It has been a while since I have gotten a strong reminder about why I want to build sustainable passive income sources. Well, I have received that wake up call. I am not sure why, but I have largely moved away from discussing personal items on this blog. I think the reason is that since I am not networking within the personal finance blog world there is no need to tell the personal side of the story since those vested in my story have diminished. I am not complaining as that is largely my fault, but rather it has shifted the way I write posts.
Notwithstanding, in mid December my father in law was diagnosed with multiple blood clots in his legs and lungs. The treatment caused him to suffer a stroke. Thankfully (and probably the only reason I am writing about it now) he has made a miraculous recovery in terms of both speed and health. My father in law is a fantastic, smart and hard working individual who has built a very successful business by any metric. He has been an entrepreneur for the past 30 or so years. When The Wife was about 24 years old she jumped in feet first with his guidance, so when he became unable to work it was The Wife who has done an amazing job stepping it up professionally for both my in-laws and our immediate family essentially taking over his duties and operations. It is because of The Wife that my in-laws’ income has not suffered and that scares me. Currently, there is no one in my life that could do what I do on a daily basis to keep my family in the lifestyle they have become accustomed to. While I have both group and personal disability insurance, but that is just not the same as additional income coming in without working.
This very personal event, which I barely skimmed the top of, has really lit a fire under me to start creating those passive streams of income which would provide income regardless of whether I am actively managing them.
Passive Income Streams of Income I’d Like to Eventually Build
I am not (that) naive, none of my ideas below are completely hands off. I actually don’t believe there is a type of income that you can just ignore without threat of being diminished, but my ideas below are less time intensive than a salaried position, which is probably the farthest thing from a passive income stream.
I probably don’t have to say it, but someone else might – the ideas below are not original. I am not expressing some profound knowledge, that has never been though of before. Rather, this is more of a “goals” post something for future Evan to look back on and ask himself, did you accomplish your goals. Thus far, at the age of 35 I have not and that is a bit frustrating to be honest, but since I plan on living to 108 years old I think I have some time!
In no particular order:
The painstakingly slow process to build my dividend income has been frustrating as of late, however, this event has reminded me that this is worth it! Once large enough (i.e. not the few hundred dollars per year it is currently at) it will provide my family with income every month/quarter without regard to whether I am able to go to work.
This is actually one of the reasons I chose to build this account in a non-retirement account. I want the ability to access the income much sooner than traditional retirement (hopefully not for a situation like I described above).
Government Bond Income
Bond Income is attractive to me because if I hold the bond to maturity the income and principal are relatively safe. I am not a “doomsdayer” I believe that if I give the State of New York or the Federal Government money they will pay me back, if for no other reason than to prevent a widespread riot.
I have not done a ton of research beyond my academic and professional knowledge on the topic (i.e. can talk about the taxes on bonds and how the obligations work), but I have yet to buy a single individual bond. I do own a bond fund in my 401(k), but I look at that as very different than knowing that $X of income is coming in at the beginning of each semi-annual period.
Some people may not consider real estate investing as a passive source of income. Having watched my father deal with the headaches that come with owning 2 properties with a total of 5 units I can probably agree with them, however, on a small ownership level it is certainly not 40 hours a week tied to a desk.
I thought I was going to buy an investment property a few years back, but the risk on that particular property was too much. Since then, it seems like pulling the trigger is further and further away. I am not sure what would actually get me involved in investing in real estate – it would have to be an unusual set of circumstances for me to get started anytime in the near future. I clearly want to be in this space, but in New York the barrier to entry is high. This is not something I can dabble in with tens of thousands of dollars, I would need 6 figures (of cash) to get started in New York – and for better or worse, I don’t see that happening anytime soon.
These Passive Income Ideas All Have One Thing in Common
There is one thing that all these ideas have in common. My expenses have to be less than my income and I need to invest the difference starting yesterday. The Wife and I are pretty good at saving, and keeping spending under control, but it is evident that if I can somehow supercharge that I can exponentially grow these three passive income ideas.
What type of passive income am I missing?