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Is complete passive options possible?

ben5blg

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Hey everyone! I've heard a lot the concept of passive income and financial freedom, but I still don't get it, like is there a way to a completely PASSIVE option? I'm talking about not working at all (not even 3-4 hours a week) and still earning money.


"False" passive option:
So first, there's the "false" passive option, aka the FIRE method (not the concept itself but more the "HOW"), by being frugal and giving all your money to Wall Street, this is financial dependence so not true independence.

The right neighborhood and the right house:
Then, if you want to be financially independent, you need to have your own business. But is there a way, using "the right neighborhood and the right house", to completely passive option? You seek freedom over financial growth with your company ("Company of One" book) and you can work remotely, wherever you want. But it means that you will still have to work a bit on your business somehow.

Sold your company:
Another way will be to sell the company but you will be dependent on the cash. (This is the most realistic one, even though you don't earn money, you can relate on a large sum of money, see Post #8)

So for me, complete PASSIVE option, aka not working at all and still earning is impossible, if you have a business, you will always have responsibilities and work to do.

What do you think?

Edit note:
I'm just looking into a hypothetical idea, about complete PASSIVE options. When I said things like "still have to work a bit on your business", does that mean that I'm not willing to work a bit on my business? not at all, it just means that it is PASSIVE (aka asymptote) but not completely PASSIVE (not working at all).
Please understand that I think, it's impossible to have a 100% completely PASSIVE option. And even if yes that's probably not the way I'd go, I just want your thoughts on this idea of completely PASSIVE option.


P.S: I changed this first post and the title, to orient it more about passive income and financial independence than retirement.
 

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MTF

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I think that you're putting the cart before the horse but since you asked...

We can argue that there's no 100% passive source of income. Even if you live off dividends and do absolutely nothing else, you still should check your broker account periodically and reinvest. Even if you have several rental properties managed by a property manager, you should still periodically make sure that everything's going well.

No matter what it is, there's always some work involved, even if it's just an hour a month.

But who cares? Is there really such a difference between working one hour a week or a month vs not working at all?

The mythical retirement when you're not working at all is a sure-fire path to depression and early death. Humans are not designed for idleness. As much as you now think that you'd love to do nothing, after a few months of "do nothing" retirement you'd probably go crazy.
 
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ben5blg

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I think that you're putting the cart before the horse but since you asked...

Even if you live off dividends and do absolutely nothing else, you still should check your broker account periodically and reinvest. Even if you have several rental properties managed by a property manager, you should still periodically make sure that everything's going well.

No matter what it is, there's always some work involved, even if it's just an hour a month.

But who cares? Is there really such a difference between working one hour a week or a month vs not working at all?

The mythical retirement when you're not working at all is a sure-fire path to depression and early death. Humans are not designed for idleness. As much as you now think that you'd love to do nothing, after a few months of "do nothing" retirement you'd probably go crazy.
Yeah, I definitely agree! Just hearing all the time "early retirement" I was a bit confused. Thanks :smile2:
 

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It’s called entropy. The natural state of things is chaos. You will not find money being deposited into your account forever. All things deteriorate into a state of chaos and it takes effort to keep things organized. The same goes for income. Passive income is low maintenance income.

Now as for early retirement...well...I sorta feel like a retired person. I live on a lake. I don’t have a boss. I work a few hours a day right now on my lawn care company and get off around 2pm Monday through Friday and go swimming. And when I want to grow the business I can put my foot down on the pedal more. Retirement is just an idea. The only rules are that you’re born and then you die and everything in between is up to you.
 
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ben5blg

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May 11, 2019
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It’s called entropy. The natural state of things is chaos. You will not find money being deposited into your account forever. All things deteriorate into a state of chaos and it takes effort to keep things organized. The same goes for income. Passive income is low maintenance income.

