Is it time to quit the day job?

10th Apr '21 by Bluesky Ventura

121 comments 4792 reads

Is it time to quit the day job?

As the title implies, I am giving serious consideration to giving up my day job and fully focus on investing, and I would really appreciate the thoughts and advice of the Stockpedia community to help with the following questions;

1. Should I quit the day job and focus on Investing full time?

2. As investing will be my only Income, what should do to keep my family financially safe and secure?

Investing with no idea -No investment plans, no analysis, no rules.

Having sold a property and having lots of cash looking for a home just before the 2008/9 credit crisis, I placed a lot of money into the stock market. I chased beat-up stocks, with no analysis and no plan. With stock markets going down and banks looking cheap I thought this was the best place to put all my cash into the market stock market believed I was about to make a fortune. It did not end well with investments losing more than 50% of its value in 2008 and taking 5 years to break even.

Why I’m considering quitting the day job this year

Since 2009, I have read plenty of investment books and joined Stockopedia in 2012, which has contributed to my understand and knowledge about investing in stocks and building a portfolio. I now always think about my returns pre-Stockopedia (-11%) and post-joining Stockopedia (20% plus). I disclosed the yearly return including the dividends below for a more complete picture.

The last few years have been exceptional with covid imposing lifestyle changes on everyone. For me, it is one of working from home and saving time traveling to work and clients. This has given me time to test run what might be possible with a more hands-on investment strategy. Having grown the portfolio value by more than 20 times my take-home pay, with profits all wrapped up in tax-free ISA’s, I seriously considering quitting the day job and investing full time.

I invest using a buy and hold long-only strategy, using technicals to add to positions. 25-35 stocks are held based on personalized rankings and evaluated every Quarter. Selling is predefined based on the stock fair valuation and market cheapness/expensiveness.

Plans to keep the family financially safe and secure.

The biggest worry in executing…

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Bluesky Ventura

15th Apr '21

Let me thank everyone for contributing to this conversation, it has really sharpened my think extended the options available to take the leap.

I will definitely investigate working part-time or taking a sabbatical.

Thanks again

BSV

mckennajewels

16th Apr '21

Robbie Burns is a top trader and a very nice bloke. He would be a great role model in transitioning to full-time trading. I think he would be the first to say that you need stops!

Martin VT

18th Apr '21

Hi BSV

I became a semi-professional investor a few years ago. This path developed over a few years.

My particular advice is to really work on your partner and her understanding of what you are doing, and what the stock market is about. My wife started out with a view of owning shares as equivalent to gambling. She now has a far better understanding of what I invest in, how decisions are made, how risk is managed and generally how individual stocks and markets generally have lifecycles, so that a soggy or down period of itself is not necessarily a reflection of a poor investment. A lot of that has come through regular briefing and discussions (eg I’m thinking of this, for these reasons, how does that sound?)

This culminated in me having a disastrous Feb / March 2020, when our own health issues took attention away from the market at just the wrong time (something that I have given much thought about how to avoid or mitigate ‘next time’) and consequently our portfolios lost half their value by March 19!
My lovely wife took it in her stride and I worked hard at turning things around and we are now +30% ahead of our pre Covid peak. The point is that although she liked it no more than I did, she did not panic, or even unduly worry - that makes this lifestyle so much more pleasant and easy to manage.

Short message: talk to your wife....a lot.

Indie

Hi Martin VT, if you do work out how to avoid your portfolio being hit if you were ill, it would be interesting to hear it. Does it come down to the automatic stop-loss/no-stop-loss debate or would it be more like human intervention through a power of attorney?

19th Apr '21

Hi Martin,

I Glad to hear about the recovery of the numbers and hope your health has returned as well?

Yes, agree it's important to be open and transparent with one's partner as this is our family's resource, not just mine.

Great advice again.

Tommy H

I like the book title, though I would have to go with from Little Chef to Millionaire.

Though I doubt it would sell as much as the Little Thief puts me in a certain age bracket and demographic of my mum taking my sister and I for several hours in an old estate car to stop with relatives for a weeks summer holiday and where to stop with a clean loo that we could use, and then go outside to eat our sandwiches!

Tommy

Appreciating your thoughts on the SCVR and taking a break from work that I am not wanting to do.

FOR FULL DISCLOSURE I HOLD!

I am 46, wife 43, children 7 and 5.

Sorry just deleted a lot of irrelevance.

Whilst very unhappy with work (and life) in ~June 2019 I made a "Can I retire at Christmas" spreadsheet, based on a draw down strategy. I got a clever colleague to check it as knew he was in a better financial position to me, and his answer is do not retire, get a part-time job lecturing at a local university as you will get bored.

