Why you can’t quit your job to become a full-time investor

The best investment you can make is investing in yourself. ~Warren Buffett

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A quick look – It could be lonely and frustrating, more dangerous to your sanity and financial well-being.

A long look – First a clarification. I am No full time investor ie me and my family are not dependent on the stock market for life. I make my living by teaching people how to invest wisely in stocks and how not to blow it as an investor, and by selling books. And I invest a large part of my savings in stocks. But I won’t have sleepless nights if the stock market were to tank tomorrow and stay down for the next year or two, because that’s not what oats and sprouts earn me (I don’t eat “bread and butter,” you see).

Anyway, the reason I’m writing this post is because this is a stage in the market where I’m seeing several questions from readers about how they can quit their jobs to become full-time stock market investors.

In most of my answers, I’ve asked people not to quit their jobs to become full-time investors, and here are five reasons I’ve often mentioned to support my reasoning. In case you’ve had this question but were afraid to ask, I hope the information below will help you make a decision.

Please don’t take my arguments as a deterrent if you really want to become a full-time investor (although investing is not a full-time activity anyway). I’m just sharing what I’ve learned and experienced over the years, and feel free to ask more questions and share your thoughts or counterarguments in the Comments section of this post.

5 Reasons Why You Mustn’t Quit Your Job To Become A Full-Time Investor

1. You don’t have to get rich by investing – With the overall market doing pretty well over the past few years, and with lots of people venting their rants on social media, it’s no wonder that many people looking to quit their jobs become full-time investors. because they think they have “a knack for spotting potential multi-baggers”.

However, such ideas are often masked by survivorship bias, which is the logical fallacy of focusing only on people or things that “survived” a process, inadvertently overlooking those that did not. So taking inspiration from other full-time investors who made good, fast, money in stocks, and ignoring others who followed similar processes but ended up in disaster, can lead you to false conclusions about your own potential as a full-time investor.

Plus, like them, you don’t have to think of investing as a way to get there make you are rich…but the way hold you rich i.e. it will help you to grow your purchasing power.

Look at your work – job/profession/business – to get rich and focus more energy and focus there than on the stock market. This is another reason why most of us should only consider owning high quality businesses where we don’t have to spend a lot of time answering a lot of questions.

2. Investing is not your passion – Yes, I know that the stock market excites you and that you think you have a passion for stocks. But if you could look deep inside, you might realize that what excites you is not the idea of ​​”investing in stocks”, but the idea of ​​”investing in stocks that will grow and get rich quick”. Or why else do you look forward to Monday with great excitement if not for the kick that logging in to your online portfolio tracker gives you? Yes, yes, I went through this and therefore I could very well relate to it (I don’t have an online portfolio tracker now).

For many people in the stock market, “I have a passion for stocks” is often the result – not the cause – of “I’ve made good money in stocks in the last few months/years.” Most of us can’t tell the difference between luck and stock investing skill – how for ourselves, as well as for people who brag about their great tips on social networks. And passion for stocks often dies with a stock market crash.

So please be careful – clearly know what you enjoy and it doesn’t necessarily have to be the stock market.

3. You have not experienced a deep/long bear market – When I say “experienced” it’s when you had 80%+ of your savings invested in stocks that went down 50%+. From what I can tell from the emails people send me asking if they should quit their jobs to become full time investors, most of them have been investing/speculating in stocks for less than 5-7 years. This means they haven’t experienced a long/deep bear market in stocks with a large portion of their money invested… meaning their guts haven’t been tested to stay sane in a rough market.

If this is the case for you, don’t jump into full-time investing until you’ve gained that experience. In fact, if you are serious about becoming a full-time investor, first learn how to do it sensibly, test your skills (by investing some of your savings in stocks) and courage to own stocks for at least five years. and check how you did during this period. Only then decide.

4. You may not have a solid support system – It is easier for you to convince your family when you start investing full time without another regular source of income. You have savings to see you through for a few years (this is very important), your spouse believes in your ability to do well, and your children would love to see you spend some more time with them.

But then it’s easier compared to what? It is easier compared to convincing yourself and your family for more than 1-2 years in case your investments are not earning well enough to help you maintain your standard of living. Or if you don’t have an adequate amount of capital invested that brings you enough income as dividends.

If this happens, your support system may be at risk of breakdown, which may ultimately lead you to make poor and hasty investment decisions. Then it could become a vicious cycle.

So, even if you want to become a full-time investor, secure a regular source of income – perhaps through a small business or part-time job, or if your spouse is ready to happily take on the main earning role. This would give you the time, confidence and savings to work towards your goal of becoming a full-time investor.

5. You have not handled loneliness and boredom well in the past – Being alone can get terribly lonely at times. Plus, if you’re an investor and you don’t have a new stock idea to work on—perhaps the markets are going up across the board—it can also be very boring. If you have never experienced such emotions of loneliness and boredom in the past, be forewarned because it can lead you to make bad investment decisions just because you are not in the habit of being inactive or sitting still while everyone around you is acting. The pressure to “do something” is often so great that people do bad things when they would rather do nothing.

Of course, you can find investment partners or groups to limit your loneliness. The silence you experience from time to time as a full-time solo investor can be deafening.

Still want to quit your job?
Despite my disappointment, if you still want to quit your job and become a full-time investor, or pursue another passion, here’s a checklist to help you. These are some lessons from my experience leaving my jobso they can guide you in some way in case you are in the same boat as I was over a decade ago –

  • You don’t have to quit your job if you can work on your passion for investing or something else. In fact, leaving your job should only be a last resort or when you find the burden unbearable and offensive.
  • Quitting your job and living a fulfilling life isn’t as easy as it might seem for those who have done it. Things are scary at times.
  • Quitting your job will affect others in your life, so it’s important to have an honest conversation with your family first and get them to make the decision.
  • Learn an important and marketable skill before you quit your job and start out on your own. You need to have an alternative source of income to support your family in case the stock market doesn’t value your decision and reward you for the risk you took.
  • Quitting your job and living as an investor can be a road to hell. Don’t expect to get rich by investing, but to be rich. It is the earnings of your labor and what you do with it will make you rich.
  • Commit to minimalism and lean living for at least a year or two before you plan to quit your job. Instant compromises are heartbreaking!
  • Save money to use as seed capital for your business, then keep costs low. Don’t borrow money for your business until you generate cash. As an investor, you hate cash guzzling businesses, right?
  • Don’t believe people who tell you – “How I quit my job, doubled my salary and cut my hours in half”… or something like that. They won’t help you if you reach the point of no return.

All clear?

You have my best wishes if you still want to quit your job and become a full-time investor… or if you want to quit your job and pursue something else.

I’d be happy to help if you have any questions that I can try and answer.

And by the way, to answer the question of how one prepares to become a full-time investor, here is a checklist I drew up for people who want to ignore my warnings and start investing full-time. Note in particular in this checklist aftermath how to do it wrong

Checklists save lives in aviation and medicine, as well as in tasks that involve a lot of bias and uncertainty… like investing.

I hope this checklist helps save some (financial) lives too. 🙂

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