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Ask HN: Do you have a daily cash stream?

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Re: Ask HN: Do you have a daily cash stream?

#31

Post by nknealk »

boldlybold wrote: post #16

If you enjoy investing and can spend some time learning about trading options, it can provide a nice income stream in a taxable account. Somewhere around 0.5-1.0% income a month is possible and reasonable without taking on extreme risk. Income from options on indices or futures is subject to 60/40 long/short term capital gains tax and really helps keep the tax costs down.

I’d recommend staying away from options.

That said, the only riskless options/futures trade is called a “cash and carry” which essentially earns you the risk-free rate and isn’t much better than buying a treasury note. Also with interest rates so low, you’re more likely to get like 0.5% per year rather than per month

Re: Ask HN: Do you have a daily cash stream?

#32

Post by notJim »

The way your friend describes it is almost like money laundering or something. I hardly use cash at all, why is a daily cash stream "something we all need and something that helps a great deal"? I find that phrase kind of bizarrely vague.

Like I think most people, I have a job which pays me every 2 weeks. What this enables me to do is take some small amount of that money each day to cover my expenses. I suppose if you wanted to conceptualize it as a daily cash stream, you could simply divide the lump payment by (roughly) 14, but I'm not sure why you would do that. Some days I spend a lot of money (when making a major purchase, for example), and some days I spend none at all.

Re: Ask HN: Do you have a daily cash stream?

#33

Post by ethbro »

rsynnott wrote: post #21
wprapido wrote: post #3

Earlier quoted context omitted.

Nicely put. Retainers are indeed a great revenue stream. Yet, I was thinking more in terms of daily cash stream generated by regular quick cash transactions. That's why I mentioned by buddy running a bar as his side hustle.

Do you mean _literal_ cash? Why do you want that? It's extra work and cost to deal with, generally. Though increasingly bars are shifting towards contactless electronic payment, anyway.

I hear car washes are a good option. If I understand what we're really talking about here...

Re: Ask HN: Do you have a daily cash stream?

#34

Post by atomicnumber3 »

boldlybold wrote: post #16

If you enjoy investing and can spend some time learning about trading options, it can provide a nice income stream in a taxable account. Somewhere around 0.5-1.0% income a month is possible and reasonable without taking on extreme risk. Income from options on indices or futures is subject to 60/40 long/short term capital gains tax and really helps keep the tax costs down.

This is irresponsible advice.

Options are potentially the most complicated common financial instrument and modeling their risks is extremely difficult. Moreover, unlike equities, nearly every single options trader is an institution (versus just ~most equities trades being institutions). You are a tuna in a shark tank.

There are so many ways to blow up your account with options even if you think you’re not doing anything too risky. Volatility crush, long tail risk, complicated positions (butterflies and condors etc) that can be complicated to enter and unwind. Etc etc the list is so long. Brokerages can try to paper over some of these issues but the playing field here is inherently a highly leveraged minefield. ~80% of all options expire worthless.

Retail investors should not trade options, it is not something to do lightly, and is is certainly not something to do for pocket money.

Re: Ask HN: Do you have a daily cash stream?

#35

Post by madhadron »

> Just like everyone else, I had periods of feast and periods of famine.

The answer is to have a buffer. Think of it like a queue. You are pulling things off the queue at some rate with some variation, and stuff is arriving at the far end of the queue with hopefully a slightly higher rate but with much higher variation. In order to always have queue you can pull from, you need a buffer in the queue big enough to handle the input variations.

Which is a way of saying, having however many months of living expenses in the bank (six to twelve months, usually). Spend money you have already earned at or below the rate that you are currently earning it.

Is having another income stream that makes regular money worth it? It depends. We can assume that it makes less money than your irregular income or otherwise deprives you of some benefit or need, otherwise you would ditch your irregular income and do just that. In that case it's purely about how much reducing the volatility of your income stream is worth.

Re: Ask HN: Do you have a daily cash stream?

