Do I go for it ?

Growltiger

I think you are wrong about the Housing market and interest rates - I am sure we will see 5% this summer but no more this year. GB does not want house prices to fall for a number of reasons, too many to list here but he needs builders to keep building to keep up with demand.

Until we have enough houses in this country to meet demand prices will continue upward. Next wave of European Migrants will want housing, largely in the SE and largely to let - boosting the Buy-To-Let market again.

Crashes only happen when people can't afford their mortgages, mortgages are not structured like they were in the 80's anymore. Banks and Building Societies recognise what went wrong before and can accommodate people's budgets in other ways eg lengthening the mortgage period like they do in Europe when interest rates go up, payment holidays or switching to interest only. In the 80's people just couldn't afford the payments and had to hand the keys back (on mass!). That is unlikely to happen again. Besides - we will all be able to go and get Euro mortgages at 3 - 4% soon.

That's my opinion anyway. I'll eat my horns if I'm wrong.

LWB
 
LWB,

The housing market may or may not continue up. But in his position, he doesn't need the extra stress of worrying that his livlihood is dependant on the housing market as well as his ability to trade.

His trading abilities are under his own control, but the housing market is not. It is also a very illiquid asset - anyone who remembers the early 90's will know what I mean & aren't these things supposed to come in 11 year cycles?
 
Skim,

I suspect that you can only enjoy the frugality you talk of when it is in contrast to having had the higher living standards many people aspire to. I agree completely that your values are the correct ones, but if you've lived 'without' all your life, I imagine you would not gain the same pleasure from being frugal.
 
LWB

And Wives do NOT always think of themselves and the kids when money is tight - what rubbish.

What absolute sh**e.

What I said was:
"The one thing that stood out in all this was that when pushed to the edge a womans priorities are herself and the kids."

I did not say "Women think only of themselves and the kids when money is tight". What I did say was carefully considered and carefully worded. Read it again. Not quite the interpretation you made, is it?

If you read properly my little piece you would appreciate that money had been tight for two years and she had stood by me and got a job and when I say tight I mean very tight. It was when we were facing disaster and there was no way forward and it was going to affect us for years to come that she jumped ship. She was a good wife and a good woman and simply had had enough and just wanted a life where every second telephone call and letter was not from the bank demanding money we did not have and did not look like having for many years to come. Where the hole was that deep that the interest the bank wanted to charge on the outstanding amounts was more than we could pay, never mind repaying the capital. You want to know the best bit. We would have had very little debt if the house had been sold at the market value. It was sold for less than half its real value and we knew at least one bid was for significantly more than the accepted bid. That was the final straw. When we closed the business we knew we would have some debt after everything was squared away but to then find ourselves facing a significant debt (that was growing) was a kick in the teeth.

Try reading it properly and give some thought to the difficulty of opening this to a public forum.

I felt that my own experience of taking a similar step to the one being contemplated would perhaps stop someone possibly exposing themselves to the hardship and very difficult times I experienced. I thought I had managed the risk, at the time, and we both understood that we could be starting from scratch from a financial point of view when the invoices we presented went unpaid. What we had not expected was to be facing bankruptcy or a lifetime of debt.

We know trading is a difficult way to earn a living. A large percentage fail and lose money. The failure rate is said to be in the order of 85 percent. With those odds against you then caution is surely the sensible and only option. Maintaining a life style that requires a significant monthly sum when starting a new business would not be a cautious approach in my book.

If passing on my experience of what happens when things go wrong causes just one person to plan a little more or think a little longer and deeper about what they are about to do then it has served its purpose.
 
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Just my 2 cents on what money is for. Independence. It's the ability to stand on your own two feet and tell someone to bug off and not have to tolerate their crap because you need something from them. That and the fact it gives you the ability to keep the things you can't buy, such as time.

So you were saying that you are no longer looking forward to IT Recruitment positions? Then don't spend any more time being dependent on it.
Best wishes.
 
