After 2 years of thought process, I have decided to take on full time investing from 2018. For me, I consider my salary as an opportunity cost. So my criteria was to see if I can beat mutual funds by getting at least 120% of my current salary over a period of 3 years. Added to that, I wanted to make sure I have enough cash for expenses for next 3 to 5 years. This cash is over and above the investment I plan to make in equities. I also added a corpus for medical expenses.
I did some calculation of my returns for the past 10 years to see if I met mutual fund returns. I ignored investment during my school and college days and considered only last 10 years which included substantial portion of my salary. I was also invested in mutual funds for the last 10 years and they were no more than 18% cagr. However my portfolio in equities grew by around 26% . This is rear view mirror and may not happen in the future. However for sake of calculation, the 8% alpha is more than 120% of annual take home salary.
On top of all these aspects, I can spend time on what I like. I don’t need to be awake at 3 am to attend a meeting with a US client and don’t need to wake up by 8am and rush to office. I can now pursue PhD in finance which was my speciality in MBA and I thoroughly enjoyed it. I can take care of my health and get 8 hours of sound sleep!
I will know in 10 years if I took the right decision.