i What this calculator does
Replacing a salary with trading income is an arithmetic question before it is a skill question. This calculator takes your monthly living costs, a realistic monthly return, your tax rate and the drawdown cushion you want to keep, and returns the account size that would fund the costs, the income your current capital could produce today, and the years of saving and compounding before the target is reached.
The defaults are deliberately sober: a 2% monthly return is already above what most professional funds achieve over time, and the tax applied is the income tax treatment SARS applies to frequent trading, not the capital gains rate. Change them if you disagree, and watch how sensitive the answer is.
This calculator is for educational purposes only. Results are estimates and may vary depending on market conditions, spreads, commissions, platform settings, and exchange rates. It should not be considered financial advice.
How the number is built
The account must do two jobs: produce the living costs after tax, and survive a drawdown without the living money being touched. The first job sets the capital that has to be at work: your monthly costs, grossed up for tax, divided by the monthly return. The second job adds a buffer: if you accept that a 30% drawdown is normal for your strategy, then 30% of the account has to be capital you are not living on. The target is the sum. Everything after that is a savings question: how long until current capital, savings and reinvested profits reach it.
Why the defaults look conservative
A 2% monthly return compounds to 27% a year. Very few professional managers have sustained that over a decade, and the ones who have did it with research teams and institutional execution. The tax rate is the income tax rate SARS applies to profits from frequent trading, because someone trading for a living is by definition trading frequently. The 30% buffer matches the drawdown that most retail strategies experience at some point. If you lower any of these, the target falls fast, and so does the chance that the plan survives contact with a bad year.
What the calculator leaves out
It assumes the return is earned evenly, when real trading income arrives in lumps with months of nothing between them; it ignores the medical aid, retirement contributions and UIF that a salary quietly carries; and it does not model the behavioural cost of trading money you need, which is usually what ends the attempt. Treat the target as a floor, and read the article on trading alongside a job before deciding the order in which to do things.
Spotted an outdated figure? If a rate, limit or formula in this calculator no longer matches its source, email us the page and the source. A material correction is dated on the Updates Log.
Frequently asked questions
Why does it tax my trading profits as income rather than capital gains?
Because trading for a living is frequent, profit-seeking activity, which SARS treats as revenue, taxed at your marginal rate. The capital gains treatment applies to long-term investing, not to the activity this calculator models.
What monthly return should I enter?
Your real average over at least a year of live trading, including the losing months. If you do not have a year of results yet, you do not have a number to enter, which is itself the answer to the question in the title.
Why is a drawdown buffer necessary if I only withdraw profits?
Because the drawdown comes out of the same account. If the whole account is "at work" and it falls 30%, your income falls 30% too, and the pressure to recover it quickly is what destroys most traders who have gone full time.
Does reinvesting profits really change the time by that much?
Yes. With profits reinvested the account compounds at the after-tax return; with profits withdrawn only your savings grow it. At the default inputs the difference is years, which is why most people who make the transition do it in stages.
What about a salary's hidden benefits?
A salary usually comes with employer retirement contributions, medical aid subsidy, UIF, paid leave and sick days. Add roughly 20% to your living costs if you want the account to replace those too.
Is there a safer version of this plan?
Trading part-time until the account produces a meaningful share of your costs, then reducing hours rather than resigning. The time-to-target figure tells you how long that stage is likely to last.
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