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A stock portfolio that I've built through consulting profits is my main passive income source. Anything else is not really "passive." This probably isn't the a

A stock portfolio that I've built through consulting profits is my main passive income source. Anything else is not really "passive." This probably isn't the answer you're looking for, but in my view the average developer is much better off simply selling their time at the maximum rate and funneling the profits into a well-managed portfolio. The median outcome for this is much better than the story on most passive-income businesses.

wangarific 10y ago
For 100% passive, you really can't beat this. Funnel your cash into dividend stocks and now you have a stream of income that's taxed at a favorable rate too. Even if you were to go with an S&P 500 index fund you get a near 2% yield.
- bsbechtel 10y ago
  Yes, if you don't consider the 35% corporate tax rate on the corporation's profits before the 15% capital gains.
- timetoswitch 10y ago
  And also you've taken on the risks associated with those stocks.
GarrisonPrime 10y ago
You're assuming maximizing cashflow is the most important factor. Some of us would be willing to have a lower standard of living (possibly significantly lower) if a passive income could provide that.
- morgante 10y ago
  In what way did I say that? if anything, I'm maximizing passivity. You can live off stock dividends a lot longer if you lower your standard of living. Your comment is totally orthogonal.
  - mcphage 10y ago
    > In what way did I say that? That would be this bit here: > simply selling their time at the maximum rate
    - shanecleveland 10y ago
      Exactly. Not very passive.
      - morgante 10y ago
        I never contended that the consulting part is passive. It absolutely takes consistent time every month. It's the dividend revenue which is passive.
        shanecleveland 10y ago
        Ecactly. You had to work first. Work I've put in on projects now earns passive income, too. So there are other ways.
mylons 10y ago
if you've never consulted before, how do you "start"? cold emailing people for freelance gigs that you see on hackernews doesn't usually parlay into high paying consulting gigs.
- k__ 10y ago
  Well, there are a bunch of job sites that also give the option of "contract" work. AngelList for example.
- eswat 10y ago
  This might sound hokey, but think of getting into consulting as phases of software releases. During alpha get to know people and the problems they face that you can potentially help out with (at this point you haven’t started consulting yet), in beta you drop whatever you were doing before, or cut down your time commitment enough, and getting into consulting (or more likely freelancing, where you’re doing more grunt work than being an advisor or strategic partner), in gold master you’ve demonstrated enough value that you’re at least making more than what you were previously and not hemming and hawing for more work. Don’t expect to start at gold master.
  - mylons 10y ago
    reasonable answer! thanks. during the "alpha" phase, are you potentially offering your services to prospective clients?
    - eswat 10y ago
      > are you potentially offering your services to prospective clients? Yes. If you’ve really understood the problems these potential clients have and they haven’t already asked you if you could be the person to solve it, offer your services. Depending on your employer and your comfort level you may even be able to hit to beta earlier and do your freelancing on the side. I didn’t have the energy to work on other projects outside of my dayjob when I started. So I had to make a clean break before I started working with clients. You may be different.
dxhdr 10y ago
Mind sharing how your portfolio is organized?
- morgante 10y ago
  25% play money (stocks I pick individually), 75% index funds (with a focus on dividends).
  - Jugurtha 10y ago
    Any statistics on how each of those are performing relative to each other. I've never traded real money,only paper trading freshman year and played a game on MarketWatch where I traded like a monkey and made profits. I also put a prognostic on AAPL when it was in its 52 week's low and on ORCL and the outcome was as I had predicted. Maybe because there was no real money at stake. I'm just curious and find this interesting.
    - charlesdm 10y ago
      Paper money is not real money. You won't act and respond in the same way as if you're dealing with your own cash. Trading.. well, you'll probably lose your shirt. Investing however is very doable. Start with the stuff you understand well (i.e. probably tech). Why not just put in $5k and see where you end up? Even small amounts can teach you a lot.
      - dllthomas 10y ago
        > Start with the stuff you understand well (i.e. probably tech). I worry about diversification. Tech is what I know, but I am already heavily invested: by far my biggest asset is my career, skills and experience.
        charlesdm 10y ago
        Diversification isn't all people make it out to be. As an example: if you had to pick one stock would you be more likely to pick a great tech, mining or industrial stock? If you know tech and you work within tech, the answer will likely be tech. Also, people have different risk levels. My personal opinion is that you need to make sure that, if you make a bet (by picking a stock) and you win, you win big (at least 15-30% annualised). The S&P has good averaged annual returns and it's a good idea to invest a decent amount into an S&P fund. But if you pick an individual stock to invest in, you need to do your homework and it needs to be able to outperform the index. Think George Soros vs Warren Buffet. In the early days, Soros would make massive bets on certain events and/or stocks. He bet his entire fund on the decline of the pound and made a killing. Warren Buffet is much more methodical about investing and gets great returns too. Both great investors, but they probably have different risk levels, different focus areas and different ways of approaching things. And that's one of the things that makes investing fun!
