Author Topic: Rate or slate my investement policy!  (Read 2685 times)

alwaysonit

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Rate or slate my investement policy!
« on: October 08, 2014, 04:56:31 PM »
INVESTMENT THEORY:

I am an Irish citizen but a resident of nowhere so only have to deal with withholding tax. I am certain of this and have been advised so by 3 separate tax specialists, so no need to discuss this part.

For my equity side, I will invest in VWRL (an all world ETF), using Interactive Brokers. VWRL is domiciled in Ireland and traded on the Amsterdam Exchange, so I avoid the USA estate tax and avail of Irish tax treaty rates. The TER is 0.25% and IB charge a maximum of 28 per transaction, or 0.1%. VWRL is denominated in EUR but underlying currency is USD and so interest payments are made in USD to a separate USD account. I will then reinvest the dividends in VWRD (the same ETF but based in USD) to avoid paying to change my currency.

My total equity amount is 300,000 but I have 72,000 tied up in equity like investments which will be treated as equity and transferred to VWRL when possible (May 2015). I will DCA investing 98,000 by the end of October, 76,000 by the end of November, and 54,000 by the end of December. The final 72,000 will be invested in May when my P2P lending has been repaid including interest.

I am still unsure on my fixed income side and will leave this where it currently is, in Irish and UK bonds and bank accounts earning a net of 1% interest. When I have had time to educate myself on investing in the fixed income side of my portfolio I will make a one time change here. Total amount here is 200,000.

MY BACKGROUND AND ASSET ALLOCATION

Net worth is currently 600,000.

I am a 27 year old professional gambler and the very maximum I can see myself losing in one year is 80,000. As my average expected profit per bet is just shy of 10% and I have 10,000 bets per year it is unlikely for a losing streak like this to happen, let alone continue. I spend 40,000 per year.

For my AA, I will knock 100,000 from my net worth and go 60/40 in favour of equities with the remainder. The 100,000 is an emergency fund (it covers 2.5 years of expenses or a maximum loss year plus 6 months expenses).
When I cash out over 10,000 from a gambling account, I will invest it accordingly, bringing my AA back to 60/40 and if I need to withdraw on rebalancing day to take my short term reserves back to 100,000 I will also withdraw accordingly, keeping my AA at 60/40. I will do this regardless of the market.

I will rebalance on the second Tuesday of January, beginning in 2016. If I have between 55% and 65% stocks, I will do nothing. If my portfolio is out of this bound, I will rebalance to 60% stocks 40% bonds. I will also re-evaluate how much the higher bound of 2.5 years of spending money or 6 months of spending money plus maximum possible loss in a year is, as I would expect this to increase with inflation.

INVESTMENT PRINCIPLES
1. Keep costs low, preferably by holding low cost index funds for the long term.
2. Stay out of the CGT tax net as long as possible. If it is unavoidable, sell everything before and reassess.
3. Never try to time the market.
4. Hold the cheapest well diversified ETF that tracks the world holding the assets physically.
5. Portfolio will never go above 60% stocks until I have fixed income (outside of this portfolio) of over 40k per year.
6.. I may change the above dependent on any tax changes relevant to the portfolio
7. Changes to expense ratios and available funds may lead to switching to a cheaper fund.


alwaysonit

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Re: Rate or slate my investement policy!
« Reply #1 on: October 09, 2014, 06:21:33 PM »
I should assume that the lack of replies in the past 24 hours are a positive thing, ie there are not many obvious flaws with my investment policy?

Hotstreak

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Re: Rate or slate my investement policy!
« Reply #2 on: October 09, 2014, 06:32:29 PM »
Your plan looks good.  If you keep up with earnings, you should be FI soon.


You have a very unique source of income (professional gambling) that most people probably don't understand the nuances of (buying, selling, etc.).  You also use a LOT of acronyms, and that confuses things a bit.

sb_NoVA

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Re: Rate or slate my investement policy!
« Reply #3 on: October 10, 2014, 01:24:39 PM »
Never knew there's any such thing as professional gambling?  Fact that you are a gambler and yet you believe in indexing is a very interesting and unique combination.  Even gamblers believe in indexing - surely sounds better than Buffet or Bogle believing in indexing.

MooreBonds

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Re: Rate or slate my investement policy!
« Reply #4 on: October 11, 2014, 06:15:46 PM »
I personally didn't see where there were an overabundance of acronyms that either weren't ETF symbols or fairly obvious abbreviations ("IB" = Interactive Brokers, AA = asset allocation, etc.)

As a 27 year old, AND given current interest rates around the world, I would be hesitant to have 40% in fixed income. Are your bond holdings mainly short-term, intermediate, long, or a mix? the long will get whacked like you wouldn't believe when rates move up just a little bit down the road - and when rates do move "just a few percent", they will actually be doubling. Which will not be kind to the NAV of your bond funds. Besides, what is the dividend yields of your stock funds? Surely they're decently above what the bond funds are yielding? Given your age, I would be more comfortable with more like 80% equities (actually more than that, but you do have a bit of a unique career that I can't quite weigh the risks and variability of in terms of income and alternate jobs you would be able to get).

ScroogeMcDutch

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Re: Rate or slate my investement policy!
« Reply #5 on: October 13, 2014, 05:31:30 AM »
First thing that popped in my mind, can't you move up in stakes with the gambling or did you run into betting limits or skill limits? Would it turn into a losing proposition or are you not emotionally detached enough from the money at risk in the gambling? I definitely understand the desire to park / save some of the money of course, as the volatility of professional gambling itself can already be quite stressful. I agree with MooreBonds though, that I would lower the 40% bond allocation.