Author Topic: 'Work on your passion' vs. your/or the true definition of 'passive income'  (Read 2721 times)

wire

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[m8547's  Reply #3 on: November 11, 2015, 09:15:43 PM in my topic - but where is the permalink? - made me thinking into asking this question]

The famous saying (by Warren Buffett, and, perhaps, others) goes like this: work for free on what you like, then ask money for it. Alternative version: if you work on your passion, on what you like, you really never have to work in your life. Think our father, MMM; he still earns money for this, but he is just doing it for fun now.

The definition of passive income?

Selling ebooks on the Internet (as popularized by many), for example, is definitely not passive income in my books. Especially if you want to be the best in the world. On why being the best in the world matters, check out Seth Godin's great little book, The Dip: A Little Book That Teaches You When to Quit (and When to Stick).

Investopedia's definition, for reference:
Earnings an individual derives from a ren​tal property, limited partnership or other enterprise in which he or she is not materially involved.

I don't agree with this definition:
- If you treat your rental property business seriously, you Airbnb your properties. If you treat Airbnb seriously, it's almost like being a hotel manager, with good marketing, customer service; far from being passive, but can be fun and profitable, though.
- You always have to worry about whatever business or limited partnership you have invested into; I mean, that's the point of a diversified index fund portfolio; that you do not have to worry.

And I think that, the diversified index fund portfolio is the only vehicle where you don't have to worry about it. You don't have to worry = my definition of passive income. Tell me if you know of others. I'm interested.

Your take? Or the definitive word on the subject?
« Last Edit: February 14, 2016, 06:49:38 AM by wire »

mr_orange

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Re: 'Work on your passion' vs. your/or the true definition of 'passive income'
« Reply #1 on: February 14, 2016, 07:13:09 AM »
I love investing in property and building businesses.  I could easily "work" on this for the rest of my life.  In general I have a hard time following the philosophy on these forums because I am not stuck in a situation I despise and seeking the "optimal" path of minimizing time spent working because I love what I do.  Could things be better?  Sure.  Do I want to ride my bike to work 20 miles to save $5/day on gas?  Nope. 

Honestly I think most people would be better off seeking to modify their situation gradually and taking a balanced approach rather than doing the extreme things many on this forum espouse. 

DebtFreeBy25

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Re: 'Work on your passion' vs. your/or the true definition of 'passive income'
« Reply #2 on: February 14, 2016, 07:16:54 AM »
Your passion can be translated into passive income if you have interests that allow you to make money doing something you would have done for free anyway (ie. blogging, making art you enjoy, etc.). However, there's usually some work in monetizing that activity. I've seen a definition of passive income that defines it as income where you invest time and money up-front in order to produce returns later.

Some for example with investments, you need to research where you're going to invest. That research would be the up-front work. Different passive investments will have different levels of up-front work and maintenance. Sticking with the investments example, you still need to monitor your funds. Each person has to evaluate the risks, potential returns, time investment and personal stress level associated with each option. While it's possible for rental properties to be a mostly passive income for some people, that's not the case for someone who wants to actively market and maintain their units independently to cut costs. 

I'm curious what other "passive" income streams exist. Writing and marketing a book is not passive. Investing is passive. Rental properties would not be passive for most of us. Peer-to-peer lending is passive but not legal in my state (boo, state legislators, boo). I'm interested in owner, not operator businesses and mostly passive partnerships but don't know the best way to go about finding those opportunities. (Most people who are actively recruiting investors do not seem trustworthy/legit.) Should someone interested in funding start-ups try to join a local "angel" group?


GrowingTheGreen

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Re: 'Work on your passion' vs. your/or the true definition of 'passive income'
« Reply #3 on: February 14, 2016, 09:36:57 AM »
It cracks me up how people talk about books and blogging like it's easy passive income. There's nothing passive about it. I'm constantly writing new posts, connecting to others on Twitter, and commenting on other blogs? Very few just happen upon a big money-making blog. Even then, they still must write.

Passive income is often times simply delayed payment for your work

bobechs

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Re: 'Work on your passion' vs. your/or the true definition of 'passive income'
« Reply #4 on: February 14, 2016, 10:29:10 AM »
Some folks think marrying into wealth is a path to passive income.

Then the work really begins...

Ditto the folks here who are looking for a partner of the non-marital kind who will carry them over the muddy stream of work, all for one modest investment.

wire

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Re: 'Work on your passion' vs. your/or the true definition of 'passive income'
« Reply #5 on: February 14, 2016, 10:29:51 AM »
Some for example with investments, you need to research where you're going to invest. That research would be the up-front work.

Researching these investment is like pressing 2 minutes on Vanguard's or Betterment's or WealthFront's site (or whatever is the hot investment platform these days in the US; I'm from Europe), the hard part is, I agree, to stick to the plan for your whole life, on which you clicked 2 buttons on. So, it's all about psychology.

[By the way, I have seen discussions on best European investment vehicles, alternatives to Vanguard, Betterment or WealthFront but I haven't seen anything conclusive. Maybe you have something.]

wire

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Re: 'Work on your passion' vs. your/or the true definition of 'passive income'
« Reply #6 on: February 14, 2016, 10:33:10 AM »
Off: mr_orange,

What's your signature is about?

On a related note, to my original post (YouTube recommended this video), here Elon Musk talks about why you should do what you are best at; "best in the world" (at 2 minutes): https://www.youtube.com/watch?v=hF45qsAwSvw
« Last Edit: February 14, 2016, 11:33:34 AM by wire »

wire

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Re: 'Work on your passion' vs. your/or the true definition of 'passive income'
« Reply #7 on: February 14, 2016, 10:35:22 AM »
Why would you lend peer to peer, as compared to passive investing in index funds?

It doesn't seem to make much sense: https://www.quora.com/How-does-peer-to-peer-lending-compare-to-stock-market-returns-in-a-profit-over-risk-ratio