Ask HN: Passive income ideas?
I can code well and I have 1-2 hours daily that I can spend on any project/activity that will, after some work, generate $1000/per month net in passive income. I have kept the number at 1000 as my hours to spend are limited. Change the number if you think I can have a bigger passive income with the amount of time I am have. I would like to hear ideas from the community, specially from folks who have done this in the past or are doing this currently. Please give concrete actionable ideas.
EDIT: I am willing to learn anything.
179 comments
[ 2.5 ms ] story [ 217 ms ] threadI have no experience banking in Vietnam but what he said certainly applies to both China and Thailand, if you stick to the largest banks (ICBC and Construction Bank in China are both probably safer than any US bank - Bangkok Bank, Bank of Ayudhya (owned by GE) and Siam Commercial are all rock solid in Thailand - along with HSBC in both countries). Singapore and Hong Kong are both also extremely safe places to bank and very foreigner friendly.
Source: Lived over there for 6+ years. Still bank with all of those banks, more or less doing exactly what he suggested. In China I earn 3.5% on my RMB term deposits + appreciation vs the dollar, which is almost as predictable as the interest. Personally, I prefer that to 0.1% at Wells Fargo.
A number of expats here that had planned on living comfortably off the interest of their Vietnamese bank deposits are now scrambling to come up with a plan B.
http://www.iwillteachyoutoberich.com/blog/how-i-traveled-for...
However, there are a number of reasons to believe assets are extremely over priced and yields are not compensating investors for the risk they are taking.
Someone posted a good article about finding niches in the app store recently. Something simple that satisfies an unmet need could earn decent ad money.
Imagine you had a magic formula to create businesses that make $5,000/month and only take up 10 hours/week of your time. Wave that wand once and you have a $60k salary and a thoroughly leisure class lifestyle. Wave it twice and you're living quite nicely without really breaking a sweat. Most of us stopped there.
Notice that every time you use your magic formula, you take away another chunk of your free time. By the time you've done it four times, you've got a full time job.
That's the reason most of us are smart enough not to build $1,000,000/month worth of micro businesses. If that's the sort of money you'd prefer to make, you'll need to find another way to get it. But don't knock the magic formula. It works really well. You'd be doing yourself a disservice to believe otherwise.
> I have 1-2 hours daily that I can spend on any project/activity that will, after some work, generate $1000/per month net in passive income.
$1000/28days at lets say 1.5hours = $23 per hour.
So I'm guessing they are not wanting to do the 1-2 hours per day once it's up and running, because $23/hour is not passive income.
Everything from AdWords to Uber is just "people replicating the idea" into $1M+/month.
I got to the conclusion that the answer should be in the immaculate white hat area and i am focusing on building software in that area.
Also, i dont think that100% passive is even possible, but you could reach a level where your product gets you enough income so that you become an entrepreneur
2. Create a solution that people are willing to pay for.
3. Sell it.
Tune out everything else. Ignore the gurus. Focus on the important things only and just do it. Tune out HN, tune out everything.
I would look into doing paid mobile apps. But you still need to have 1-3 nailed.
Definitely read PG's startup ideas article. You don't just sit down one day and think of startup ideas. It will come to you naturally because you will experience the problem. Any other way (other than partnering up with a problem experiencer) will yield fluff.
Start off with a service you provide manually. If you get a good response, turn it into a tool or software that automates it in exchange for a monthly fee.
Stop looking for "easy get rich quick" ideas and find the annoying, difficult stuff that people want to offload from their task list. That's where the money is.
Disclaimer: if interest rates rise you will be unable to reclaim your principal but, generally speaking, this income stream should be pretty safe for the foreseeable future. And of course, $1000 a month today is not going to be as much in the future if inflation returns to 3%.
There are other bargains out there now too, because of fears of the Fed tapering down QE, anything that yields >5% got hit hard in the recent weeks. Even foreign, emerging market bonds. ESD for example trades at a 7% discount and yields 7.5% at the moment.
For research, Morningstar is a good starting point: http://cef.morningstar.com/quote?t=esd
It's not a question of if rates will rise. They're going to rise a lot, because every day that goes by the cost of artificially suppressing rates gets more expensive (which is why the Fed has had to keep expanding their QE program). Equal but opposite reaction, is what will occur, conceptually. To the extent they've created hyper cheap money, is the extent to which money will be expensive, sooner than later I'd argue.
The bond bubble is nearing an end. If the Fed wishes to continue it, it's going to cost trillions worth of new inflation, setting up a damned if you do, damned if you don't scenario. The era of cheap money is over.
If you want to earn a return on your $200k, wait for the inevitable disaster that follows these insane central bank policies. Swoop in with your pile of cash and pick up dirt cheap assets after the next crash. Or go after yield as rates skyrocket in the next five years.
This is why buying a bond fund at a deep discount (these are at 10% discount as we speak) provides a nice cushion for all cases except the catastrophic "yields rise quickly" scenario. If you are worried about that, you should be setting aside some cash to try to time the market.
However, your premise requires a world in which nothing can truly be known for certain and all outcomes are equally likely. Such is not the case; not even remotely the case.