Now as for early retirement...well...I sorta feel like a retired person. I live on a lake. I don’t have a boss. I work a few hours a day right now on my lawn care company and get off around 2pm Monday through Friday and go swimming. And when I want to grow the business I can put my foot down on the pedal more. Retirement is just an idea. The only rules are that you’re born and then you die and everything in between is up to you.
Ok I see that’s what I seek about having choices to do whatever you want
 
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ben5blg

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Retirement?

I'd go crazy. To many ideas to few life years to get them all implemented....
I think what I said wasn’t clear: when i’m Talking about retirement is more about not working for the money anymore.

Does that mean I will be sleeping all day on a beach? Heck no! I will still work on awesome projects and ideas.
 

Kevin88660

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You mean no amount of money can let retire? Come on...

If you have 2 million net assets you can bring up a family without having your wife to work.

Focus on investments that give you 4 percent return without exposing you to too much risk. Riets, bonds and dividend stocks (emerging market preferred). You get 80k investment income yearly. Unless you live in Manhattan, you can decently support yourself, your wife and two kids.

If you just want to scrape a living and live frugally in Thailand alone I say 500k is enough.
 

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I think what you are saying is you want "Freedom and better options" in life. Not necessarily retirement.

You could technically start living this life in just a few months! If you haven't, read Unscripted and try applying some of MJ's principles. Set some goals and see what happens.

Good luck!
 
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ben5blg

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I think what you are saying is you want "Freedom and better options" in life. Not necessarily retirement.

You could technically start living this life in just a few months! If you haven't, read Unscripted and try applying some of MJ's principles. Set some goals and see what happens.

Good luck!
Personally yes that what I want, this thread was more an “hypothetical idea” to see if complete retirement was possible.
 
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ben5blg

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You mean no amount of money can let retire? Come on...

If you have 2 million net assets you can bring up a family without having your wife to work.

Focus on investments that give you 4 percent return without exposing you to too much risk. Riets, bonds and dividend stocks (emerging market preferred). You get 80k investment income yearly. Unless you live in Manhattan, you can decently support yourself, your wife and two kids.

If you just want to scrape a living and live frugally in Thailand alone I say 500k is enough.
It looks a lot like FIRE method?
 

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MJ DeMarco

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Hey everyone! I've heard a lot the concept of retire early, but I still don't get it, like is there a way to completely retire early? I'm talking about not working at all (not even 3-4 hours a week) and still earning money.

False Retirement:
So first, there's the false retirement, aka the FIRE method, by being frugal and giving all your money to Wall Street, this is financial dependence so not true retirement.

The right neighborhood and the right house:
Then, if you want to be financially independent, you need to have your own business. But is there a way, using "the right neighborhood and the right house", to completely retire early? There's the concept of "semi-retirement" when you seek freedom over financial growth with your company ("Company of One" book) and when you can work remotely, wherever you want. But it means that you will still have to work a bit on your business somehow.

Sold your company:
Another way will be to sell the company but you will be dependent on the cash.


So for me, complete retirement, aka not working at all and still earning is impossible, if you have a business, you will always have responsibilities and work to do.

What do you think?
Of course you can retire early without having another income stream, it just requires a larger sum of money. Cash in money markets earn (currently) about 2%. But even if you earn ZERO percent, as long as your monthly expenses stays less than your drawdown for your life expectancy, you won't need to earn anything. The aforementioned is the completely PASSIVE option, with zero management.

If you want to add management into your "retirement" then you can add various investments; another small business which has profits, dividend stocks, bond ETFs, munipal bonds, real estate holdings and their rents, REITs, etc. This adds income to your retirement, but also introduces certain risks. This is why I advocate a combination of all of it so in the advent of a collapse, you STAY retired.
 

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So for me, complete retirement, aka not working at all and still earning is impossible, if you have a business, you will always have responsibilities and work to do.

What do you think?
Of course it's possible. If you had $10M in the bank making 0%, you could just spend $250k a year and it would last 40 years.

Your question to me does not make any mathematical sense.

What is "complete" retirement mean to you?

