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Ask HN: What was your best passive income in 2016?

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Re: Ask HN: What was your best passive income in 2016?

#71

Post by cesarb »

Here in Brazil we have it easy. The most boring funds (the ones which track the interbank rate - CDI) easily return around 12% per year (depending on the administration fee; the smaller the administration fee, the higher the return). With the inflation around 6% per year, this gives around 6% returns before tax. If you stay with the fund for at least two years (and it's of the correct kind), the tax rate is 15% over the gains, so you have an after-tax return of around 5% per year above inflation. And that's for a fund which basically never gives negative returns.

You can go further and buy government bonds directly, through the Tesouro Direto system. Those indexed by the SELIC rate (which is sort of related to the CDI) are currently around 13.5% per year, before administration fees and taxes (in fact, the boring funds I mentioned above mostly invest in these SELIC-indexed government bonds).

This will change when (and if) rates get lower, but so far, investing in these funds or bonds is the simplest (and one of the best) way to have passive income.

Re: Ask HN: What was your best passive income in 2016?

#72

Post by PaulRobinson »

antr wrote: post #33

In early 2016 I purchased commercial real estate, got a 25 year fixed rate mortgage, and leased it. This requires very little of my time every month, and the post-tax yield is above 5%. I couldn't be happier. I'm now considering doing this again in 2017. Hopefully interest rates will remain as low as they have been in order to lock-in an attractive mortgage.

You don't say where you are based, but you are going to get a shock if you think interest rates are going to stay on the floor. If you can get a genuine 25-year fixed rate, great, but you need to tread carefully here.

Brexit, Trump, EU sentiment, China trying to deal with their own problems, they're all pointing to the same way: devalued currencies. Where they start, rising interest start to follow.

I'd also be wary of assuming commercial real estate was a lock-in. I've heard horror stories.

I'm glad it's working for you right now, I'm just saying: make sure you tread carefully and have done your research before you start gearing up.

Re: Ask HN: What was your best passive income in 2016?

#74

Post by marvin »

wfunction wrote: post #21
buf wrote: post #17

Earlier quoted context omitted.

Sorry for the confusion. It's just a set it and forget it robo investment for now. I go in and adjust every quarter.

Ah, so no actual income then? Just stocks going up in value? As in, at some point you'd have to sell before you actually have any income from it, right?

But even if a company doesn't pay dividends, it will often make a profit that ends up on the company's books. A part of this profit, proportional to your ownership, belongs to you who own the stock.

In an index fund, the stocks contained in the index will on average pay out a certain dividend and turn a certain profit that isn't squandered on worthless projects.

This last part is what makes stocks increase in market value long-term, and which also makes it reasonable to sell a small proportion of your shares every year as a passive income.

If the dividends and your sales constitute less than 3-4% of your funds' total market value each year, you can expect your portfolio not to decrease in value long-term.

Re: Ask HN: What was your best passive income in 2016?

#75

Post by lowpro »

PaulRobinson wrote: post #72
antr wrote: post #33

In early 2016 I purchased commercial real estate, got a 25 year fixed rate mortgage, and leased it. This requires very little of my time every month, and the post-tax yield is above 5%. I couldn't be happier. I'm now considering doing this again in 2017. Hopefully interest rates will remain as low as they have been in order to lock-in an attractive mortgage.

You don't say where you are based, but you are going to get a shock if you think interest rates are going to stay on the floor. If you can get a genuine 25-year fixed rate, great, but you need to tread carefully here. Brexit, Trump, EU sentiment, China trying to deal with their own problems, they're all pointing to the same way: devalued currencies. Where they start, rising interest start to follow. I'd also be wary…

This isn't necessarily true. The US dollar is actually increasing in value as people want their money to be safe. If Trump does bring back American jobs, meaning less jobs in Asia, the dollar buy will continue, depressing Asia and strengthening the US for now.

But you're right, the OP definitely needs to tread lightly with property and the contracts. The devil is always in the details.

Re: Ask HN: What was your best passive income in 2016?

#76

Post by tomschlick »

chipperyman573 wrote: post #46
tomschlick wrote: post #9

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Re: Ask HN: What was your best passive income in 2016?

#77

Post by DangerousPie »

cesarb wrote: post #71

Here in Brazil we have it easy. The most boring funds (the ones which track the interbank rate - CDI) easily return around 12% per year (depending on the administration fee; the smaller the administration fee, the higher the return). With the inflation around 6% per year, this gives around 6% returns before tax. If you stay with the fund for at least two years (and it's of the correct kind), the tax rate is 15% over…

You probably know this, but it's always important to keep in mind what causes such high interest rates.

A high interest rate is a signal that lenders are wary of lending money to the borrower because of an increased risk of default/inflation. That's fine as long as you are aware of this, but don't think you're getting a "better deal" than someone investing in a boring 1% German government bond. That 12.5% you're getting in addition represents the increased risk that the Brazilian government might default on their debts or the currency might inflate enough to negate the advantage.

Re: Ask HN: What was your best passive income in 2016?

#78

Post by bshimmin »

sanswork wrote: post #39
maaaats wrote: post #31

Earlier quoted context omitted.

Writing a book is not exactly passive.

I'm going to assume from your reply that you've just not heard the term before but passive income refers to income from something where you do the work up front and it continues to pay down the road. A book is a perfect example of that.

I'm trying to work out what would count as passive enough to satisfy the grandparent commenter, if writing a book doesn't qualify. Maybe inheritance? Even robbing a bank requires some upfront effort, so it's hardly passive.

Re: Ask HN: What was your best passive income in 2016?

#79

Post by madaxe_again »

cesarb wrote: post #71

Here in Brazil we have it easy. The most boring funds (the ones which track the interbank rate - CDI) easily return around 12% per year (depending on the administration fee; the smaller the administration fee, the higher the return). With the inflation around 6% per year, this gives around 6% returns before tax. If you stay with the fund for at least two years (and it's of the correct kind), the tax rate is 15% over…

Man alive. Here in the UK a five year treasury bond yields precisely nothing - potentially less than nothing. I have a mountain of cash and nothing to invest it in here. Even property doesn't present a meaningful yield any more.

It also doesn't look like it's going to get better, just worse - so as far as I can discern the best course of action is just to spend it before it becomes completely valueless. To stay ahead of inflation here I'd have to have a 10% yield at least - official CPI figures grievously underreport it, as the baskets of goods they use don't account for the shrink ray.

Re: Ask HN: What was your best passive income in 2016?

#80

Post by erikb »

scolvin wrote: post #61

Helpmanual.io is my first attempt at passive income. Launched 6 weeks ago and traffic is building nicely. There's still a fair bit to do but the delight of sites like this is you can make improvements when you want. Shame that ad income is less than it used to be but we'll see how it gets on. https://helpmanual.io

It seems to be a searchable man page index. What does it offer that google+terminal don't offer?
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