AP retirement account

[Mimosine]

If one was to save for retirement via AP play, what is the general feeling about the returns on investment here. I don't really have a sense of what one could expect with X number of hours played per year.

I know what it takes to double a bankroll, playing really undercapitalized with an ROR of >40%, because I've done it.

But now that I have a access to a real 5 figure bankroll and am relatively young with 3+ decades until retirement, I have little confidence or interest in active stock trading. I have a ROTH and it is doing fine with the 3 index funds I track and I'm happy with that.

But now the choice is 401k or AP play.

Let's say I play 10 hours a month + 100 hours on 'vacation' a year for 220 hours, playing only good games, i.e. 0.45% house edge or less, 75+% pen, etc... in general, what would my expected yield be on any given bankroll, assuming kelly betting? Rough estimates? 15%, 25% MORE?

Any thoughts, or feelings? I'm not looking for unsolicited investment tips, or info about options trading :cool2: i'm looking for a brief analysis of this idea from seasoned players (sonny, ihate17, AM, ZG, ER others?).

as always, thanks in advance,
-Mimocide.

 

[moo321]

Well, if you're looking for a passive investment, I would go with real estate. Very good return on investment. As far as annual return on blackjack, you should try to look at how many hours you are playing, and how many hours it will take to double the bank. A full-time team living in Vegas could expect 500% annual return or more. A weekend warrior might expect 100%. An occasional day-tripper might expect 20%.

 

[ChefJJ]

I have little confidence or interest in active stock trading. I have a ROTH and it is doing fine with the 3 index funds I track and I'm happy with that.

But now the choice is 401k or AP play.

Out of curiosity, are you looking to treat the AP play "account" like you would be making regular contributions to a 401k...in other words, would you be extracting money out of each of your paychecks or just a lump sum?

I don't blame you with shying away from active trading...with the short term cap gains taxes, trading fees, etc. you might as well play blackjack with AP skills.

good luck

 

[Mimosine]

in other words, would you be extracting money out of each of your paychecks or just a lump sum?
k

Yes I would be treating this like an investment account making regular contributions. Probably it'll all be parked in a money market with ING making 4.9+% maybe shuffling chunks of it in and out of 5.15+% 9-12 month CDs, just to optimize what isn't needed for liquid - i.e. trip bankrolls. So i guess it will always be making 5%, neglecting this, what is my annual expected return? anything greater than 20% makes this worth while to me. If 20% is the lower limit, then the risk isn't worth it when i could get ~15% in an index fund, or other ventures that I have access too.

 

[EasyRhino]

The idea of liquidating a bunch of my real investments to form a sizable bankroll crossed my mind. But I poo-pooed it pretty quickly. Too much pressure, and I'm not good enough.

It's mainly a factor of how much time you're spending playing with the bankroll. Unlike a mutual fund, it's not "in the market" all of the time.

Let's say your bankroll is $10,000, and your hourly EV is, for whatever reason, is $15/hr (I'm hoping that would be a real conservative estimate). 200 hours of that is $3000, so that would be a 30% return on the year, not bad.

And much like stock investing, there's a tradeoff you can make between variance and expected return... just bet a larger portion of your bankroll. You could probably get it to a point where over a year, your fluctuations would be more or less than the stock market.

Course, a "less risky" approach is just to play more. Playing 400 hours would double your return!

The biggest advantage you'd have in building a portfolio this way is that unlike a real pro player, it's assumed you're not spending any of the proceeds.

BTW, I was just reading an academic paper about hedge funds. In the "good old days" of the late 90's, one popular hedge fund strategy could generate a theoretical return of 1% per day. When compounded, that's insane.

It's really too bad you can't declare "cash" to be your IRA account, because then you could gamble away without any tax consequences!!

PS - 15% is probably an unrealistically high expectation for index funds over the long run. Most sober estimates don't go over 8-10%.

 

[Mimosine]

The biggest advantage you'd have in building a portfolio this way is that unlike a real pro player, it's assumed you're not spending any of the proceeds.

Being such a low roller so far, nothing comes out of the 'gambling' fund, not gas, not hotel, not food, maybe tips for drinks though But with the few comps i've received so far, they have paid for a sizable portion of the travel expenses. especially all the free gas i was getting comped for awhile there....

PS - 15% is probably an unrealistically high expectation for index funds over the long run. Most sober estimates don't go over 8-10%.

reality check, you're right. i think 8-10 is a more realistic number.

It's really too bad you can't declare "cash" to be your IRA account, because then you could gamble away without any tax consequences!!

what, you mean i have to pay taxes with my "AP Retirement Account?" :O
I think I'll write my own tax code for this account

 

[ChefJJ]

It sounds like if you were able to pull a $3K return per $10K bankroll a year figure like ER noted, that would be pretty solid...combine that with your strategy for holding it in the ING savings & CDs, and you would grow that even more.

Could you not then take a quarter or half of your annual winnings and reinvest them in your IRA or Roth IRA to grow at that 8-10%?

 

[Mimosine]

Could you not then take a quarter or half of your annual winnings and reinvest them in your IRA or Roth IRA to grow at that 8-10%?

at some point i would imagine having too much money in the 'fund' to be useful for BJ play - for me. At some point I could divert the funds into something more risk-conscious and return modest. 401k, real estate, other investments.

My Roth I plan to max out with other funds every year, pretty pathetic as is, $3000 max/year investment I think....