So we have a family home with no mortgage.

We have about 3 years of outgoings in cash - slightly smaller than your 5 but currently we do not touch this as we both work currently, and are adding to cash/shares/pension accordingly.

We have a rental property (no mortgage) which would gives about 1/3 income required. If sold would give about 8-10 years to live on (without reinvesting).

I have private pension, mostly DC, but with Fidelity/Aegon not SIPP, long term lifestyle strategy but staggered retirement draw downs 65/70/75/80/85 with about 20% in each age range. Figuring we want more at 65 than we do at 85. No we do not cruise.

I need about 9 years more contributions to get a full state pension, but get some through child benefit if I stopped PAYE work now.

HAVE YOU GOT FULL STATE PENSION ENTITLEMENT? Easy to check and you can but extra years fairly easily, but worth getting and knowing about.

My "Can I retire at Christmas" is based on 5% investment return and 2% inflation and having money left at 100. Obviously it can be swapped around and happy to share if you drop me a note. But this allowed a number of scenarios to be played with and right now the answer is without either of us working, not touching the cash savings, and this does not make any allowance for my wife's NHS/State pensions we can both stop work today.

To disclose we are currently going through another major life changing event, my wife having lost her dad 2 years ago is now losing her mum hence this is very pertinent to my supporting her, she just returned to work and retrained after 7 years break and hence feeling very bad about potentially walking away 5 months after finishing training (NHS).

I would say do the whole track what you spend is very useful, a friend has been doing this for years (retired at 56 and now 65) and shared with me and it was wow you spend less than you think. I started doing this least year after reading Rich Dad, Poor Dad by Robert Kiyosaki. Our monthly spend does vary massively, but average is about £3k/month. But I also now have a good understanding of what a "hermit" would cost, e.g. food/bills/basic life, and the nice stuff, decent holidays and all that. But you realize that home cooking costs a lot less than eating out even with really good quality meat/fish/wine.

So the thread has been very useful thank you.

I would say lessons learnt from being furloughed last year are have a plan and make it work for you all. Whilst it was a financial disaster zone for me, I was at a low point July 2020. So the work at investing 3 mornings per week 9-1, exercise 2 mornings a week, mental stimulation, family activities and all that. I was flexible in that I could change mornings but I was fairly strict on the hours, e.g. fair weather cyclist!

I have opened up discussions with my employer (based on my mother-in-law's illness) to go to 30 hours, e.g. 9-3:15 5 days, my boss obviously does not want that, but knowing where our lives are I may force it next month. But I, like you, can afford not to work and I know that there are other jobs out there if I wanted/needed them. Obviously I work in Construction so they are less enlightened to the flexible life/work approach everyone wants you 40 hours (and then all the free overtime) with 25 days leave.

I would say nearly 2 years after making major changes to my own career/life I have no regrets. Yes I am working but this is now a job that pays well (offered me a lot more than I thought they would), requires no travel and I work at home 4 days currently, so suits, but it is not a career, it is an income and I can walk on 4 weeks notice. But my wife leaving at 5am to a hospital call, I just got up breakfasted and dressed the kids, took them to school, will collect, do swimming, Beavers and tea and that is wonderful for me, and the girls like too hopefully. I am very clear with the girls what is going on with Grandma and why mum has been away so much the last three weeks, and my eldest was very clear that she does not want daddy working away anymore last night.

I was going to say that I have lots of thoughts, based around Maslow, on things like why work and the mental management process. My childhood and upbringing means not working seems totally insane but my parents are both very supportive. Given the reactions of most of my ex-colleagues, it is amazing who soon loses touch, when you do something different - I might as well say I have leprosy. But friends highly supportive, and lovely to have some of my wife's friends reaching out to help them with financial thinking and saying why do you not do part time financial advice?

I would also add that we are in the process of setting up our children's financial independence, so they have JISA's (Fundsmith) since they were born, not maxed out but healthy valuations, and I am toying with starting pensions for them too - more stop them spending the lot when 18, but do not think that they will. But we are honest about money with them, so why save, no you cannot have that, you do have to work as dad is not working for ever. But more that they are not tied to me.

Good luck!

Postscript note:

My portfolio currently looks like:

Rental property (one house) ~ 35%

DC Pension (Fidelity/Aegon Lifestyle Strategy Funds) ~ 55%

Investments (ISA 65% / Shares 35%) ~ 10%

heregoes18

Interesting thread, lots of great responses/information.