#36

Post by dceddia »

dmje wrote: post #2

Web guy here (more PM than developer). The two things I've done to keep the (unavoidable) feast/famine cycle at bay are: 1) keep two work bank accounts, one for daily use, one savings, and syphon off more than needed from daily > savings when invoices are paid. Example: client pays us £5k. We know we need to put aside corporation tax (we're UK based) of 20% on profit, but instead we put aside 25%. After a while of do…

Your point #1 sounds similar to the method outlined in Profit First[0]. Theirs is a bit more complex and has more accounts (Income, Profit, Owner's Pay, Tax, and Operating Expenses), but the theory sounds the same.

It's been a big help for my own business, especially for knowing that I always have enough for taxes. Money comes in to Income and it gets split up percentage-wise into the other accounts. I pay myself every couple weeks out of Owner's Pay, pay taxes out of the Tax account, pay my credit card out of OpEx, and cover shortfalls and/or pay myself quarterly from the Profit account.

0: https://profitfirstbook.com/

Re: Ask HN: Do you have a daily cash stream?

#37

Post by pikklemonster »

rsynnott wrote: post #12

> His reasoning behind running a bar is that the bar serves as a daily cash stream Of course the downside is that if things go wrong it acts as a daily cash sink, instead. Most businesses, especially retail/catering businesses, fail. Don't get into that unless you know what you're doing. I have a daily cash stream; it's called a job.

With some few exceptions, in my experience, bars are awful investments. Did a tech company which sold tech solutions to this space and got to see the books and behind the scenes at many dozen bars (and restaurants / coffee shops / frozen yogurt stores / etc).

Even before pandemic few of them netted any real significant profit after all expenses, and those that did managed to pull it off largely because if highly, highly engaged owners constantly on-site day in and out.

There is a huge number of people who think they can invest $20K (or $200K) in one of these businesses and hire a GM and sit back and take profits. I can think of maybe one example of that I encountered in 5 years.

Is it technically possible? Sure. Is it even remotely likely? No way. Especially if you didn't cut your teeth "In The Industry" and know all the things you need to know about shrinkage, vendor fraud, the politics of liquor licenses, et al. Nightmare fuel.

Re: Ask HN: Do you have a daily cash stream?

#38

Post by Kosirich »

Not to steer the conversation, but perhaps what you are interested in, considering the friend story, is if people have wealth (invested or created) that provides them with some steady cash flow on a daily or monthly period while not requiring full time (or near full time) commitment. (in my case is an apartment that I don't get much rent out of, but is a very safe way to keep wealth)

Re: Ask HN: Do you have a daily cash stream?

#39

Post by notJim »

voisin wrote: post #22

A more reliable side hustle than a bar would be to own some residential real estate and rent it out to respectful people. There’s a lot less work involved than running an operating business, and if the property cash flows (rent exceeds costs), you have a little bit of cash every month. There are also tax advantages via mortgage interest and other expense deductibility, and some “forced savings” as the mortgage pays d…

> the still-unfolding economic consequences of Covid19 may lead to an excellent entry point

This kind of thing is what puts me off real estate investing. The idea that I would be a beneficiary of an enormous crisis leaves a bad taste in my mouth. I'm not stupid, I know that someone is going to make that profit, but it doesn't have to be me. Similarly, the idea of putting myself in the position of one day needing to deprive someone of their housing if they're unable to pay is something I'd strongly prefer to avoid.

Re: Ask HN: Do you have a daily cash stream?

#40

Post by graeme »

rsynnott wrote: post #12

> His reasoning behind running a bar is that the bar serves as a daily cash stream Of course the downside is that if things go wrong it acts as a daily cash sink, instead. Most businesses, especially retail/catering businesses, fail. Don't get into that unless you know what you're doing. I have a daily cash stream; it's called a job.

> I have a daily cash stream; it's called a job.

Technically you have a bimonthly cash stream.

Needing a daily cash stream suggests poor cashflow management on the part of OP’s friend.

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