Passive Income Ideas

[james.hendrickson]

Oh and one more update for this thread.

DON'T FORGET ABOUT BONDS!!!!

I've been investing in small business bonds through an app called The SMBX. SMBX stands for small business exchange. I regularly log into the site to reinvest my coupon payments.

I checked the app a few weeks ago and I saw that a brewery local to Portland, Oregon had a bond offering out to expand their locations. So, I went down the brewery and checked it out. The place was full, it was clean and it had customers. So, I put like $550 into the bond offering. Its enough to get some decent payments per month (given how the bonds are structured) and it was enough that I wouldn't loose any sleep if the brewery went under, so I pulled the trigger and placed the order.

So, the bottom line here is another classic way to make passive income is buy lending money/buying bonds. And this option has lots of flavors as indicated by the SMBX example here.

[kork13]

I checked the app a few weeks ago and I saw that a brewery local to Portland, Oregon had a bond offering out to expand their locations. So, I went down the brewery and checked it out. The place was full, it was clean and it had customers. So, I put like $550 into the bond offering. Its enough to get some decent payments per month (given how the bonds are structured) and it was enough that I wouldn't any sleep if the brewery went under, so I pulled the trigger and placed the order.

That's pretty cool, that you were able to invest directly in a local business without getting wrapped up in the minutiae of becoming a partner or major investor. I love this.

[james.hendrickson]

Kork, thats an advantage of the SMBX platform. It brings local back to finance and lending. Also a lot of the bigger banks discriminate against Black people. Thats less of problem for apps like SMBX.

[disneysteve]

I took a look at SMBX. It looks like they're only operating in a few states. NJ is one of them but there is only one listing in the state which doesn't happen to be anywhere near me so not quite local. Still a neat concept if you're looking for something very speculative in nature. The one offering in NJ is paying 11% interest. I certainly wouldn't risk a lot of money on it but might be willing to gamble a couple thousand. I had looked into peer to peer lending years ago but it wasn't legal in NJ. I hope they've changed that.

I'm guessing it's a fairly new service as they're only showing 9 offerings total nationwide. I guess you could diversify and maybe put $100 in each of the 9 to reduce your risk.

[james.hendrickson]

I took a look at SMBX. It looks like they're only operating in a few states. NJ is one of them but there is only one listing in the state which doesn't happen to be anywhere near me so not quite local. Still a neat concept if you're looking for something very speculative in nature. The one offering in NJ is paying 11% interest. I certainly wouldn't risk a lot of money on it but might be willing to gamble a couple thousand. I had looked into peer to peer lending years ago but it wasn't legal in NJ. I hope they've changed that.

I'm guessing it's a fairly new service as they're only showing 9 offerings total nationwide. I guess you could diversify and maybe put $100 in each of the 9 to reduce your risk.

DisneySteve, so one reason why they don't have a lot of listings is strict underwriting standards. Their default rate is really low, because they're using the same standards as a lot of the major banks.

I have about $1,100 in the platform - which is fine for speculation.

What isn't clear to me is, what do the risk adjusted returns look like? I just don't think anyone has run the numbers for the direct lending small business loan market yet. Its probably too small.

[disneysteve]

DisneySteve, so one reason why they don't have a lot of listings is strict underwriting standards. Their default rate is really low, because they're using the same standards as a lot of the major banks.

I have about $1,100 in the platform - which is fine for speculation.

What isn't clear to me is, what do the risk adjusted returns look like? I just don't think anyone has run the numbers for the direct lending small business loan market yet. Its probably too small.

It also sounds like interest payments don't start until the offering is fully funded and closes. Do they just hold your money until then? What happens if the offering doesn't get fully funded? If there could be weeks or months where you're not getting interest, that's an issue.

[james.hendrickson]

It also sounds like interest payments don't start until the offering is fully funded and closes. Do they just hold your money until then? What happens if the offering doesn't get fully funded? If there could be weeks or months where you're not getting interest, that's an issue.

Disneysteve, yeah they debit the funds when you make the purchase of the bonds, and you get the actual electronic bond certificates about a month after the bond offering closes. If the company doesn't make the minimum bond offering, your money gets returned to you. So, yeah in some cases your money gets locked up for two or three weeks.

And yes, you start getting paid about a month after the offering closes.

[Vincent Smith]

When I think of "passive income" streams, I generally think about things that don't require much work.
Many of the above items could involve significant to full time work in order to be successful.

My thoughts exactly.

[QuarterMillionMan]

Robert Kiyosaki: 6 Best Ways To Earn Passive Income (msn.com)

[disneysteve]

Robert Kiyosaki: 6 Best Ways To Earn Passive Income (msn.com)

That article is delusional.

1. Buying properties and renting them out is NOT passive.
2. Dividends aren't really income but they're taxed as if they are. When a $50 stock pays a $2 dividend, the value drops to $48. There's no net gain.
3. Royalties are kind of sort of passive income except for all of the work you have to do to create the product or content that results in those royalties.
4. Building a business that then operates without you certainly isn't passive.
5. Lending money for interest is passive except the part where you need to vet all of the potential borrowers.
6. Most annuities are a complete rip off, though there are exceptions. Variable annuities should never be purchased by anyone pretty much. Immediate annuities can be legit but you really need to do your homework to select a good one.

[srblanco7]

That article is delusional.

1. Buying properties and renting them out is NOT passive.
2. Dividends aren't really income but they're taxed as if they are. When a $50 stock pays a $2 dividend, the value drops to $48. There's no net gain.
3. Royalties are kind of sort of passive income except for all of the work you have to do to create the product or content that results in those royalties.
4. Building a business that then operates without you certainly isn't passive.
5. Lending money for interest is passive except the part where you need to vet all of the potential borrowers.
6. Most annuities are a complete rip off, though there are exceptions. Variable annuities should never be purchased by anyone pretty much. Immediate annuities can be legit but you really need to do your homework to select a good one.

To be honest, I’ve never understood the “hype” around Mr. Kiyosaki or why he’s considered a trusted financial voice. Could just be me, but I’ve never felt like he offered financial advice that’s appropriate for the average person.

[Fishindude77]

To be honest, I;ve never understood the hype around Mr. Kiyosaki or why he;s considered a trusted financial voice. Could just be me, but I;ve never felt like he offered financial advice that;s appropriate for the average person.

I agree.
Too much doom & gloom regarding the future and bragging about his own personal wealth situation.

[QuarterMillionMan]

I was going to research annuities but disneysteve squashed that idea.

[disneysteve]

I was going to research annuities but disneysteve squashed that idea.

Immediate annuities can be useful in retirement in certain situations and MYGAs can be good (multi year guaranteed annuities) but that’s about it.

[FrostedMoose]

my wife is a wet nurse for two women in our tribal nation thats pretty passive good money tho