In January my 401K and retirement growth exceeded my income for the first time ever!
Gains in 401k, IRA and MAP growth together totaled $8,723.
This was due to annual MAP matching, and gains from a sharp increase in the market. I sold 100% of my portfolio during the month of January as RSI figures were above 90 across the board, and every sale was profitable.
Just days later the market dropped over 10% in 5 trading days. If I had had not sold I would have ended up negative for the month, instead of exceeding my day job income.
Why was this important an important milestone?
This shows that it is possible to live in retirement from my 401K savings using active market timing to maximize efficiency of growth by actively avoiding market pullbacks, but also that it is possible to generate enough income from gains to live from.Converting from a growth model to income model
If I increase my 401K through trading to $500,000, it should be more than possible in most months to withdraw $6,000 after tax per month of trading gains, without reducing the principal.
For example: At a balance of $500,000, following my current strategy of investing 10% of my capital per trade, my trades would be $50,000 each. This means a 1% trade is $500, 2% $1000 etc.
Many of my mutual fund swing trades yield 3% - 5% gains in between 30 - 60 days.
Closing 1 trade at 5% per month = $2,500
Closing 2 trades at 5% per month = $5,000
Closing 3 trades at 5% per month = $7,500
The beauty of my trading model is that it minimizes risk by minimizing market exposure by keeping trading duration short. It achieves growth by ratcheting up my overall balance with small profits on position sales, rather than relying on overall market gain.
It demands some discipline to take relatively small gains often. The philosophy is that it is better to be out of the market with a 5% gain, than holding a fund that gains five percent then drops again.
