After-work Activities: Should you Trade, Invest or Study?

Among the perks of undergraduate living is that you are free to canoodle with spreadsheets.

This spreadsheet attempts to put in absolute dollar terms, the cost of pursuing 3 activities in one's adult life after work hours that doesn't involve liquor, women/men, social activities etc. over 1 year and excludes cost of living.

In this hypothetical case, Mr A Hardy either actively trades with a strict money management strategy, invest for the long haul (i.e. A Long-only investment strategy, but Mr A Hardy believes in careful allocation of funds across portfolios, so he insists on picking his own funds/ stocks/ bonds etc. No shorts or puts or speculative derivatives trading, however) or he can pursue his MSc in Financial Engineering. A course of study which opens doors and earns him the right to climb into a higher tax bracket. (or so he hopes!)

Here's a couple of non-surprising findings.

Trading is ok when one does it for a hobby, but it blows once you do it for a living. Take a look at line (L) of the spreadsheet. By far, investing gives you a much larger share of net wealth, and this is before Cost of Living mind you!

Also note, that these activities are over a 1-year basis. So the negative Net Wealth for Studying Option is amortised over the rest of your remaining life. Furthermore, you make up for that loss by moving into better paying jobs, or earn a higher salary.

Trading, some claim, offers an additional or alternative stream of income. This is true so long as the input less than the output. Consider how much effort,energy and time it takes to maintain one's shareholdings or trading portfolio? If you work in the office, and you work at home, is there space for your family? Is there space for your own interest?

The biggest attraction of getting into trading and investing is the vibrancy of one's after work life. People who are doing stuff with money seem very involved. Its a wee bit like footy lovers. All they seem to do is talk soccer.

It is my personal belief that people who say they trade to become richer are deluded. They trade for the thrill and for the pleasure of seeking something arcane and mystical that has opportunity for wealth. After work traders are modern alchemists.