Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Ask HN: What was your best passive income in 2020?

news.ycombinator.com

Post reply on HN
Print view View original

31–40 of 62 posts

Re: Ask HN: What was your best passive income in 2020?

#31

Post by nly »

boardwaalk wrote: post #26
fny wrote: post #4

Earlier quoted context omitted.

This is not passive income. This is asset appreciation. Dividends or rent collection qualify as passive income.

Can you explain why you differentiate the two (price changes vs dividends)? AFAIU it’s really just that you have to instruct one to be sold to realize it and the other just shows up in your account, but the overall returns, tax implications, and such are basically the same.

Not sure what jurisdiction you're in, but the tax implications are not 'basically the same' here in the UK.

Capital gains are taxed at 20% and can be offset against personal losses, whereas dividend income is typically taxed at 32.5 - 38%, and that's after the company issuing the dividend already paid corporation tax of 19% on their end.

Re: Ask HN: What was your best passive income in 2020?

#33

Post by RivieraKid »

thesuperbigfrog wrote: post #10
bwh2 wrote: post #2

Low cost index funds provided a 16% return in 2020 and require nearly zero effort.

They do require starting capital which the asker may or may not have. Still, it is a good option if your finances allow.

Any type of passive income is generated by capital which you have to somehow acquire, typically through labor. For example, you can use your labor to create a game. Or you can sell your labor and buy stocks in a gaming company.

Re: Ask HN: What was your best passive income in 2020?

#34

Post by skybrian »

Google was up about 30%. I made most of my money by procrastinating about diversifying.

(I believe in diversifying for the usual reasons and sometimes do it, but usually regret it in retrospect. Maybe someday I won’t regret it.)

It looks like I will regret diversifying again this year.

Re: Ask HN: What was your best passive income in 2020?

#35

Post by thomascgalvin »

nly wrote: post #14
thomascgalvin wrote: post #7

Earlier quoted context omitted.

This, 100%. No hustle, no gimmicks, just the same passive investing advice we've known for like thirty years now. If you're in your twenties and thirties, it is absolutely worth scrimping and saving to put as much as possible into a retirement account that tracks the S&P 500, or the worldwide stock market, because this is the single surest way for "normal" people to retire rich.

There are a lot of people who think that returns are going to be lower going forward due to 1) reduced productivity, 2) more people investing with too much liquidity looking for a home, and 3) high starting valuations. I don't have much of a better idea tbh but I'm always seeking alternative investments.

That's the primary reason I mention a total-world fund. A lot of people expect the US to be flat for the next few years, with a corresponding uptick in the world market.

Re: Ask HN: What was your best passive income in 2020?

#36

Post by KptMarchewa »

nly wrote: post #31
boardwaalk wrote: post #26

Earlier quoted context omitted.

Can you explain why you differentiate the two (price changes vs dividends)? AFAIU it’s really just that you have to instruct one to be sold to realize it and the other just shows up in your account, but the overall returns, tax implications, and such are basically the same.

Not sure what jurisdiction you're in, but the tax implications are not 'basically the same' here in the UK. Capital gains are taxed at 20% and can be offset against personal losses, whereas dividend income is typically taxed at 32.5 - 38%, and that's after the company issuing the dividend already paid corporation tax of 19% on their end.

That's why accumulating index funds are better option.

Re: Ask HN: What was your best passive income in 2020?

#37

Post by exhilaration »

thomascgalvin wrote: post #35
nly wrote: post #14

Earlier quoted context omitted.

There are a lot of people who think that returns are going to be lower going forward due to 1) reduced productivity, 2) more people investing with too much liquidity looking for a home, and 3) high starting valuations. I don't have much of a better idea tbh but I'm always seeking alternative investments.

That's the primary reason I mention a total-world fund. A lot of people expect the US to be flat for the next few years, with a corresponding uptick in the world market.

Can you recommend a total world fund?

Re: Ask HN: What was your best passive income in 2020?

#38

Post by nly »

KptMarchewa wrote: post #36
nly wrote: post #31

Earlier quoted context omitted.

Not sure what jurisdiction you're in, but the tax implications are not 'basically the same' here in the UK. Capital gains are taxed at 20% and can be offset against personal losses, whereas dividend income is typically taxed at 32.5 - 38%, and that's after the company issuing the dividend already paid corporation tax of 19% on their end.

That's why accumulating index funds are better option.

In the UK it doesn't matter. Even dividends paid inside an accumulating fund or ETF are still considered income and, if held outside of a tax sheltered account, you're supposed to (somehow) figure out how much income tax to pay and declare it.

Most people get away with doing this because they use tax sheltered accounts, or the amount would be below their tax-free allowance.

Ref: "Accumulation units – the income tax loophole that never was" - https://monevator.com/income-tax-on-accumulation-unit/

Re: Ask HN: What was your best passive income in 2020?

#39

Post by Retric »

sethd wrote: post #27
RivieraKid wrote: post #19

Earlier quoted context omitted.

It's effectively the same.

It's only income if you sell, at which point it's no longer passive, right? Otherwise it's unrealized gains and not income.

Setting up a passive income by regularly selling stocks clearly qualifies. Unrealized gains are more questionable, but you don’t have to realize gains from other forms of passive income like rental income either.
Post reply on HN