 

[21forme]

One thing to consider is the growth limitations of such an investment. At this point, say you're playing green chips. As the account grows, are you willing to play black (or purple)? If not, you're losing the opportunity for more than a steady, linear growth (ignoring short term variance.) If yes, while it's theoretically possible, you could run into some longevity issues associated with greater scrutiny as a high roller.

BTW, I have an acquaintance who is now retired and funding his retirement with AP play, so it is possible.

 

[jon]

If your employer matches your 401K, say 50% match, then you earn a 50% return on invested money by just utilizing your 401K. Not to mention the tax implications. So if you are in the 25% bracket. You save 25% plus you earn 50% off your investment by just putting in the 401k. Then any gains the market makes you benefit more. I would do both if possible. Contribute to employer 401K and start a gamblin bankroll for retirement as well, you will be the better off 30 yrs from now.

 

[Mimosine]

I would do both if possible. Contribute to employer 401K and start a gamblin bankroll for retirement as well, you will be the better off 30 yrs from now.

My employer does not match 401k contributions - I wish they did, however, the retirement plan they do provide I think is far superior to a 401k match.
I have the option of contributing to a 401k, but there is no real need to do so in light of a better retirement program. Thus with the money I have to invest in whatever vehicle I want, I'm looking for a moderate risk - moderate reward strategy and on face value, AP play is suitable - unless more feedback from people here forces me to reconsider....

 

[Kasi]

My employer does not match 401k contributions - I wish they did, however, the retirement plan they do provide I think is far superior to a 401k match.
I have the option of contributing to a 401k, but there is no real need to do so in light of a better retirement program. Thus with the money I have to invest in whatever vehicle I want, I'm looking for a moderate risk - moderate reward strategy and on face value, AP play is suitable - unless more feedback from people here forces me to reconsider....

What do YOU think your EV is, given a vague 5 figure bankroll, playing only "good" games, with a spread of what and how, we don't know, and at what RoR?

You gonna play the same game the same way for 220 hours a year for the next 30 years?

You think the ROR of a 401 K is essentially 0%? What's that worth?

You may scoff at the tax issues. I hope you are never audited.

Basically, if you have to ask us, don't.

But, you know me, I always worry too much

Convince me (or yourself) with a detailed plan. Very detailed lol.

 

[EasyRhino]

The idea of a hypothetical gambling IRA that return $3000 on a $10000 contribution is nice, but then when you start compounding that gain over many years, it gets impressive. Which is all the more reason why it's a pity you can't avoid the taxes on a gambling IRA

But seriously Mimo, don't knock the tax advantages. Some back-of-envelope math on guy who was considdering two jobs paying around $50k, one with no 401k and one with a 401ik and 5% match, over a 15 year period. If he contributed the max each year, the 401k would add about $6000 per year to the guy's effective salary.

If you think you're going to end up eventually working a job making good money, then the tax thing will become even more important. And since there's only so much money you can put into IRA/401k each year, it's best to think of it as a bucket that you should stuff as much cash with as possible each year, just to increase your eventual tax-advantaged savings when you're old and gray.

Max on a IRA contribution this year is $4000, next year is $5000. Max contribution on a 401k this year is $15,500, next year is $16,000.

The rule of thumb for IRA/401k savings is:
1) Contribute to 401k up to the company match, if they do.
2) Contribute to own IRA (often a Roth) up to max with next portion
3) Contribute remainder to company 401k, up to max.

 

[toastblows]

The rule of thumb for IRA/401k savings is:
1) Contribute to 401k up to the company match, if they do.
2) Contribute to own IRA (often a Roth) up to max with next portion
3) Contribute remainder to company 401k, up to max.

This is really solid advice if you have the channels of 401K match!

One other thing I do, is after the 401K match and ROTH max...if say we are in a free falling market in the short term....you could say after 9/2001 we fell quite a bit for a length of time you might consider stopping investment....enough time where socking away your extra after the 401K match and ROTH max would make you consider other ideas to use your money...like paying off a 7% car loan instead of throwing your money into a -15% returning 401k plan. Just another thing to think about, if short term debt interest is more than your ROR on investments trying paying it off faster while you cushion steeper investment losses. Of course when it hits bottom, BUY BUY BUY.

 

[EasyRhino]

Yeah, or in general, paying off any high-interest rate (credit cards) debt may be a better call than any normal investment. Other debt may be much less expensive to pay off, and worth keeping on the books (mortgage, student loans).

 

[zengrifter]

But now the choice is 401k or AP play.

Actually it could be BOTH - there is a simple way to use your IRA for BJ. zg

 

[toastblows]

Yeah, or in general, paying off any high-interest rate (credit cards) debt may be a better call than any normal investment. Other debt may be much less expensive to pay off, and worth keeping on the books (mortgage, student loans).

Pretty much any interest you cant write off in taxes...mortgage, school loans, are a different boat

 

[jon]

Actually it could be BOTH - there is a simple way to use your IRA for BJ. zg

Could you point me to the appropriate tax code or literature where i could find out more about BJ and IRAs?

 

[EasyRhino]

zg, would you be talking about a Self-directed IRA or something else?

Also... just to be sure, this isn't what got you time in the federal pen, is it?

 

[BJinNJ]

Employer Pension Plan AND IRA?

I wasn't aware that you could contribute to an IRA, if your
employer offered a pension plan. Have the rules changed?

BJinNJ