• Frank Font

Being Realistic

Updated: Jun 22, 2021

After looking at the different trading strategies and familiarizing myself with realistic returns, I have reevaluated the numbers and are following in the chart. Going off some of the numbers of Reddit, one user averages $400 a week selling covered calls on 600 shares of Micron, which cost about $50 two years ago. That would mean that my capital would have to be around $30,000. I am assuming that there are 52 trading weeks in a year that would be $20,000 each year. That would result in a return of 40%, which is the reasoning behind the return percentage at year 22. Then I referenced datadrivieninvestor, which stated that to make 6-figures a year selling options, you would need $500k. I went with this strategy because it would have reduced risk and likely be a strategy that works consistently. The highlighted areas indicate that I could stop contributing money to the account and instead be able to withdraw specific amounts. They were highlighted in red, yellow, and green to indicate how risky it would be to no longer work at that age and take on trading full time. At the blue highlighted area, I once again assumed that my returns would be lowered to 20%, which is the return that would come from the number calculated by the data-driven investor. The numbers that are in parenthesis indicate money is withdrawn. In this scenario, if I were to start withdrawing from the portfolio at 50, with the portfolio earning 5% after inflation and then 3% after the age of 65, I would be able to withdraw $300,000 and then $200,000 from the age of 65 to 90. That would result in an income that is twice the amount necessary for my ideal means of living during retirement. I did this to give myself a more realistic portfolio on which to base my results.

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