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Passive incomes are not for passive people

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@spinvest
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Hello everyone, as crypto addicts/investors we all understand passive income. Most of us will have heard about these sorts of incomes be it through the stock market, crypto staking are even some hive-engine tokens. The wonderful thing about passive income is very appealing to lazy people, the sad thing about passive incomes is all the hard work and grind one has to put in to get them which makes them hard to build.

Im guessing this post will get more than average views and comments because passive income is in the title. Everyone wants to know how to build passive income. I'll tell you, work your ass off for 40 years and let the power of compounding work its magic.

If you want say $60,000 per year to stop working and live the dream you have in your head, you need to factor in 2 things.

1/Future inflation We are all aware of inflation and what it is. If not, inflation is basically the weakening of the spending power of a currency as more currency is issued into circulation. Inflation is reported at 3% per year so your first 3% of earnings are reinvested to ensure your income increases over time and you can maintain your chosen lifestyle.

If you have -20ish years left on Earth, not financial advice but I would not worry about inflation, invest in something super safe with almost zero risk and just eat into your capital a little bit each year. By the time you're gone, there will still be plenty left over for kids/families to inherit. Sorry but nobody ever talks about older investors. All these passive income and save a million $ posts are targeted toward younger people. Anyways, if I were 65 years old, I personally would not factor in inflation because you dont need it. You'd have enough to maintain your lifestyle by eating into your capital, enough until you die enless you live you 100 are something.

2/ Your expected yearly APY
By using the estimated APY you can expect to earn and the amount of income you require each year will tell you your target amount. Were going to say we can earn 8% per year and we need $60,000. If we are not factoring in 3% for inflation, you need $750,000. If you do factor in 3% for inflation, you'd need just under $1.1 million.

These are big numbers but these are the sorts of numbers required you need to obtain to have a passive income to sustain a decent lifestyle. $60k is not a huge amount of money and you'd not be living rich. You'd not be living like a millionaire, that's for sure because, well, you wouldn't be able to afford to.

Building up an investment portfolio of over $1 million dollars sounds impossible and to most, it will be impossible because they'll never get started, some will try and give up after not seeing instant results, a few will grind it out with little results because they cant change with the times, do things hard-assed and very few will do it, they'll build up side hustles, take on risky investments that pay off, build nest eggs is different asset classes and most likely be very boring, predictable and focused on 10-20 years from now. If you are focused and disciplined, you can do it. It's slow in the beginning but if you keep adding new sources of income and compounding what you already have, you will soon start to see that time goes by quickly and working toward a goal that takes a long time is doable if you stick to it for a long time.

Fake passive incomes Pretty much every crypto-related that is advertised as passive income is infact, not passive income because you are always required to collect/harvest something, convert tokens, move funds, maintain farming LP's and many other things. This is not a passive income, it's a sale gimmick targeted toward lazy people which is 98% of everyone (don't know the actual number).

In crypto, I would consider something like Nexo to be passive income because your only requirement is to cash out. It's 100% auto reinvested daily with no gas fees are operator fees. You'll earn a smaller APY but not much smaller after you factor in fees and the fact most people dont get the advertised farm APY's because they dont compound daily. And i think your cryptos are safer on a platform like Nexo, Celsius, Compound and the rest. I'd take one of these centralized platforms over uniswap or pancake clones every time to hold my crypto for the longer term because they are simply not passive incomes. Haing to collect/claim any sort of reward are maintain anything is not a passive income.

Real passive incomes Buying 10 houses and having an agent take 100% responsibility for advertising, collecting rent, repairs, visits etc and you getting a payment into your bank every month would be a passive income as you are required to do zero work, you dont even dont to pay yourself. Investing into an index fund like the SP500 and removing a certain percentage every year is a little more work as you'd be required to do 1 sell order and cash out once per year but I think we could call this passive income 😁 Picking up $60k in $100 bills would be more work so it's passive income.

Real passive incomes are normally very boring but that's good because they should be, boring is consistent and you dont would your income to go up and down each week/month/year. That makes budgeting hard.

Sadly passive incomes are only obtained by people that are very active and determined to reach their goals. The passive income part is the end result of all the work and effort part into getting your results. If you try and quit for whatever reason, your results will reflect this, if you do it half-assed, start-stop-start (like only interested during bull run times) your results will reflect this. We've all heard the saying buy when there is blood and on the streets and sell when money is easy. Most of the ones that understand and take advantage of this saying will obtain a passive income, enough to maintain a decent lifestyle if they want is bad enough. If you are working toward a goal and you are working toward it every week or month, you get closer to your goal every time and that's the exciting part.

It'll still take years of your life grinding but what do you have to lose when you start from almost the bottom?

Posted Using LeoFinance Beta