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Most forms of passive income are going to wind up tending to below market average. Which is fine, if you plan for it. Longterm market average is 7%. So, bear th
by ggm 2y ago
Most forms of passive income are going to wind up tending to below market average. Which is fine, if you plan for it. Longterm market average is 7%. So, bear that in mind, the amount of capital you need to invest to deliver a comfortable lifestyle may be significantly higher than you think because to be "safe" its going to be a lower rate of return. This is why annuity income fell out of fashion: people expected higher rates of return.
They are also rarely hedged against inflation, and can incur capital gains taxes distinct from the income.
Investments in small business incur huge risks. If you don't understand the pizza business putting your dough into dough is a mistake. Small business is hard work.
Your best bet may be to put surplus into your own home and post-work retirement investments with tax advantages. That means keep working. Sorry.
Some FIRE people wind up regretting dropping out.
I'm not a financial adviser. If you really want to pursue this, pay up front: avoid sources of advice which profit from a tail income on your investments and remember if a suggested return seems to good to be true, it's probably a scam.
Government service is often tedious, full of paperwork and boring. It's also necessary, and Musk aside, comes with good benefits and some job security. Older people do well in government. They can't discriminate as freely.
Learn Cobol.
- WheelsAtLarge 2y agoPaying off your house as soon as possible is a big deal. There are better investments, but there's nothing like knowing you don't ever have to make another mortgage payment. Unfortunately, you never really pay it off since you have taxes and insurance to pay, but it helps a lot.
- bdangubic 2y agoI personally think, IF you are financially literate (I don't mean this in any derogative way, just more like you understand compound interest, the value of saving/investing...) it is a very poor financial decision to pay off the house, especially if you are holding 3.x% loan. There is nowhere you can get money with that interest and if instead of trying to pay off your house early you took that $ and invested it, you'd definitely end up on top. House also ties you to a specific location which makes your life harder if hard times actually arrive
- ggm 2y agoIFF you have a US style fixed interest mortgage. Fo almost any other economy, the rate variability means paying down your house may the best deal you have with some certainty of outcome. Your home isn't really an asset you want to leverage unless you already accept risks into your life, because unlike other bricks and mortar assets you live there and have non financial interest in it.
- WheelsAtLarge 2y agoI agree that finding an investment that generates a higher percentage profit is ideal, provided you have the discipline to maintain that investment over the long term. However, the reality is that most people lack this discipline. How many individuals actually keep their money in the most profitable investments over time? Particularly when most investments, aside from bonds, have variable returns. Often, people withdraw their money from investments when they start to decline in value, or they divert funds into impulsive investments that ultimately result in significant losses. If you speak with any doctor and ask what patients typically do when advised on how to improve their lifestyle, you'll find that many attempt to change their habits. Yet, ultimately, they often revert to the unhealthy behaviors that led to their issues in the first place. Behavioral bias, is challenging to overcome, even when it compromises their well-being. The same happens in financial decisions. While it is possible to find better investments over the long term, paying off your mortgage as quickly as possible I believe is the better investment for most people. It's not the best but it's the easier one that most people can achieve.