (Amazing and surprising things happen in bankruptcy's.. hence the need for a lot of education on the subject matter.)

I am not concerned with cap gains for retirement accounts and I've converted those all to Roth's last week. The retirement accounts we'll use when we are of eligible age.

I am concerned with cap gains in my regular brokerage account, which is the account which will let us retire. So much so that we're discussing the option of moving to a state with no income tax for a year, such as Nevada, Delaware or Florida. And there are a few others. It would be a considerable savings to us and worth the temporary inconvenience. But we also need to factor in the move for our kids, the oldest which is in 1st grade.

I currently use ETrade and TDAmeritrade. They both have their strong points and excellent tools.

 

[ReadyToRetire]

True. And I was thinking of corporate tax; unrelated.