LWB

If you are wrong about the housing market, and eat your horns, that will not do Hopefull much good. So far as his business planning is concerned, the question is not whether the housing market tanks, but whether he can afford to take the chance that it may. If the chances of failure as a trader are 80% and the chance of a housing crash is only 20%, it still does not make sense to gear up your house to support a new venture as a trader when pretty much 100% of your gross assets are represented by the house. If you start by eliminating the debt, and downsizing your house so that you are living in only 50% of your gross (and net) assets, the position is much less risky. The loss of upside, if house prices continue to rise, is just an opportunity cost; the risk of going bust while you find out whether you can trade is much reduced.
 
I would think the possibility of House prices falling sometime soon is > 50% given they are at an all time high on the affordability index and interest rates are likely to be substantially higher after the next General Election.

JonnyT
 
Serious question (to be explored by those with more knowledge...?)

Couldn't Hopefull (all of us for that matter) hedge his house's value?

IG Index I know for sure offer a bunch of house price related instruments.

Just how viable would that be?
 
JPWOne

Obviously this is a very sensitive subject, you were indeed courageous to talk about it and I waded in too heavy there - sorry for that.

As your statement does generalise about a woman's reaction to being in that situation that is what I think is unfair.

It is your experience of how your wife reacted which is in your view is reasonable given the circumstances in which she found herself and your children.

A wife deciding to go it alone with the children in that situation is perfectly reasonable and her choice, putting her desperate husband's clothes in bin bags and locking him out is not necessarily the reaction most men should expect, and dare I say it - not reasonable in my view, making anyone homeless for whatever reason is not reasonable. The old saying comes to mind 'don't kick a dog when he's down'.

What I should have said, and I apologise prefusely for my previous wording, is what I really think and that 'Hopefull' should not be worried about his wife reacting like this if he loses alot of money, as we are not all the same. However, your experience will no doubt contribute to helping him make the right decisions. He has had a varied and mixed bag of views which is interesting to read in itself as it proves that Traders are not all made of the same stuff - this has helped me learn more as it was implied to me in the beginning that you had to be a certain type of person to Trade well - not so it seems.
 
There was a guy a few years ago who sold his house, downsized and started trading for a living. He wrote a weekly column in the Sunday Times for a couple of years and posted on advfn.
Very early on it became clear to me he was not going to succeed and I quietly offered him some very discreet help. I felt sorry for his wife and kids and I thought he was going to be publicly humiliated in the Sunday Times.
I know other professional traders who also offered to help him and whose offers he also ignored.
After two years his column was stopped and to the best of my knowledge he joined the thousands of other would be traders who think they can teach themselves to trade and fail.
Perhaps his experience is worth remembering, "hopefull".
Richard
 
Well done Skim. And knitting your bears for the little kids to boot. Im sure you'll go to heaven.

All this reminds me of the old storey about the management consultant on holiday in Spain. He meets a poor fisherman in a little village and helps him build his small fishing business in to a multi national global fishing interest, listing on NYSE etc. 40 years later, the 2 are talking and the fisherman is thinking of retiring. His dream is of the simple life in a small Mediterranean coastal village where he can work his own hours, do his own thing......

Anyway folks, life's what you make it and you only get one pop at it.

Good to see most people here aren't the 'know the price of everything, but the value of nothing' types.
 
Perhaps one option Hopefull has is to just up sticks and move to a cheaper part of the country. That way he can keep the same size house, and do away with the mortgage.

If trading is going to be his game, then it will not matter where he is based as long as there is a good Internet connection. And a complete change may also remove the cobwebs and help put him in a new frame of mind ready for the new challenges ahead. I'm not suggesting that he has a problem in this area, but when one door closes and another opens it's often nice to have a new view from the door too.
 
There was a guy a few years ago who sold his house, downsized and started trading for a living. He wrote a weekly column in the Sunday Times for a couple of years and posted on advfn.
Click to expand...