woodpanel 10y ago
> The median outcome for this is much better than the story on most passive-income businesses. Thanks for the reality check. I currently follow exactly this strategy. It's not the perkiest way of living, but it's actually pretty good considering what most people have to do to make ends meet. Still, passive income strategies make me curious. We devs are in the luxurious position to be able to tweak our income-per-hour situation like mostly no human ever could. I think it's not a sign of gluttony to aim for more but actually a sign of appreciation of the situation luck has handed us. We are one of the few people on earth who can get richer by refusing to work. Not only richer in a metaphysical way but in actual cash.
shanecleveland 10y ago
> Anything else is not really "passive." Sure it is. Yours is just a different method. You had to work to get the money, first. Passive income is the same. Some effort had to be put forth. Passive doesn't mean do nothing and get something. That's idle income. I believe, particularly when we talk about it here on HN, it means to apply a set of already possessed skills, knowledge, resources, etc., and put forth some effort without a great deal of emphasis on making a profit, at least initially. Otherwise, it is a job. But if successful and money is made, you have a source of income. And it may eventually become idle income.
- morgante 10y ago
  I guess we have different definitions of passive income. Obviously you can spend a bunch of time to build and run a business (and, in fact, I try to do that). I just don't really think it's passive when you're working many hours a month on it. In contrast, my portfolio requires literally 0 work on a monthly basis.
  - shanecleveland 10y ago
    Pretty much the same. Do some work, create resources (money, website, app, property, knowledge), put the resource to work for you. No doubt using resources you already have, which in your case is money, to generate income would fit the definition of passive income. More accurately, it's investment income, which also is not guaranteed. And you did have to perform work to get that money in the first place. Are planning on injecting more funds into your portfolio? That likely means performing more work to generate those funds. Likewise, I have sites that generate income that I have not touched in months, maybe a year or more. Like you, I had to do some work to begin generating the income. Now, it's passive income. Not a business.
dmoney 10y ago
What's a good resource on how to do this? How does the "income" part actually come back to you? Do you sell a little stock each month?
chad_strategic 10y ago
I have to laugh at "well-managed" portfolio. That's hysterical, in fact I'm still laughing. I might even wake up in the middle of the night and laugh. Silly, active managed portfolios never beat their benchmarks over the long run. Anybody in the financial industry knows that... and index fund are only good till that strategy doesn't work anymore.
- wayn3 10y ago
  "your investment strategy only works until it doesn't work anymore" say what?
  - chad_strategic 10y ago
    Black Swan.
- morgante 10y ago
  Err, what? I'm not sure where you got the idea that I'm actively managing my portfolio. The vast majority of my money is in index funds. In my view, a well-managed portfolio is one which aims to perform at market and no better or worse. > index fund are only good till that strategy doesn't work anymore. The day that index funds cease to be the optimal investment strategy (for most individuals) is the day that stocks overall have stopped being a viable investment strategy. Obviously you're just arrogantly trying to make assumptions instead of asking questions.
  - tiatia 10y ago
    >> index fund are only good till that strategy doesn't work anymore. > The day that index funds cease to be the optimal > investment strategy (for most individuals) is the day > that stocks overall have stopped being a viable > investment strategy. I believe that Index funds are a very good investment strategy. But before you make condescending remarks about the previous poster, you should read up a little bit. Index funds HAVE problems, especially if too many people use them to invest. http://www.nytimes.com/2015/10/11/business/mutfund/the-ease-of-index-funds-comes-with-risk.html?_r=0 http://www.nytimes.com/2015/10/11/business/mutfund/the-ease-...
kzisme 10y ago
Can you recommend advice or resources to being building a financial portfolio?
- morgante 10y ago
  Check out Bogleheads and Vanguard index funds. In general, the people who spend more time thinking about and managing their portfolio get worse returns.
kohanz 10y ago
Are you actually taking income out of this portfolio? I'm in my mid-thirties, so I invest in index funds, but any dividends are re-invested. It's not something I intend to touch until retirement or some extraordinary situation.
- morgante 10y ago
  It varies. Since I'm a consultant, if I take a vacation or have a dry spell then I do have to take income from the dividends. In other cases, I reinvest all the dividends (and my earnings).

