Author Topic: Index investing vs Real Estate/P2P/websites, etc.. How much is time worth?  (Read 860 times)

Swat

  • 5 O'Clock Shadow
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I've currently been wrestling with further diversifying my overall portfolio. Currently, I do plain old vanilla investing with Vanguard index funds that is well-diversified and I will certainly stick with for the long term. I've read enough already that I feel comfortable with my plan, it is easy to do, and I can put things on autopilot with relatively minimal effort on my part. Essentially save a lot and invest according to the plan you've already established. I have no doubt that this can be a successful recipe for success and given that there isn't as much to learn about it anymore, I can spend my hours generating significant money has a well-paying physician.

On the other hand, I am now thinking about diversifying outside of just index investing. This can include Real Estate, websites/blogs, P2P lending, travel hacking, other businesses, etc... I read all over the internet about things people have done as their "side hustle"... whether that was to truly diversify or scratch an entrepreneurial itch I don't know. However, from a truly financial perspective (not trying to satisfy one's interest), does it actually make sense when you are a physician with an excellent hourly/daily rate? A couple cases to illustrate:

-Website: I follow WhiteCoatInvestor and Dr. Dahle has admitted that for several years he didn't make any money with this blog and has only really started turning a major profit the last few years. If you were to add up all those hours that he spent from beginning to end and he worked in the ER and then invested the proceeds in Vanguard, would he have been better off. Also, he has been wildly successful as the go-to blog/website for physicians. What about some of the other blogs, for instance, that aren't #1 in their space (PoF, PassiveIncome MD, non-medicine blogs, etc...).

-Real Estate: "pro" real estate people will always mention their end of year returns and how they exceed what the stock market would have done. They talk about control over their investments, tax benefits, etc... However, how many hours are required to learn all about the nuances of real estate. Even if you aren't owning/managing a property yourself, there is still a time value learning about P2P lending, different platforms, etc... What about the additional costs of LLC, additional tax forms that your accountant charges you for preparing, etc... I don't think I've ever seen anyone try to REALISTICALLY add up all the hours (plus additional costs) that they put into an investment and calculate their hourly rate. Usually it is people who have been doing it for several years and they talk about how easy it is once everything is on autopilot. However, I usually don't see things factored into their early years, nor are they typically high earning professionals where their time could be spent elsewhere. 

Anyway, just a thought to the high income professional and was curious what people think. 

teltic

  • Bristles
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You are right in that people undervalue their time when starting a side hustle like blogging (Most make $0 or actually cost money to run), real estate (no one accurately shows how much time it took to get their first deal, and to maintain it), P2P lending, etc.

You have to enjoy the side hustle.  Strictly talking numbers... You are a highly paid professional, your plan will work!

Don't like that answer?  Tip-toe into  things. 

Interested in P2P lending?  I've enjoyed prosper.com for the last 2 years.  It's fun to learn about, and honestly doesn't take much of my time anymore (other than to check things out, and smile while staring at graphs).  I also use lendingrobot.com that I pay 1% fee for them to hand pick loans that they tell me is a higher risk adjusted return than I could do myself.  I read a ton on this, attempted a couple thousand $ to sell loans myself, then did the same with lending robot.  lending robot has kicked my ass (by like 3-4% after their fees).  I gave up trying and let lendingrobot do the work for me.

Real Estate?  biggerpockets.com is full of good info if you're looking to learn and land your first deal.  Sounds like too much work?  Look into a site like fundrise.com.  I worked with a private wealth advising company (our clients bought into these private real estate deals... And the advisors took 12% up front commissions off of them.  Ouch), and I noticed the exact deal they were purchasing was on this site.  fundrise charges 1-2% a year.  I tip toed into this, and have enjoyed it enough that I want to put 30% of my portfolio in it (I've been lazy, one day).

Overall you have to get some form of satisfaction in your side hustle (not sure if passive investments like fundrise & prosper is a "side hustle" but you get my point).


Freedomin5

  • Magnum Stache
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Financially speaking, it does not make sense to diversify. However, from a life fulfillment perspective, it does make sense to diversify into areas that interest you or in which you want to increase your knowledge. Having a high paying “day job” gives you freedom to try new things, to take well-considered financial risks, and to improve yourself.

Of course , this means that your goal of living life is not just to maximize your savings. In our case, we are into real estate. Our investments certainly don’t make as much as dumping the funds into Vanguard, but it allows us to develop other skills and do something that is fun. I think that, while some on this forum focus on maximizing net worth, others focus on maximizing life fulfillment. As a high earner, you have flexibility to focus on the latter.