Is passive income always the hardest to make?

[The motor guy]

I love how whenever you rely on something or someone else to make money besides yourself it usually bites you in butt. Like renting things out, but it doesn't take much for that earned income to go right back out. Like let's say you rent out a trailer. You may rent it out 4 times without an issue until someone runs it into a curb bending the axle. Now we're back to square one. Still little physical effort spent, but still a waste of time in the end. Versus just getting a regular job and putting in a good days work yourself to make your $300 or whatever it is you aim to make. Not saying that can't go sideways too, but it's less likely.

Opinions? I'm not really sure why, maybe it's just too many things out of your control at that point.

 

[PandaBear]

To me "passive" income is an oxymoron. Your assets make income on its own as a yield, and you have to put in the work to search for such assets to buy at a discount unless you pay a slightly above market value to acquire it.

The non-passive income is work that most people have to do to get that hidden gem in investment, or active work to manage such assets (i.e. landlording or running a business as an owner). I don't think passive income is any worse than active but you always need to do your part to make sure your investment is still a good one, even if you are just auditing it. All income needs either capital, work, or usually both.

 

[The motor guy]

To me "passive" income is an oxymoron. Your assets make income on its own as a yield, and you have to put in the work to search for such assets to buy at a discount unless you pay a slightly above market value to acquire it.

The non-passive income is work that most people have to do to get that hidden gem in investment, or active work to manage such assets (i.e. landlording or running a business as an owner). I don't think passive income is any worse than active but you always need to do your part to make sure your investment is still a good one, even if you are just auditing it. All income needs either capital, work, or usually both.

That's just what the definition stated. I was trying to do a better job of making my thread titles more clear as I've been getting complaints from some of the admins.

 

[JavierH19]

Treasuries and fdic backed CD's

Corporate debt can pay more but of course can go belly up unless it's secured but even then it's not smooth sailing.

 

[The motor guy]

Treasuries and fdic backed CD's

Corporate debt can pay more but of course can go belly up unless it's secured but even then it's not smooth sailing.

Yeah, that's probably the easiest way, you just need patience

 

[Greenbeforeblue]

To me, the ONLY passive income is interest/dividends. I rented out a house as "passive income" years ago and there wasn't anything passive about it. And always at a PITA time.

 

[TheOilWizard]

To me, the ONLY passive income is interest/dividends. I rented out a house as "passive income" years ago and there wasn't anything passive about it. And always at a PITA time.

I've always heard the same.. that renting is anything but passive. It's basically a part-time or full-time job depending..

 

[k1xv]

NOBODY makes legal passive income without owning a productive asset(s), which were initially obtained by somebody's hard work.

 

[JavierH19]

NOBODY makes legal passive income without owning a productive asset(s), which were initially obtained by somebody's hard work.

Don't have to have it directly. You can give it to someone who puts a plan in place to use your money so productively they can make money to grow themselves and still pay you a decent cut for your risk so both benefit. It's what debt is all about.

 

[The motor guy]

I've always heard the same.. that renting is anything but passive. It's basically a part-time or full-time job depending..

I think the only good thing about it is that it allows you to own something you wouldn't otherwise be able to because someone else is paying for it, so in the end you end up with a $300k house for example after 30 years probably. Probably wouldn't make anymore than what the original value was due to maintenance costs/repairs.

 

[TheOilWizard]

I think the only good thing about it is that it allows you to own something you wouldn't otherwise be able to because someone else is paying for it, so in the end you end up with a $300k house for example after 30 years probably. Probably wouldn't make anymore than what the original value was due to maintenance costs/repairs.

Agreed. Throwing the cash in the S&P and checking 30 years later does seem like less headache over the long run

 

[k1xv]

Don't have to have it directly. You can give it to someone who puts a plan in place to use your money so productively they can make money to grow themselves and still pay you a decent cut for your risk so both benefit. It's what debt is all about.

Money deposited in a bank is a passive asset, managed by the banking institution, ultimately loaned to a person or business that puts it to economic use.

 

[Vil_Riker]

Rentier capitalism, i.e. passive income generation, is a large chunk of the incomes of the elites. You need to have a large enough portfolio to manage risk.

 

[The motor guy]

Rentier capitalism, i.e. passive income generation, is a large chunk of the incomes of the elites. You need to have a large enough portfolio to manage risk.

Or a good relationship with a bank who will loan out to someone who can't afford a house just think if the bank let me have enough to rent out 3 more houses I'd be good come retirement time because they would all be paid off by then.