Mr C

I remember this guy and used to read his column every sunday.

At that time I was just getting interested in trading and learning all about T/A etc. I wasn't actually trading at the time but I quite often cringed at some of the things he was doing.

ie buying the likes of BT/ vodaphone, when we were clearly in the midst of a tech/ telecom share bear trend.

The profits he took were small and the losses he took were large.

Even in my early stage of becoming involved with trading, I could see it was a recipe for disaster.

To be fair to hopefull, he seems to have a good grasp of trading to say he has only been doing it for 4 months and obviosuly has a level head on his shoulders and won't be doing anything rash.

To Hopefull, if trading is your passion, go for it one way or another. My opnion FWIW is is to try and do something part time to create an alternative income to trading, even if it's self employed/ contracting type work. Given the equity you have, I think I would also release some but not a huge amount, maybe 50k and give it a year, see how it goes. If you make a good return on 50k in a year, then go full time.

I read somewhere that many traders will keep 50% of their trading capital on deposit, placing the other 50% in to their trading account/s. With this in mind, a current account mortgage may be a good idea. ie have a facility to draw 50k of equity. Only actually draw 25k and leave the other 25k available. That way, you will only actually pay interest on 25k but the other 25k will always be available if required for additional margin or whatever.
As your pot increases (thats the plan anyway), you can adjust and repay part of the mortgage debt. You then keep adjusting the mortgage debt until you no longer require it.

I am considering a similar thing myself but I am still in full time employment and don't have as much equity. The principle of raising some additional capital though is quite appealing to me.

Hope it goes well whatever you decide.

PS Great thread.
 
Freedom has given me that same long happy smile for the last four years.
Click to expand...

How far into the 4 years were you when the smile became a fixed permanent grin Richard ?
 
After two years his column was stopped and to the best of my knowledge he joined the thousands of other would be traders who think they can teach themselves to trade and fail.
Click to expand...

Could you define these type of people a bit more specifically Richard. Are they people who do not seek any sort of professional training, do not read books, are not avid T2W readers etc... ?
 
Salty

The particular chap in the times I recall remortgaged his house and decided to "trade" UK stocks at the height of the tech boom.

He sought no training, did no studying as far as I am aware, just started buying/selling

He only ever bought shares, ie went long and it was on the back of things like "well there's some news due on this and profits might be up, so I'll buy".

No t/a, no charts, no money management strategy, no stops etc.

Basically, he wasn't trading as such, just buying/ selling on a whim.

The ironic thing is, if he'd done it a couple of years earlier, He probably would have made a fortune as many people did. (but then again he would have probably then lost it all again anyway)
 
Hmmm, I guess that the majority of failed traders are the ones who are really gamblers and not risk managers.
 
darrenf,
He actually tried to teach himself how to trade by reading books, websites etc after a little while, but still couldn't make it.

Salty,
In broad terms, the vast majority of would be traders try to teach themselves from books, attending endless public seminars, (some of which are very useful - especially the ones I give ;-)) - many are useless) web sites etc. Some even read the comments of BB contributors and think because some people sound more knowledgeable than themselves they must know what they are talking about. Although there are nuggets here and there, most speak without sufficient knowledge or experience and are often misleading or plain wrong.
Of that universe of would be traders, many fail early on, many struggle on for years.
Only a few make it. They are the result of Darwinian Natural Selection.
The chances of success of any would be trader are hugely enhanced, but cannot be guaranteed, by personal 1-2-1 coaching.
In my experience coaching people from all different backgrounds, there are certain qualities which almost preclude success as a trader, but that's another subject.
Richard
 
On the basis that my trading is in a continual process of evolution and progressive change, hopefully I might survive as one of the fittest.

Would dearly love to hear in your opinion Richard, what qualities preclude success.
 
"Darwinian Natural Selection"...LOL...how about a poll to see where people think they are in the food chain..?..
 
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