wangarific 10y ago

For 100% passive, you really can't beat this. Funnel your cash into dividend stocks and now you have a stream of income that's taxed at a favorable rate too. Even if you were to go with an S&P 500 index fund you get a near 2% yield.

bsbechtel 10y ago
Yes, if you don't consider the 35% corporate tax rate on the corporation's profits before the 15% capital gains.
timetoswitch 10y ago
And also you've taken on the risks associated with those stocks.

GarrisonPrime 10y ago

You're assuming maximizing cashflow is the most important factor. Some of us would be willing to have a lower standard of living (possibly significantly lower) if a passive income could provide that.

morgante 10y ago
In what way did I say that? if anything, I'm maximizing passivity. You can live off stock dividends a lot longer if you lower your standard of living. Your comment is totally orthogonal.
- mcphage 10y ago
  > In what way did I say that? That would be this bit here: > simply selling their time at the maximum rate
  - shanecleveland 10y ago
    Exactly. Not very passive.
    - morgante 10y ago
      I never contended that the consulting part is passive. It absolutely takes consistent time every month. It's the dividend revenue which is passive.
      - shanecleveland 10y ago
        Ecactly. You had to work first. Work I've put in on projects now earns passive income, too. So there are other ways.

mylons 10y ago

if you've never consulted before, how do you "start"? cold emailing people for freelance gigs that you see on hackernews doesn't usually parlay into high paying consulting gigs.

k__ 10y ago
Well, there are a bunch of job sites that also give the option of "contract" work. AngelList for example.
eswat 10y ago
This might sound hokey, but think of getting into consulting as phases of software releases. During alpha get to know people and the problems they face that you can potentially help out with (at this point you haven’t started consulting yet), in beta you drop whatever you were doing before, or cut down your time commitment enough, and getting into consulting (or more likely freelancing, where you’re doing more grunt work than being an advisor or strategic partner), in gold master you’ve demonstrated enough value that you’re at least making more than what you were previously and not hemming and hawing for more work. Don’t expect to start at gold master.
- mylons 10y ago
  reasonable answer! thanks. during the "alpha" phase, are you potentially offering your services to prospective clients?
  - eswat 10y ago
    > are you potentially offering your services to prospective clients? Yes. If you’ve really understood the problems these potential clients have and they haven’t already asked you if you could be the person to solve it, offer your services. Depending on your employer and your comfort level you may even be able to hit to beta earlier and do your freelancing on the side. I didn’t have the energy to work on other projects outside of my dayjob when I started. So I had to make a clean break before I started working with clients. You may be different.

dxhdr 10y ago

Mind sharing how your portfolio is organized?

morgante 10y ago
25% play money (stocks I pick individually), 75% index funds (with a focus on dividends).
- Jugurtha 10y ago
  Any statistics on how each of those are performing relative to each other. I've never traded real money,only paper trading freshman year and played a game on MarketWatch where I traded like a monkey and made profits. I also put a prognostic on AAPL when it was in its 52 week's low and on ORCL and the outcome was as I had predicted. Maybe because there was no real money at stake. I'm just curious and find this interesting.
  - charlesdm 10y ago
    Paper money is not real money. You won't act and respond in the same way as if you're dealing with your own cash. Trading.. well, you'll probably lose your shirt. Investing however is very doable. Start with the stuff you understand well (i.e. probably tech). Why not just put in $5k and see where you end up? Even small amounts can teach you a lot.
    - dllthomas 10y ago
      > Start with the stuff you understand well (i.e. probably tech). I worry about diversification. Tech is what I know, but I am already heavily invested: by far my biggest asset is my career, skills and experience.
      - charlesdm 10y ago
        Diversification isn't all people make it out to be. As an example: if you had to pick one stock would you be more likely to pick a great tech, mining or industrial stock? If you know tech and you work within tech, the answer will likely be tech. Also, people have different risk levels. My personal opinion is that you need to make sure that, if you make a bet (by picking a stock) and you win, you win big (at least 15-30% annualised). The S&P has good averaged annual returns and it's a good idea to invest a decent amount into an S&P fund. But if you pick an individual stock to invest in, you need to do your homework and it needs to be able to outperform the index. Think George Soros vs Warren Buffet. In the early days, Soros would make massive bets on certain events and/or stocks. He bet his entire fund on the decline of the pound and made a killing. Warren Buffet is much more methodical about investing and gets great returns too. Both great investors, but they probably have different risk levels, different focus areas and different ways of approaching things. And that's one of the things that makes investing fun!