 

[Dave Hess]

To me "passive" income is an oxymoron. Your assets make income on its own as a yield, and you have to put in the work to search for such assets to buy at a discount unless you pay a slightly above market value to acquire it.

The non-passive income is work that most people have to do to get that hidden gem in investment, or active work to manage such assets (i.e. landlording or running a business as an owner). I don't think passive income is any worse than active but you always need to do your part to make sure your investment is still a good one, even if you are just auditing it. All income needs either capital, work, or usually both.

Don’t forget risk.

 

[PandaBear]

NOBODY makes legal passive income without owning a productive asset(s), which were initially obtained by somebody's hard work.

Disagree, it is all about pricing, risk, and return.

People selling you their "passive income" fair and square and cash out. You own it by paying a price they want to accept otherwise no deal. They made the money then either walk off the scene, or they work as an employee making a paycheck. You pay a price they think is enough to cash out on. Everyone has a price they are willing to accept whether it is a well managed business, or a well managed home, etc.

The other legal passive income is a non productive assets that appreciate against inflation. Nobody is working on it, just a hedge against inflation and speculation. You win sometimes, you lose sometimes. If you have a bunch of them and you balance your portfolio regularly, you may win when others panic and volatility kicks in over time. It is probably a slow growth, much slower than a productive asset, who knows.

Personally I think working is a much lower risk and higher return activity than trying to speculate on a get rich quick passive investment, and much lower risk too.

 

[PandaBear]

Rentier capitalism, i.e. passive income generation, is a large chunk of the incomes of the elites. You need to have a large enough portfolio to manage risk.

When a portfolio is that large it is no longer passive. It is like owning stocks and you have to constantly monitor the return, risk, future planning, etc. It is also like owning shares in mining companies just digging up minerals out of the ground. Is mining passive? It still takes a lot of work and risk management.

Diversification on rental properties doesn't eliminate all risks like interest rate, economic cycle, etc. They are only diversifying vacancy and catastrophic event risk.

 

[Dave Hess]

I love how whenever you rely on something or someone else to make money besides yourself it usually bites you in butt. Like renting things out, but it doesn't take much for that earned income to go right back out. Like let's say you rent out a trailer. You may rent it out 4 times without an issue until someone runs it into a curb bending the axle. Now we're back to square one. Still little physical effort spent, but still a waste of time in the end. Versus just getting a regular job and putting in a good days work yourself to make your $300 or whatever it is you aim to make. Not saying that can't go sideways too, but it's less likely.

Opinions? I'm not really sure why, maybe it's just too many things out of your control at that point.

How much money is being put to work ?

 

[Cujet]

I love how whenever you rely on something or someone else to make money besides yourself it usually bites you in butt. Like renting things out, but it doesn't take much for that earned income to go right back out. Like let's say you rent out a trailer. You may rent it out 4 times without an issue until someone runs it into a curb bending the axle. Now we're back to square one. Still little physical effort spent, but still a waste of time in the end. Versus just getting a regular job and putting in a good days work yourself to make your $300 or whatever it is you aim to make. Not saying that can't go sideways too, but it's less likely.

Opinions? I'm not really sure why, maybe it's just too many things out of your control at that point.

I'm retired now, but for me, the only way I made any money was to work for it. I was quite good at working long hours, careful with my spending, and always saved. I'll be OK in retirement, barely. My career was cut short due to health and other factors.

A friend does the opposite. He works teaching High School. Earns little and has gobs of time off. Which he spends tending to his handful of rental homes. Along with buying 'fixer-uppers' and selling them partially finished (new drywall for example). He moved on purchases during economic downturns, rents them out and sells during hot markets.

He owns three airplanes, lives in a fly-in community and has out earned me by an order of magnitude.

 

[SC Maintenance]

NOBODY makes legal passive income without owning a productive asset(s), which were initially obtained by somebody's hard work.

Someone had to generate the money in the first place, in order to be able to then put it in a passive investment vehicle, so I agree that this statement is correct:

ie I work a normal job, and put the extra in T-bills, amongst other things. T-bills are about as passive as you can get. I don't worry much about managing that portion. Since T-bills by definition are 52 weeks or less I don't worry about the dollar going to zero. If I were buying 30 year notes I would. Of course T-bills 10 years ago paid less than inflation, so at that time they were not good buys. Many other things were - but hindsight is easy.