Ask HN: What passive income investments exist to supplement your salary? • Hacker News Board

Re: Ask HN: What passive income investments exist to supplement your salary?

#11

Post by hash872 » Mon, May 10, 2021, 4:58 PM UTC

As another poster already said, being a landlord is not 'passive'- you are essentially buying a part time job with no set off hours. The heat could go out on Christmas Eve, while you're on vacation, etc. It is a highly regulated (especially in blue states) field involving, you know, actual human beings!

Anyone advocating for being a landlord as a 'passive' investment vehicle is generally some type of Trump University or 'creative real estate' guru trying to sell you something. By contrast equities average a 9% annual rate of return, and are truly passive

Re: Ask HN: What passive income investments exist to supplement your salary?

#12

Post by theplague42 » Mon, May 10, 2021, 4:58 PM UTC

dangwu wrote: post #9

throwaway088 wrote: post #7

So, about renting, I bought a single family home for $500k in bay area. It now is worth $1M. Gets me rent before expenses of $40000. So far, I have spent about $5k per year on. Repairs etc. So effectively, I make about $20k after taxes, repairs, mortgage interest etc. Overall, I spent $350k by way of downpayment, mortage interest payment, etc. No major tenant issues. Hence, I would peg my return on investment of 5% i…

In hindsight, was it worth it compared to just investing all that money into the S&P500?

I think that's his point; that 5% returns aren't actually that great.

Re: Ask HN: What passive income investments exist to supplement your salary?

#13

Post by throwkeep » Mon, May 10, 2021, 4:58 PM UTC

throwaway088 wrote: post #7

So, about renting, I bought a single family home for $500k in bay area. It now is worth $1M. Gets me rent before expenses of $40000. So far, I have spent about $5k per year on. Repairs etc. So effectively, I make about $20k after taxes, repairs, mortgage interest etc. Overall, I spent $350k by way of downpayment, mortage interest payment, etc. No major tenant issues. Hence, I would peg my return on investment of 5% i…

And that can quickly disappear for those who end up with tenants that don't pay and can't be evicted.

Re: Ask HN: What passive income investments exist to supplement your salary?

#14

Post by betterunix2 » Mon, May 10, 2021, 4:59 PM UTC

No investments are "fully" passive, but some are more passive than others. For equities, the Dividend Aristocrats (those companies that have paid an increasing dividend for 25 years or more) are pretty close, and also are somewhat lower risk than equities in general (lower beta). The traditional passive income investments are bonds, and with as little as $6000 you could create a bond portfolio of US government debt that pays a monthly coupon (each individual bond is $1000 and pays interest every 6 months, so with 6 you get monthly income until the bonds start to mature). Unfortunately, interest rates are so low right now that you probably won't get the sort of income you are looking for even with the longest duration government bonds.

Anything that is not as standardized and well-organized as the stock or bond markets is going to require more work and thus is less passive, or will result in you having to pay others to do the work on your behalf (thus leaving you with less income).

Re: Ask HN: What passive income investments exist to supplement your salary?

#15

Post by TatersGonnaT8 » Mon, May 10, 2021, 4:59 PM UTC

I own a rental property, and I have a property manager who handles the day-to-day operation. The money I've put towards the rental would have performed better if it would have gone towards an index fund instead and would have been lower stress that way, but I like the feeling of having at least some "diversified" assets in real estate.

I've also made a couple games in my free time ("Dodge the Wall!" on Steam and "Cup Pong AR" on iOS/Android). Those games have been a great way to make ~tens of dollars.

The best way that I've made passive income is just through boring Vanguard index funds/target date funds.

Re: Ask HN: What passive income investments exist to supplement your salary?

#16

Post by Ennis » Mon, May 10, 2021, 5:01 PM UTC

By passive I'll assume you mean less effort and risk than starting a new business that requires daily attention.

The nice things about the property market are: 1. High leverage - to a very high amount when you put down payments greater than 30-50%. 2. Managed or protected by some governments. Gives a more consistent rate of growth in many fast growth cities. 3. Cashflow and appreciation.

The details matter and there's obviously skill involved in making it work. At some point like other businesses you will need to hire others to manage the day-to-day if you choose to keep growing.

Re: Ask HN: What passive income investments exist to supplement your salary?

#17

Post by throwaway088 » Mon, May 10, 2021, 5:01 PM UTC

chillacy wrote: post #6

One which I'm curious about is buying software businesses with existing user bases and adding new features, kind of the equivalent of buying a fixer upper, but it uses my unique skills.

I have been part of feinternational for sometime and saw their prospectuses. In general, if there is an existing user base, then the price factors it in already. You must have a plan and ability to increase the userbase in order to get a return on investment. Otherwise, some competitor may simply attract your customers and you are doomed.

Re: Ask HN: What passive income investments exist to supplement your salary?

#18

Post by dangwu » Mon, May 10, 2021, 5:02 PM UTC

theplague42 wrote: post #12

dangwu wrote: post #9

Earlier quoted context omitted.

In hindsight, was it worth it compared to just investing all that money into the S&P500?

I think that's his point; that 5% returns aren't actually that great.

Well, 10% is great, and he's diversified. I don't think it's that cut and dry.

Re: Ask HN: What passive income investments exist to supplement your salary?

#19

Post by bluGill » Mon, May 10, 2021, 5:03 PM UTC

theplague42 wrote: post #12

dangwu wrote: post #9

Earlier quoted context omitted.

In hindsight, was it worth it compared to just investing all that money into the S&P500?

I think that's his point; that 5% returns aren't actually that great.

Diversity is useful though. Stocks have crashed in the past, and they will in the future. As has real estate and every other investment. You thus need a backup plan in case your investment fails. I make no attempt to predict WHEN these crashes will happen, or how big they will be.

Re: Ask HN: What passive income investments exist to supplement your salary?

#20

Post by sbmthakur » Mon, May 10, 2021, 5:03 PM UTC

Relationships with people can be considered as an investment. Off late I have noticed that any relationship will start degrading in the absence of communication. It's better to invest some time in people you really value and nurture the relationship over time.