woodpanel 10y ago

> The median outcome for this is much better than the story on most passive-income businesses. Thanks for the reality check. I currently follow exactly this strategy. It's not the perkiest way of living, but it's actually pretty good considering what most people have to do to make ends meet. Still, passive income strategies make me curious. We devs are in the luxurious position to be able to tweak our income-per-hour situation like mostly no human ever could. I think it's not a sign of gluttony to aim for more but actually a sign of appreciation of the situation luck has handed us. We are one of the few people on earth who can get richer by refusing to work. Not only richer in a metaphysical way but in actual cash.

shanecleveland 10y ago

> Anything else is not really "passive." Sure it is. Yours is just a different method. You had to work to get the money, first. Passive income is the same. Some effort had to be put forth. Passive doesn't mean do nothing and get something. That's idle income. I believe, particularly when we talk about it here on HN, it means to apply a set of already possessed skills, knowledge, resources, etc., and put forth some effort without a great deal of emphasis on making a profit, at least initially. Otherwise, it is a job. But if successful and money is made, you have a source of income. And it may eventually become idle income.

morgante 10y ago
I guess we have different definitions of passive income. Obviously you can spend a bunch of time to build and run a business (and, in fact, I try to do that). I just don't really think it's passive when you're working many hours a month on it. In contrast, my portfolio requires literally 0 work on a monthly basis.
- shanecleveland 10y ago
  Pretty much the same. Do some work, create resources (money, website, app, property, knowledge), put the resource to work for you. No doubt using resources you already have, which in your case is money, to generate income would fit the definition of passive income. More accurately, it's investment income, which also is not guaranteed. And you did have to perform work to get that money in the first place. Are planning on injecting more funds into your portfolio? That likely means performing more work to generate those funds. Likewise, I have sites that generate income that I have not touched in months, maybe a year or more. Like you, I had to do some work to begin generating the income. Now, it's passive income. Not a business.

dmoney 10y ago

What's a good resource on how to do this? How does the "income" part actually come back to you? Do you sell a little stock each month?

chad_strategic 10y ago

I have to laugh at "well-managed" portfolio. That's hysterical, in fact I'm still laughing. I might even wake up in the middle of the night and laugh. Silly, active managed portfolios never beat their benchmarks over the long run. Anybody in the financial industry knows that... and index fund are only good till that strategy doesn't work anymore.

wayn3 10y ago
"your investment strategy only works until it doesn't work anymore" say what?
- chad_strategic 10y ago
  Black Swan.
morgante 10y ago
Err, what? I'm not sure where you got the idea that I'm actively managing my portfolio. The vast majority of my money is in index funds. In my view, a well-managed portfolio is one which aims to perform at market and no better or worse. > index fund are only good till that strategy doesn't work anymore. The day that index funds cease to be the optimal investment strategy (for most individuals) is the day that stocks overall have stopped being a viable investment strategy. Obviously you're just arrogantly trying to make assumptions instead of asking questions.
- tiatia 10y ago
  >> index fund are only good till that strategy doesn't work anymore. > The day that index funds cease to be the optimal > investment strategy (for most individuals) is the day > that stocks overall have stopped being a viable > investment strategy. I believe that Index funds are a very good investment strategy. But before you make condescending remarks about the previous poster, you should read up a little bit. Index funds HAVE problems, especially if too many people use them to invest. http://www.nytimes.com/2015/10/11/business/mutfund/the-ease-of-index-funds-comes-with-risk.html?_r=0 http://www.nytimes.com/2015/10/11/business/mutfund/the-ease-...

kzisme 10y ago

Can you recommend advice or resources to being building a financial portfolio?

morgante 10y ago
Check out Bogleheads and Vanguard index funds. In general, the people who spend more time thinking about and managing their portfolio get worse returns.

kohanz 10y ago

Are you actually taking income out of this portfolio? I'm in my mid-thirties, so I invest in index funds, but any dividends are re-invested. It's not something I intend to touch until retirement or some extraordinary situation.

morgante 10y ago
It varies. Since I'm a consultant, if I take a vacation or have a dry spell then I do have to take income from the dividends. In other cases, I reinvest all the dividends (and my earnings).