If you want to do absolutely nothing financially, you can. But it's not smart to let other handle 100% of your net worth.
 

biophase

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It looks a lot like FIRE method?
So you don't believe that the FIRE method is retirement? But you want "complete" retirement.

What I hear is that I don't want to learn how to manage money because it's work (not retired), but you also don't want to hand my money over to someone else to manage.

Sold your company: Another way will be to sell the company but you will be dependent on the cash.
But you also don't want to be dependent on my own money.

So what the heck do you want to do, live a on beach your whole life and have money grow from your fingers?
 

WJK

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Hey everyone! I've heard a lot the concept of retire early, but I still don't get it, like is there a way to completely retire early? I'm talking about not working at all (not even 3-4 hours a week) and still earning money.

False Retirement:
So first, there's the false retirement, aka the FIRE method, by being frugal and giving all your money to Wall Street, this is financial dependence so not true retirement.

The right neighborhood and the right house:
Then, if you want to be financially independent, you need to have your own business. But is there a way, using "the right neighborhood and the right house", to completely retire early? There's the concept of "semi-retirement" when you seek freedom over financial growth with your company ("Company of One" book) and when you can work remotely, wherever you want. But it means that you will still have to work a bit on your business somehow.

Sold your company:
Another way will be to sell the company but you will be dependent on the cash.


So for me, complete retirement, aka not working at all and still earning is impossible, if you have a business, you will always have responsibilities and work to do.

What do you think?
I retired the first time when I was 49. I'm just as busy today as was before I made that decision all those years ago. Doing nothing is boring and it sucks the meaning out of life. At least that is my reality. I've noted that the people around me who retire lay down and die, become insufferably petty and bitter people, or they find something new to anchor their lives. I've taken the latter option. The money issue is only one of the elements to consider. You can always make more money --it's a renewable resource. But time is a lot more finite. Using my time well is a lot more important to me.
 

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Another way will be to sell the company but you will be dependent on the cash.
"Dependent on cash" rings a little strange to me. Your question is whether retirement is possible, not whether independence from a country's currency is possible. Which are you looking for? Both are possible at some level, but you have to define what you want exactly, and what you're willing to do, or sacrifice, to have that. The easiest way to be independent of your country's currency is to live in the forest and eat acorns... but you might not consider that "retirement."
 

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I think that for the most part there's always going to be some maintenance, but there are some ventures that provide a completely passive income. Book sales, digital products.
 
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ben5blg

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paycheck pot concept
I definitely need to look at this deeper, just bought Unscripted yesterday!

Of course you can retire early without having another income stream, it just requires a larger sum of money. Cash in money markets earn (currently) about 2%. But even if you earn ZERO percent, as long as your monthly expenses stays less than your drawdown for your life expectancy, you won't need to earn anything. The aforementioned is the completely PASSIVE option, with zero management.

If you want to add management into your "retirement" then you can add various investments; another small business which has profits, dividend stocks, bond ETFs, munipal bonds, real estate holdings and their rents, REITs, etc. This adds income to your retirement, but also introduces certain risks. This is why I advocate a combination of all of it so in the advent of a collapse, you STAY retired.
Alright, so the completely PASSIVE option would be to have a large sum of money.


So you don't believe that the FIRE method is retirement? But you want "complete" retirement.

What I hear is that I don't want to learn how to manage money because it's work (not retired), but you also don't want to hand my money over to someone else to manage.



But you also don't want to be dependent on my own money.

So what the heck do you want to do, live a on beach your whole life and have money grow from your fingers?
I admit the way I titled the thread is confusing. Here I'm just looking into a hypothetical idea, about, as MJ DeMarco said, complete PASSIVE option. (retirement was not the right word).

Then, personally, I want financial freedom and when I said things like "still have to work a bit on your business", does that mean that I'm not willing to work a bit on my business? not at all, it just means that it is PASSIVE (aka asymptote) but not completely PASSIVE.

Please understand that I think, it's impossible to have a 100% completely PASSIVE option. And even if yes that's probably not the way I'd go, I just want your thoughts on this idea of completely PASSIVE option.