One area to consider that I don't think has been mentioned yet is the risk of holding cash above the level of protection that is offered by the Financial Services Compensation Scheme (currently £85k 'per financial institution').

PhilHofGrowYourDough

My advice would be rather than quitting your day job to focus soley on investing quit your day job to do something you love doing (hopefully with a salary) and keep investing too.

I embarked on that journey when I retrained from software development to becoming a counsellor, which for one's own sanity has to be a part time job and as a result doesn't pay well.

Investing gives us more options as a family plus I get to do something which I think is meaningful rather than just piling up cash.

Best of luck
Phil

Boon

2nd May '21

Quote: "I invest using a buy and hold long-only strategy"

Naturally, this works in a bull market between crashes/big corrections, so your investment strategy has been untested over a time horizon that includes a crash (bar COVID, due to its exceptional nature).

3rd May '21

Hi Dahokolomoki,

I absolutely do not make any claims of having a strategy that is good or poor. I am just looking for insights to figure out if I should quit the day job.

I do find your comment to be basically incorrect, as 2008 and 2020 are both market crashes and the returns are included in the table. So by your definition, the returns have been tested over 2 crashes.

For the record personally, I consider returns were very poor between 2008-2011, were good between 2012-2019 overall, and exceptional in 2020/2021YTD.

I have no idea if the 2020/21YTD returns are due to a genius change in processes/strategy or just dumb luck. I am really happy with the return either way. If the outperformance persists I might have to write about it in more detail.

andrewdb

The weather is not so good here this w/e so I sat down and wrote a stochastic projection tool last night / this morning.

The results worried me.
Basically worked out some time ago that if I get 7% pa on the fund, at age 103, the pot is still in a v.v. healthy state.
But that is 7% pa _every_ year.

In real life 7% pa on average is more like 7,0,14,-14,28 (averages to 7) - this is what a stochastic projection tool does, generates sets of random numbers that have the same sort of distribution as FT index returns) and in that case I stand a good chance of running out of money.

This is very much in line with many other earlier comments on the impact of sustained adverse market conditions over a number of years.

The question I need to answer for myself is whether the projection tool I 'borrowed' is any use (https://livrepository.liverpool.ac.uk/3026401/1/SahinS_1010_macs%20%283%29.pdf) - the wilkie model is a bit old-school but I have fond memories of if from my days as a (failed) actuarial student.

The question that is relevant to this thread is essentially "how little can I live on" - if the market falls 10% pa for 3 years, can you live on 30% less?

The Phoenix

To be fair to Bluesky Ventura he did say he would keep a five year cash buffer to maintain lifestyle in such an event I guess the issue would be what would happen if we did get a pro-longed bear market in excess of five years although these days with QE to infinity bear markets don't seem to last that long.

Hi Andrew,

It a really good question and thought-provoking. It made me model what would happen in my worst 10 years were it to repeat again. For illustration and simplicity, I've used an imaginary £1M OR £2M pot/fund, and a £30K minimum to live off for 10 years.

When the pot starts at £1M with low returns over 10 years I could run out of cash. Possibly taking 20% of the profit from good years will keep the cash balance healthy, but overall returns would be lower.

When the starting pot is £2M a period of low returns is much safer.

Ultimately I'm only contemplating, in the belief I can make superior returns, but think it is worth waiting for the pot to be large enough to cope with an extended period of low performance.

rincao

If its buy and hold keep the job, its not going to take all your day time up, go do something you enjoy and get paid for it?

25th Jun '21

Hi Bluesky just wondered any nearer escaping the 9/5 grind ?

26th Jun '21

Hi Andy,

Yes, a plan is afoot.

Step 1 - Having spoken to my boss about the route to working part-time, it seems a plausible option. We plan to discuss it in detail at the next review with the expectation we can make the change in early 2022. We also discuss taking a sabbatical which also looks possible.

My investment process will mean I have a lot of spare time, and I want a clear idea of how I'm going to use it below to make a clear break from work.

Christine H

28th Jun '21

Having no mortgage and living a simple life would greatly reduce your income needs. That is what we did. "Retired" at 44 in 1998. Never splashed any cash until recently (when the pensions kicked in).

So go for it, we feel it has added years to our life. (I will say that our kids have the ambitions of a dead sloth though).

29th Jun '21

Thanks, Christine,

It great to hear how well it has gone for you.

I told the kids it's all going to charity, and they'll have to make their own way in the world, they all seem to be driven for now. (Got themselves a good education).

Is it time to quit the day job?

Is it time to quit the day job?

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Bluesky Ventura

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