FIRE — Extended Toy Model

A while back, I looked into a very simple toy model for living off savings. The main idea was to: set aside a yearly budget at the end of the year cover all expenses for the upcoming year using the yearly budget invest the lion share of your salary every month refill the budget a little bit every month The first time around, I looked at a single year. …

Posted on

Living Off Savings & Stocks - A FIRE Toy Model

The FIRE (Financial Independence, Retire Early) community is rather interesting. I periodically read threads like this one, or this one, to get an idea of how other people approach this lifestyle. The goal of FIRE is to ultimately retire early. Yet, the financial independence part (even when you still have a job) is what appeals to me the most. I’m interested in the idea of not living paycheck to paycheck. …

Posted on

1% Rule

The 1% rule is a trading risk management technique that instructs the trader to never risk more than 1% of their account on any given trade. This article from the Balance tries to give some examples but it lost me at “By risking 1 percent of your account on a single trade, you can make a trade which gives you a 2-percent return on your account, even though the market only moved a fraction of a percent. …

Posted on

How To Convert Investment Returns

Usually, we look at investment returns in terms of annual returns. However, yours may be expressed as daily, weekly, or monthly returns. Here’s how to convert them. The idea is to use the general formula for returns and compound them to an annualized period. \[r_a = (1 + r)^n - 1\] Where \(r_a\) is the annual return, \(r\) is the return (in decimal) and \(n\) is the number of periods in a year. …

Posted on

Trading Technical Analysis - A Refreshing Take

There’s some controversy on whether technical analysis and chart reading are better than fundamental analysis and intrinsic valuation. I personally don’t have a dog in the fight. However, scanning reddit, I found a couple of interesting answers to a thread called “Change my mind: Technical Analysis is a complete nonsense” on r/CryptoCurrency Card And the original post on r/Bitcoin Card

Posted on