Thank you PatienceWins. With that handle you definitely cannot be a trader...Patience is the key to investing! If you can earn 100% return in a year the 20 lacs becomes 40 lacs...but that's not much of wealth. Really good patience will do wonders if the process is right.
At 26% return a year, 20 lacs will become more than 20 Cr in 20 years! Power of compounding!
But pulling out money for monthly expenses may not be a good idea as you do not get the above compounding. You need an alternate cashflow to fund expenses for atleast next 10 years to be safe. But if you read my story you might show me the middle finger
I resigned from my corporate job in 2010 end. My wife was about to deliver our baby and we hardly had 40 lacs worth investments. We had an apartment worth 50 lacs then, with a home loan of around 20 lacs. I should admit it was an emotional decision rather than a rational one. I wanted to enjoy fatherhood, learn investing seriously and I was also fed-up with the operations job in a Bank which did not allow us a lifestyle we wanted. So I bid goodbye to 7.5 years of corporate life...retirement at 30!
The thinking was, we have enough money to survive next 2-3 years, lets give it a shot to live life in our terms and if things don't work out....hope to get back to corporate life. If nothing else I was confident of selling home loans as a sales executive on commission basis.
The first thing we did was cut down expenses - moved to a large apartment in the outskirts sharing rent with a friend, and minimized expenditure where-ever we could. I also enrolled for CFA (US) to ensure that my CV looked good in 2 years...if at all I had to get back to the rat race. The pressure was so much that I cleared the 3 levels of CFA in less than 2 years. I used to go and sit in the IIM library daily to study, it was impossible to sit home and study with the baby around.
So after keeping aside enough money for 2 years expenses, I started of investing and preparing for CFA. Since a large part of the CFA course helps you in investments, there was more motivation to study. Valuepickr was a godsend, I became active there by 2012, met senior investors, spent lot of time with them, picked their brains, accompanied them for company visits and ensured my decision to resign meant I do everything possible to become a good investor asap. I still remember my first visit in 2012 August to Baroda which was a turning point - 4 seniors and me and they would just keep on discussing stocks, mistakes, strategies, the art part of stock-picking and human behavior. We visited 4 companies in 3 days in Baroda and Ahmadabad and interviewed the managements. I was all the time thinking why some businesses do extremely well and how the market decides how much to pay for which business.
In 2013, I bumped into an old college mate who had started a wealth management firm in Bangalore in 2010. I joined the small 8 member team as I was impressed with their ethics and long term goals. For over a year now I have been recommending the same stocks that I like to clients of this company. The salary is quite low and cannot fund even 50% of my expenses, but I am in no way compromising on "freedom", "travel" and time with family and friends. From our progress so far, it does look like the fortunes of the company will only improve. Since returns from my investments are more than decent, I am in a happy situation as of now.
To cut the story short - it is possible to become a good investor if you really love discovering businesses, understanding how a rupee is earned and master the art of evaluating the future potential and value the investment at current price. You should also be ready to tame your mind and fine tune it to achieve higher levels of rational thinking. I know great investors who have no accounting background, but you need to have some grip on analysing the annual reports including financial statements. Seeing the larger picture by connecting all the dots is the key - its like a top notch investigation, intellectually challenging and really enjoyable.
Regarding leaving your job to do full time investing - I am an amateur with just 4 years of experience...cannot really advice you to do that. I might have been lucky not to lose too much capital in my initial days when I did day trading. I stopped trading in few months and have never touched futures or options (does not mean that you cannot make money doing these, just that I could not and am not made for that). I was also lucky to be in the right group of investors and double by capital in 2 years... and I haven't handled a recession as an investor.
You also need strong support from your family to take that decision. In the initial days when the future looks really uncertain you can easily breakdown.
Wrote a long post because the question you put forward is a very very serious one.
If you can devote 4-5 hours a week, you can still work and make serious money. Your learning curve might be a little less steep, but you do not risk your family's security.
If you are not happy with you work-life equation, you can think of a middle ground of compromising a bit on salary to take-up another job which will allow you more time for investing and pursuing other interests. For last one year, my wife pitches in with some cashflow by working around 4-5 hours a day on weekdays, but she enjoys her work and has enough and more time to look after the little one. If you already have a good house, rental income can be considered and you can shift to a rented house paying less than the rent you earn.
Search for answers earnestly and some path could show up. But be rational and have a plan B.
Cheers and all the best for achieving "Nirvana" (financial freedom)
Vindy