[phil21]

This is not what people mean by passive income. Yeah, if you have a few million dollars of capital already you can easily just toss it in the market and collect 4% every year indefinitely. Pretty much one of the only truly passive income streams there is.

The problem is how long and what you have to do to get that 3-5 million number. No one who is drawn to the “passive income” hustle is thinking “work a normal job for 30 years, live under my means, and invest everything I can”. They want to get much more immediate results so they can enjoy life on easy street because grinding it out for so long sounds extremely depressing.

What you describe is a retirement plan, not a passive income lifestyle. Kinda the opposite of escaping.

[bawolff]

> This is not what people mean by passive income.

This is literally the traditional definition of passive income - using your capital to generate more capital.

There is no free lunch, you need to provide something to get $$$. If you are providing labour it is by definition not really passive. That leaves land or capital.

[phil21]

The point is though, that no one pitches it this way. Everyone knows if you have millions of dollars you can generate passive income. That's simply not interesting to anyone.

If you have to grind out making millions over the course of a decade or three, that's simply called having a regular job. That's the status quo.

The passive income folk are all about finding some "hack" where you can be clever or smart or out-hustle the next guy and unlock some secret method to making passive income without capital. That's the entire "industry" in a nutshell. They are not going to folks with $1m in the bank telling them how to make 4% returns on it by tossing it into low cost ETFs. They are going to folks grinding out a living saying they have a shortcut to not needing that capital base to start off with.

tldr; If you already have capital, you don't need to think about passive income. It just happens.

[lazide]

‘everyone knows’ is doing a lot of work here. you still need to spend time, and make a lot of good judgement calls (not easy!) to earn a useful amount of passive income on investments without losing your principal.

being a professional investor (what you’re referring to) is especially terrifying in a low interest rate environment.

[littlexsparkee]

You don't need millions - if things go modestly well and you have a high savings rate, you can get out in 5-10 and draw enough to cover modest means. I do agree that people eying passive income maybe have a different patience / willingness to sacrifice & self-teach threshold but the calculus of grinding for a few years to escape has its adherents.

[madaxe_again]

Yup. This was my approach. Left my business a decade ago with low six figures cash in my pocket. It would have lasted about 18 months at my existing burn rate.

So I moved to a cabin in the woods in a country with a low cost of living, and stuck pretty much all of it in the markets.

Had I not done that, I would have had to go back to work - instead I lived a modest life (€500/mo, max) off the income from putting my apartment on Airbnb, and regained my sanity after a decade of relentless work while my investments did their thing.

Anyway, it’s a decade on, still haven’t done a jot of “work”, and the assets are now worth several million, and are being redeployed to continue to maximise value growth - and we now treat ourselves to spending months travelling at exorbitant budgets, real estate, expensive toys - and had enough stability to decide to have a kid.

So yeah, it’s possible - although had we grown at 6%/yr rather than an average of 80%/yr, it would be a different picture - but I firmly believe there are plenty of other opportunities for rapid capital growth elsewhere in the markets, and yet to come. I’m just some average dude who buys equities on vibes and then sits on them for a decade. If I of all people managed it, others can.

[mmmmmbop]

Way to bury the lede. Being able to average 80%/yr returns takes talent and skill and is a type of work. The type of work, by the way, that is rewarded with millions at finance companies in NYC, or even more if you launch your own trading shop.

[madaxe_again]

I’d sooner eat crow than work for a living again - and this ain’t work. I just think while I’m out for a hike, driving, whatever, and decide to make some investments in X, Y, Z next time there’s a decent looking moment to realise and reallocate some profits.

Plus, the kind of investing I do would never fly in a hedge fund - I’d just make the risk desk piss itself with laughter.

[littlexsparkee]

Did you do a ton of research to make those picks? These days I just do broad market ETFs, don't trust myself to beat the market.

[madaxe_again]

Nope. I just think about the probable shape of the future, and who benefits.

I stick with the fields I know and understand - tech, engineering, sciences - don’t go for long bets so much as “if this relatively predictable set of circumstances arises, who will inevitably benefit”.

For example, in 2017 I was keeping abreast with ML research, and realised that within a decade this stuff was going to be huge - so I bought Nvidia and their supply chain and sat on it. Also Tesla as I figured as if I saw them as an adjacent incumbent beneficiary of an AI boom, then others would, too.

I’ve followed that chain of logic through - caught the nuclear renaissance in its entirety, as well as predictable resource squeezes.

So - that’s just one of my trees of bets - but my whole thesis is “predict a future, model out what that looks like, place bets accordingly”.

[lazide]

guess how much you would have made with the same skills/work at a VC or hedgefund?

[yieldcrv]

it doesn’t matter, they didn’t want to

[yieldcrv]

You need to be around different people

Thats all it comes down to

Passive income through assets is the basis of our entire society, trying to out earn the base line is the entire economy. Banks wouldnt lend, employers would do something else, if they didnt believe they could earn more doing what they do, instead of owning US treasuries or earning dividends from stocks.

[icedchai]

It may be "not what they mean", but they're wrong. No business that actually adds value is ever truly passive.

[badestrand]

As a counterpoint, I have a website that generates a few thousand dollars per month and sometimes I improve bits about it but sometimes I also don't touch it (or its emails or anything) for a year.

[icedchai]

You've found a niche! That's awesome, actually. I shouldn't have said "no business", just that it's very rare...

[chii]

one word from the parent post sums up everything you said: patience. Or lack thereof (two words).

[phil21]

Not just one word though. Also hard work and grit. Telling someone interested in escaping the rat race (who is not in the top 10% of income earners) to just stick with a job they despise for 15-25 years is just not going to hit home. They know they can grind out a miserable life. That's the status quo they currently live.

Sure there are the scammer/grifter types who just want a super easy mode get rich quick scheme, but a lot of these folks are somewhere in the middle which is where they get taken by the actual scammers. They get told if they just hustle harder than everyone else for a few years they can achieve escape velocity.