I retired the first time when I was 49. I'm just as busy today as was before I made that decision all those years ago. Doing nothing is boring and it sucks the meaning out of life. At least that is my reality. I've noted that the people around me who retire lay down and die, become insufferably petty and bitter people, or they find something new to anchor their lives. I've taken the latter option. The money issue is only one of the elements to consider. You can always make more money --it's a renewable resource. But time is a lot more finite. Using my time well is a lot more important to me.
"Dependent on cash" rings a little strange to me. Your question is whether retirement is possible, not whether independence from a country's currency is possible. Which are you looking for? Both are possible at some level, but you have to define what you want exactly, and what you're willing to do, or sacrifice, to have that. The easiest way to be independent of your country's currency is to live in the forest and eat acorns... but you might not consider that "retirement."
Again, my fault, "retirement" was not the right word to use here. It's more about a completely PASSIVE option.
 

Kevin88660

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I don't consider spending five min a day logging into my interactive broker account to check and balance my portfolios a chore. Maybe I like this kind of stuff.

You can just to skip this its just slightly less optimal for your income pot.
 

JScott

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Again, my fault, "retirement" was not the right word to use here. It's more about a completely PASSIVE option.
Stick your money in a savings account, order 100,000 personal checks and there you go -- you're completely passive for the rest of your life. Of course, your returns are going to be small (likely less than inflation) and may eventually go negative (depending on future economic events). But, you didn't indicate that you needed a minimum return on your cash. Assuming you're willing to settle for 0-1% returns, this is completely passive barring an economic meltdown.

Now, if you want higher returns than 2%, that's when you have to either give up some passivity or take more risk. If you don't want to give up passivity, there are certainly higher risk options. You can put your money into CDs or T-Bills, and have someone spend a couple minutes a year ensuring that your money is reinvested and move any money you want to spend into an accessible account.

The risk is obviously that you have to trust someone to do this for you. But, if you're willing to take that risk, you are still completely passive.

If you want higher returns than when you'll get with CD and treasury bonds, again, you either need to give up some passivity or accept more risk. You can buy cash flowing assets and let others manage them (if you don't manage these managers, it's still 100% passive, you just have the risk that the managers screw up).

Higher returns can come from more aggressive money managers. Again, completely passive if you don't oversee the managers but higher risk.

So, there's always ways to be completely passive. You just need to decide which level of risk/reward you need...
 

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Brent Shields

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I invest in apartment syndications, it takes about 30 minutes to invest then I usually receive 20% per year for about 5 years.
It's the most passive investment I know with the highest return.
Then I spend my time doing things I enjoy.
 

JScott

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I invest in apartment syndications, it takes about 30 minutes to invest then I usually receive 20% per year for about 5 years.
It's the most passive investment I know with the highest return.
Then I spend my time doing things I enjoy.
Just keep in mind that for those who have no experience or connections in real estate, investing in an apartment syndication is risky. Most apartment syndications over the past 5 years have been successful, lulling investors into the belief that this investments are low risk, easy returns.

But, with cap rates ultra low, with the economy at the top of the cycle and with a whole lot of new operators jumping into the multi-family syndication game, it's probably safe to say that there are going to be a lot of failed syndications over the next few years.

If you don't know how to analyze a value-add multi-family investment, you're taking a risk. Especially given all the novice investors jumping in and asking for money...
 

Brent Shields

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Yes, I would agree with all of that. I actually spend a fair amount of time researching and finding the best syndicators doing the best deals, in the best markets.
So for me it's not quite so passive,
I should have said, for my group of friends and business associates who I share my information with on which deals I am investing in, they have truly passive investments with very low risk.
 
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ben5blg

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Stick your money in a savings account, order 100,000 personal checks and there you go -- you're completely passive for the rest of your life. Of course, your returns are going to be small (likely less than inflation) and may eventually go negative (depending on future economic events). But, you didn't indicate that you needed a minimum return on your cash. Assuming you're willing to settle for 0-1% returns, this is completely passive barring an economic meltdown.

