Starting Bankroll

Our first future fantasy baseball pro is on board with Draftbug Millionaire. He's going to be writing up a post to introduce himself in the next few days, so I'll wait until then to comment on what about his background makes me think he'll be a success at this.

In the meantime, I'll discuss his starting bankroll. While nothing is set in stone, it looks likely that he'll start with $70 at Draftbug - $50 that he'll deposit, and another $20 that we'll provide him. So is it realistic to build a $70 bankroll into a large enough bankroll to earn $25,000 in a year?

The answer is 'maybe'. I played around with some assumptions in a spreadsheet. If we assume that we can achieve a 10% ROI (return on investment) and that we risk 10% of our bankroll each day of the 180 day season, we're only going to have about $415 at the end of the season. It's going to take a long time to go pro at that rate.

If we make some more aggressive assumptions...that either our ROI is 20% (which may not be completely absurd if we can enter enough large, multiplayer contests) or that we risk 20% of our bankroll each day, then our bankroll can grow a little faster - to $2,423 by season's end.

If we make extremely aggressive assumptions...that both ROI and percentage of bankroll at risk each day are 20%, then our bankroll would be $78,354 by the end of the season. Now we're getting somewhere. I'm not saying that a 20% ROI is possible or that there's a way to put 20% of bankroll at risk each day without going broke. Just that IF we can do either of those, we can grow our bankroll more than 1,000 times, thanks to the magic of compounding.

One of the things that I think separates a 'professional' in any form of speculation from an amateur, is that the pro should have enough data (and enough detail in the data) to make a reasonable estimate of their expected ROI in various types of contests. We obviously won't have that on day one, but it's going to be a pretty important task for us to work on, because the more accurate our estimates of ROI, the better we can determine how much to put at risk in each contest and each day.

While our team of future pros obviously won't be revealing all of our 'secrets' here at Draftbug Millionaire, we will be talking about some of the concepts we're looking at in our day to day play on the site. Many serious gamblers or investors who have read this post are probably thinking that our 'risk of ruin' is going to be unacceptably high if we're putting 20% of bankroll at risk each day. In a future post, I'll talk about why that may be true on some days, but not on others.

Also, given the extremely aggressive assumptions we had to make to achieve our financial goals in one baseball season, it's likely that we'll either take more than a year, or supplement our initial bankroll with additional deposits once we're confident that our strategies are working well. Either of those is acceptable.