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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?

#41

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 anyth…

I disagree. Not with the facts stated, but your interpretation of them. With defined risk positions, the risks are easy to understand. Of course you can't compete with the institutions, but should that be a reason not to invest at all?

Again, with defined risk positions there is no way you can blow up an account. Options expiring worthless works for you if you're a net seller. Others have written extensively about strategies: https://earlyretirementnow.com/2019/03/27/passive-income-thr...

This is not something someone should do without the prior research. It's not for everyone. But compared to something like opening a small business (which I haven't done, but would consider very risky) at least in this "business" your risk can be defined.

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

#42
post #31

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

It's not for everyone, but only if you want to learn and take matters into your own hands as opposed to simple buy and hold investing. People may recommend not opening a bar for passive income, but it looks like at least someone in here is doing it well.

Of course there's no free lunch or ways to make any considerable profit without risk. But compared to holding long stock, you can take defined risk positions that are more/less risky.

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

#43
post #40

> 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.

Bimonthly? Depends on the country

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

#44
post #43
post #40

Earlier quoted context omitted.

> 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.

Bimonthly? Depends on the country

Fair. I doubt it’s daily in most jurisdictions though.

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

#45
post #39
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 d…

There’s other ways to look at it. If someone is forced to sell, they likely took on too much leverage in the first place or didn’t save enough for a rainy day. Those decisions aren’t your fault, and by buying when prices are low, you are in effect giving them the liquidity they need which is a good thing.

Also, you never have to deprive someone of their housing if they are unable to pay. You can work out payment plans and all sorts of compromises to get through tough times and tenants will generally appreciate that flexibility.

The point remains - real estate is more stable for side income than a bar!

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

#47
post #39
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 d…

> The idea that I would be a beneficiary of an enormous crisis leaves a bad taste in my mouth.

Worth noting that even in "normal" times, the banks and money lenders are benefitting due to the parasitic and immoral practice of lending money with usury (aka interest), which is one of the major cause of financial crises that have and keep on happening. It's baked into the system.

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

#48

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)

Passive income

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

#49
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…

> rent it out to respectful people

This is the difficult part.

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

#50

> 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, hig…

I'm a bar owner.

I see some truths and some falsehoods both in your statement, for sure.

My business partners at the time and I started our bar for under 30k. It was an existing bar, but a terrible one--day drunks, no regular customers had a job, and the two taps were Busch and Busch. But it had a big unused area we wanted to get up and running, which we did quickly. But to be clear, we were rank novices. I was 26 and had never had a sip of alcohol. My family had zero entrepreneurs. I did not have a runway, I was all-in.

We worked our asses off, working behind our own bar for 100% of the shifts. Not only did we not have a GM, we didn't even have bartenders! Kept our own books, did our own taxes. Ran our own pool tournaments. Everything. For over a year, I think, before we finally hired one bartender a couple of nights per week.

I've since bought out my partners, and I make a good living at the bar, but still no GM. I have a "manager" I trust who mostly deals with scheduling the staff and ordering product. She's a bartender who spends about 8 hours per week on managerial duties. I still do the books & taxes, and make all the higher-level decisions. On a given night, if I'm not there, the bartender is the boss. Cooks and security guys answer to them.

Our state issues liquor licenses to basically everyone, very cheap. There's not a limited supply like other places. We think we made it through perseverance. The first few years were not good money. We're 10.5 years in now, and I've had other positions in that time, including being a remote web developer for five years.

I don't think I'd recommend it for most people, but I do think you can will your way through the rough times into a profitable business. Staying power is worth something in this industry.

Also, if anyone ever reads this, here's my best lessons distilled down. At least it's what makes my place work well.

1) Hire honest people. It's very easy to steal at a bar, so an honest person who can't make a drink is a much better hire than a dishonest bottle-flipping whiz kid. You can train (almost) anyone. 1a) Don't be afraid to let go of someone you need to. There's always a fear you'll piss off your regulars; it's highly unlikely and worth it regardless.

2) Stay open as late as possible, and never close early. People have to know, beyond a doubt, that you will be open if they drive to wherever you are.

3) Have a flat top and a fryer, and base a whole menu on that. Make good food, it's not difficult.

4) Own your own machines. Pool tables, juke boxes, etc. They pay for themselves very quickly. If you can have cherry machines and pay cash (probably a gray area at best), definitely do that. We can't, but maybe you can.

5) We went cash only about a year ago. Our sales continued increasing until covid, and by placing an ATM with no fee, nobody is disgruntled. Saves me countless thousands per year in credit card percentage fees, although I have to manage keeping the ATM stocked.

6) Ban people who are a problem, and ban them permanently. A guy who starts a fight once will always start a fight again. Cultivate a respectful environment where nobody (including single women) feels harassed or awkward or whatever.

I personally think that's a decent recipe for a can't-lose bar, as long as your lease payment is small enough. For reference, ours is $1610/mo for a 6,000 sqft building. Business can't lose, but your personal life and finances could if you aren't making any tips behind your own bar. Definitely worth thinking about.

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