passive income versus your day job ... what to do???
I wrote a pretty lengthy comment at MillionDollarJourney, so I thought it would make a good post on its own :-)
Here’s my counter point to passive income: it takes a very long time (or excellent skills or luck) to build a decent passive income stream. Yes you can point to some cases of great success but that’s like looking at rich and successful CEOs: yes everybody can get there in theory, but not everybody will. All that time and energy is wasted diversifying for small returns when specializing on your job would bring big returns (how many bloggers can beat an annual performance bonus at the job for example?) I went through a period of dissatisfaction at my work where I started trying to make more money quickly in stocks and building dividend based income only to realize I was playing with fire and neglecting the real problem: I was not happy at work. I changed position and things started to be much better. I then sold all non-RRSP stocks to pay my mortgage faster. Now I’m happy at work, less in debt and still investing in good old index ETFs (always maxing out the RRSP as well). So I’m trying to generate a higher revenue now with focus in order to have more to invest. Ultimately, I believe that this will lead to earlier retirement (compounding a bigger amount for a longer time with less risk). And as a conclusion: isn’t being happy at work the ultimate form of passive income? :-)
That said, I completely understand that for some people, life balance will be found in seeking multiple income streams. I still blog once in a while but I do it only as a hobby and I find that has made it much more enjoyable. I also don’t expect everybody to agree with me and please bear in mind that I respect your point of view.
3 comments:
I've watched my income drop in half with the dot com collapse in 2001. I was a superstar at the job winning award after award, but an acquisition meant there was no place for me. Six years later, my income is finally at where it was.
I built my blog with the idea that I'd focus on not letting that happen again. The odds are that even with focus on my job, it will. Simple economics say that if you can get 80% of the result for 20% of the price, it's a better move. People in other countries can provide exactly that type of service. I'm not naive enough to think that I can be that much better than someone from another country to make it worth keeping me.
I thought the blog would be a source for me to learn how to make more money, but now it earns an income of it's own. I'd a great hedge against an uncertain future. In the end, I'd rather be betting on myself than on a particular company or ecomonic landscape.
that's a great point! I'm still hoping that through continued training and repositioning, I'll be able to surf the wave and recover from job problems if they do occur ...
thank for reminding me about the fragility of the employment market ... it's easy to become comfortable and forget that it's a jungle out there
CMBR, your post reminds me of a comment in one of the Financial webring forums by a doctor who stated that he would have made far more money doing extra hours in his real job than the many hours he spent learning how to invest.
However, as lazy man points out, diversification, aka not all eggs in one basket, is a good thing.
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