Seriously, don’t look. Let your investments earn passive income.
Passive income is a popular topic.
There are a million great ideas to build passive income streams, yet people often avoid one of the most efficient sources.
Invest in a diverse equities portfolio and leave it be. It’s so simple and boring. After all, we all need excitement.
We all feel that we can do better than this simple strategy.
The simple truth is you don’t need to do better to build wealth.
The stock market is moving no matter which day you read this article. Some days the moves seem crazy and feed fear and frenzy.
This feeling in your gut will lead you astray. You’ll make poor decisions not based on fundamentals. Your investment strategy will cease to be passive.
Passive income from investing doesn’t mean getting rich quickly.
Too often, we fall victim to the fast track, the easy way. Investing to build wealth isn’t about getting there instantaneously. Instead, it’s a journey to financial freedom — one where you can begin to receive the benefits of wealth long before you are rich.
Lots of people like to speculate. Trying to pick a stock is a gamble that provides a dopamine hit. The process is not boring, and it’s most certainly not passive.
In some instances, speculation pays off. However, most of us fail.
Heck, nearly 80% of professional fund managers fail to beat the S&P500. And they spend their careers researching investment options.
Those who dabble in hopes of striking it rich are wasting time and effort, only to fail.
Slow and steady is a better path. Pick a diverse fund and contribute. Let it sit.
The larger the percentage of your income you can contribute, the sooner you can achieve financial independence. The Mr. Money Mustache article on this shockingly simple math opened my eyes years ago.
Spend time building income instead of chasing quick financial gains.
You will have more time available for more important things when you can ignore the news and that feeling in your gut and just let your diversified investments ride.
You need to focus on increasing your income to reach your financial milestone faster. You can do this in a 9–5, as an entrepreneur, or as a combination of a day job and side hustle.
The more you can earn, the more you can save. That assumes you control lifestyle creep.
If you make very little and make many life sacrifices, removing the deprivations as your income grows is wise. The urgency to reach your end financial goal isn’t so crucial when you can live without deprivation.
If you work for someone else, you need to drive your career. That’s not much different than working for yourself. Your employer isn’t going to hand you promotions. You need to seek them out.
People who actively seek promotions are the ones that get them.
You can be the best at your job, and your boss will be pleased to keep you there. You have to be the driver.
Be willing to take risks and go for jobs you don’t qualify for. You might be surprised, but most people don’t apply for jobs they already know how to do.
You build new skills and marketability by taking on new roles.
You’re probably going to look at your investments too often.
Some experts suggest only looking at your portfolio quarterly. I don’t have the willpower to do that.
I have a secret weapon, and you can too.
My investment contributions are automated and have been for many years. When a paycheck comes in, money is invested.
No matter the market condition, or financial headline, that money goes into a diversified index fund. My fund of choice is VTSAX, but other good low-cost funds are out there.
When I look at the headlines, I often worry or get excited about the performance of the market. I question my decisions.
The automatic contributions are my backstop. They give me a moment to pause when the fight or flight response hits me.
I look back at my investing history. I made gut decisions during the dot com bust of 2000 and saw stocks in my portfolio go to zero. By 2008 I was only investing in index funds, and my automation powered on despite the moves in the market. I was rewarded handsomely for staying the course.
My investments passively worked for me, even when I had urges to make moves. I never acted on these urges and instead let them ride for the long term.
Passive income from investing is not very exciting.
We seem to need excitement in our lives. No one wants quiet time, and no one wants to wait for anything anymore.
Businesses are open around the clock, and if you want something delivered to your house today, it can happen. Easily.
Facebook, Instagram, TikTok, Twitter, etc., live off our incessant need for excitement.
Passive is the opposite of exciting. Your investments just work in the background, earning for you. While you will gain wealth quickly with discipline, the progress is slow from day to day.
Know that boring and slow is good.
Exciting and fast can easily lead to big losses when investing.
Investing in low-cost index funds is a great path if you truly want to build wealth and utilize passive income.
You must ignore your gut feelings when the market moves and stick to your game plan.
Buy and hold for a long time isn’t all that exciting. Embrace that, and know that your investments are creating passive income for you in the background.
Use some time you recover by not researching the next big thing and invest in your career instead. Build your income, so you have more to eliminate deprivations and add to your investments. Know that you have to drive your career. No one is going to do that for you.
Automate your investment contributions as a line of defense. If you can’t kick the habit of checking in on your investments, use the automation to your advantage. Take time to pause before making a rash decision. That automation will keep working for you, and in the long term, you will see returns in line with the market instead of mistiming your investments like so many do.
Enjoy your journey to financial freedom. Emotionless passive income from your index fund(s) will work for you while you live your life.
The Journey to Financial Independence Creates Freedom
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