Now, if you want higher returns than 2%, that's when you have to either give up some passivity or take more risk. If you don't want to give up passivity, there are certainly higher risk options. You can put your money into CDs or T-Bills, and have someone spend a couple minutes a year ensuring that your money is reinvested and move any money you want to spend into an accessible account.

The risk is obviously that you have to trust someone to do this for you. But, if you're willing to take that risk, you are still completely passive.

If you want higher returns than when you'll get with CD and treasury bonds, again, you either need to give up some passivity or accept more risk. You can buy cash flowing assets and let others manage them (if you don't manage these managers, it's still 100% passive, you just have the risk that the managers screw up).

Higher returns can come from more aggressive money managers. Again, completely passive if you don't oversee the managers but higher risk.

So, there's always ways to be completely passive. You just need to decide which level of risk/reward you need...
Ok I like the idea that when you want more returns, either you take more risk or you give up some passivity, thanks
 

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I think that you're putting the cart before the horse but since you asked...

We can argue that there's no 100% passive source of income. Even if you live off dividends and do absolutely nothing else, you still should check your broker account periodically and reinvest. Even if you have several rental properties managed by a property manager, you should still periodically make sure that everything's going well.

No matter what it is, there's always some work involved, even if it's just an hour a month.

But who cares? Is there really such a difference between working one hour a week or a month vs not working at all?

The mythical retirement when you're not working at all is a sure-fire path to depression and early death. Humans are not designed for idleness. As much as you now think that you'd love to do nothing, after a few months of "do nothing" retirement you'd probably go crazy.
No better answer than this. (Yes, I read OP's edits. He's right.)
 
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Ing

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Retirement. Doesn’t it mean to have the freedom to do, what you want?
Riding dirtbike 7 days a week or running a business I dreamt of , which perhaps bring never a buck but fun...?
 

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I think there are certain apps and websites that can achieve 1-2 hours/month. The idea of passive income just means you can earn while you sleep,in stead of selling your time for fixed rates
 

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The only 100% passive method I can think of is US Treasury bonds, since the US government (contrary to the whinings, moanings, and bitchings of ZeroHedge/gold bugs/gloom-and-doomers/etc.) is unlikely to default anytime soon.

Yes, the US debt is getting worse, I agree on that point, but it's not like we're going to become Venezuela or Zimbabwe, even if a "democratic socialist" (LOL) gets into power somehow because Congress still needs to write the laws first.

The problem with T-bonds, of course, is that the 30 Y yield is very low (2.3% or something like that, and shorter than 30 Y bonds is even lower), and it's only going to get lower as investors pile into "safety."

Your money will get eaten away by inflation if you're only counting on the bond coupon.

Digital products like eBooks/eCourses/audio recordings are 95% passive after you run a successful marketing campaign for 1-2 years. You probably only need to spend a couple hours each week (2-4 hours) to do basic maintenance, like check if your website is up, if you're being spammed by some idiot or moron in your email, etc.

You can even do it in your pajamas if you want. That's about as close as you'll get to a perfectly passive system.

Contrary to what MJ wrote back in 2011 in The Millionaire Fastlane, I don't believe "software" category products are as passive as he mentions anymore. The "build a MVP" (Minimally Viable Product) with a one or two person team is dying and you're going to need employees if you actually want to scale. The MVP product field is crowded as F*cking hell with a gazillion CRMs and other "low level" software that doesn't actually provide any additional value.

Software that is ACTUALLY PROFITABLE requires a lot of maintenance (like those startups working on security software). I'm sure there are a few niches where software doesn't require at least several employees, but they're excruciatingly difficult to find (and if I do find them, I sure as hell am not going to share the ideas with other people.)

The old 64 bit games that sold well in the 90's and early 2000's also hardly exist anymore, unless you're as talented/skilled as the guy who made Stardew Valley by himself (99% of software programmers/devs aren't going to be able to do what he pulled off, so don't bother).
 

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