Living off my savings and sharedealing

jamesd

bobbyj, you did write "I doubt I will bother working again" so it's no surprise that people respond as if you're retiring.

Are there any questions you have that haven't been answered yet?

zygurat789

jamesd wrote: »

bobbyj, you did write "I doubt I will bother working again" so it's no surprise that people respond as if you're retiring.

Are there any questions you have that haven't been answered yet?

To be fair he did say in the OP that he was in his 30s. It just goes to show people don't read everything before they post.

sillystudent_2

Umm I'm not sure if this has been mentioned here but in regards to tax, a very easy way to avoid paying income tax would be to spreadbet rather than sharedeal.

Let me explain quickly - I'm definitely not advocating the ridiculously leveraged examples of spreadbetting you see in the news, where people lose their shirts in a week. But take this (simplified) example:

You want to buy £10,000 of RBS shares, which are currently at 50p a share. You could simply buy them through a sharedealing broker (like you probably do atm) and if they make a profit you will pay tax (if it exceeds the threshold.)

However, if instead of buying £10,000 RBS shares, you took a "bet" on RBS shares through someone like (say) igindex or cityindex, you could bet £200 for every £1 movement in share price. The risk/reward is exactly the same to you - if the shares go to zero, you're down 50*200 = £10,000, if they double, you make £10,000. (this also allows you the flexibility of 'shorting' shares by betting on them going down.)

The only difference is that spreadbetting is classed as "gambling" and is thus exempt from tax. (one downside is you won't get any dividends from the shares however.)
Obviously the main thing with spreadbetting would be to not start leveraging yourself and taking bigger risks - if you take exactly the same risks as you would've by actually buying the shares, you can't really lose - only the taxman does

zygurat789

Since you've got a gambling streak how do odds of 112,000,000 to 1 sound?
But, seriously, why not become a share-tipster you could start by putting one up here, now.

bobbyj_2

http://www.thisismoney.co.uk/pensions/article.html?in_article_id=491969&in_page_id=6#ixzz0fdg0JXrY

sabretoothtigger

for every £1 movement in share price.

you mean 1 pence movement. Mr brown would be very glad if rbs moved near to a pound worth each after they have quintupled the shares in circulation

Historically, shares have tended to rise and have made better returns than cash or fixed interest investment. According to the Barclays Capital Equity-Gilt Study 2008, over the past 50 years equities have produced an average annual real return (above inflation) of 7.2%, government bonds (gilts) have delivered 2.4% while cash has posted a mere 2%.

7% growth every year on average sounds pretty high.

According to the FT since 1984 for FTSE 100 its been an average 6.45% per year growth and I think that includes dividends reinvested but does not account for inflation of 100% during that time, i.e prices doubled and money became worth half as much as mid eighties
http://markets.ft.com/markets/interactiveChart.asp?ftauth=1266443982586#

cloud_dog

bobbyj, I'm ever so slightly confused as to your question. And my reasons for this are......

* You are a successful trader (you've found something your good at)
* You can lay your hands on approx £500k
* Your looking to make an extra £2k pm doing something else
* You feel you should be able to generate an approx return of 30% pa

Why don't you just concentrate on what you appear to be good at doing, use the £500k (or whatever proportion your are happy with) and trade. Using your figures you should be able to get a return of about £10kpm. I'm sure revenue of approx £100k pa would keep you in suitable lifestyle without eroding capital (perhaps you could slum it an live on only £80k pa and continue to increase your capital).

I just don't get it, why look to make money doing something different and introduce risk and opportunity costs?

You have your panacea and yet you can't see it.

bobbyj_2

yes you are probably right. I'm still looking at creating a 'guaranteed' smallish income though to go along side the trading profits from my shares ISA, say around £800-1000 a month so researching 5 yr bonds etc.

It's interesting that when people research returns on equity they always seem to quote the ftse 100. Don't people realise not everybody sticks to ftse 100 all the time??? Look at the last few days and see what you could have made (although these are AIM stocks) FEP for example and COV today. Maybe I should have declared in my opening post that I was much more biased towards trading rather than investing as well.

aspiration_2

Bobbyj - Whatever your reasons for posting, it has given paupers like me hope. Congrats. Could you please PM me some tips on the Stocks (any exchange) and what software you find useful? Thanks

bobbyj_2

I don't have to PM you.
If one is serious about making money on the market then level 2 is a must, everyday should start with a look on investegate to see which cos are saying what (for instance COV announced this morning and the news was good re oil strike and so I bought first thing at 29p and i'll be looking to exit in the morning in the mid 40s).
I also use igindex for top movers up/down min by min - another must.
Also I periodically look at the ftse 350s biggest losers over a month and look to see reasoning. If it's not news related falls then it's probably sector out of favour and so i may trade it back up over a period of time. Last post re shares as the do-gooders and thomases on here will have me arrested and chased off.

ps never by a tip, the marketmakers will suck you in and spit you out, always sell a tip. Good luck.