Rates cannot stay at 0% for the next 10 years, the math involved won't allow for that scenario. The Fed is already having their hand forced right now, as is easily demonstrated by the huge spike in bond yields, oil being at $100, housing and stock prices skyrocketing due to asset inflation generated intentionally by the Fed (as they openly said they wanted to have happen). It's a repeat of the last asset bubbles they brewed, and for exactly the same reasons, only this time it's 100% intentional. The clock is rapidly running out on their fraudulent game. They're already being wedged between a rock and a hard place; continue the policies of cheap money, and assets go so high they rip the economy apart upon implosion, again; stop the policies, and the economy implodes instantly. Rates skyrocket either way, as the bond buyers begin demanding higher yields to compensate for worsening inflation with continued QE; or rates skyrocket as the Fed stops QE and stops artificially holding down rates.
You might as well claim that rates can stay at 0% forever, or for 1,000 years, or for 100 years. Again, your position requires the premise that all outcomes are equally possible, and that is not true.
It's obvious the era of cheap money is ending. The era of expensive money is about to begin, as it must by the basic laws of economics (which is in fact a science, despite the many witch doctors in the field).
If you buy a 10% discounted tax free bond fund (a taxable equivalent of a 9% yield currently) that has medium duration (~6 years) then you are fairly well cushioned from gradually rising yields, as the fund turns over and moves into higher yield bonds your distributions should increase. In other words, all of your fears are not hidden, secret, insider knowledge, but are largely getting priced in at this point.
The biggest risk with long-term CEF muni bond holdings is not interest rate risk (since you don't have to sell them, you have a 10% cushion, they have moderate duration, and a large enough spike in yields to really impair your principal is a pretty low probability outcome. but again: you don't have to sell them.) The real risk is inflation risk. And this is what I said in the Disclaimer:, which you seemed to not read. Also, your viewpoint seems to indicate the best assets to hold are gold and cash, and the cash side of your portfolio is going to be exposed to the same inflation risk as your bond coupons. There's also risk of default, but you can find national funds that are well diversified, etc, so this doesn't seem to serious a concern either.
edit: Also, one thing you are overlooking is that if the shit hits the fan, there is a lot of greedy, borrowed money in equities right now, both people chasing dividend yield and people chasing capital gains now that we're in a bull market, thanks to the Fed's bubble, that will head for the exits. It will go where it always goes: government backed fixed income and money markets. This will cause downward pressure on yields in the scenario where Fed moves cause a panic in the stock market, even though ironically the Fed doesn't even buy equities, it only buys bonds.
For more of an income play I'd look at IGR (yields more than 6%, trades at a 7.5% discount currently).
Another one I'm watching is "O".
Risks: Prices can swing wildly due to any number of reasons. Rising interest rates can depress real estate prices in the near term. Income should stay fairly stable though in my opinion, so I'm taking the long term view and try not to obsess about daily price volatility. I wouldn't put more than 5-10% of my capital into REITs.
Though I still have some exposure to the sector through other funds like AWP and SDIV.
Marketing is by far the hardest part!
If you're saving / hosting the layouts, in which users can come back and create new ones or alter old ones, it jives nicely with charging on a recurring basis.
Throw in another service or two on top of what you already do, and the value proposition just keeps going up.
My previous startup generates many times more passive income than $1k/mo, and I did it the "hard" way by building the product first, then try to sell to customers. Also, don’t underestimate support costs.
Finally, keep in mind that you'll probably have to start an actual business in order to open a business bank account to collect money, and you'll have all the fees and legal obligations that goes along with owning a business, so your $1k/mo can easily turn into $500/mo after all that jazz.
Edit: I'll also add to stay away from targeting consumers directly, and instead go after businesses. Much easier to charge $199/mo to a real estate broker than $9/mo to Joe Consumer. The former won't blink an eye for a truly useful service, whereas you'll get overwhelmed with support issues on the latter.
On that subject, stay away from "free" plans, unless you really need freemium marketing - the support for free users is usually the most.
Its a steep learning curve but if you are willing to learn, it can be very profitable.
Like you, I can code confidently so during my morning commute I would read books about trading and economics. In the evening I would play with bits of code interfacing with broker API's. Within 3 months I had a working bot that automatically traded away as I slept and went about my day job (passive enough for you?).
Fast forward 6 months with a couple of hours coding a week refining my algorithms, my bots earned me more than double what I made in my day job that whole year.
The whole Bitcoin world is about to become a lot less fun soon. I'll miss the early days (even as I work daily to usher in the next phase).
And don't be put off by the hundreds of bots on MtGox, most of them are harmless and from 12 year old script kiddies placing hundreds of tiny ~0.01 btc orders for fun.
I've tried it, and even extended it to support a certain Swedish exchange, but it seems to me the pay off is small and the unreliability of the exchanges means it's not true arbitrage.
I actually ran 2 different bots with a few variations of each (for different brokers).
My first bot was an arbitrage bot running on different markets, USD, GBP and AUD. There is still huge opportunity to make money using arbitrage as I've not seen many people do it well. The trouble comes from transferring the funds between brokers, there is often a cost incurred that you must consider and price into any profit equation. @skarmklart, yes the payoff compared to the trading volume is small, but it is low risk and almost guaranteed profit.
I ran the arb bots for a few months and made around $15,000 after which I decided to step it up a level. (I started with $100)
Trading and investments always consist of a balance between risk and return. The risk for arbitrage is very low, and so the return is also low (but consistent). The return for technical analysis trading is much greater but the risks are also larger.
My second bot was programmed to take advantage of technical analysis. I realised that in the bitcoin world it is actually much simpler than people lead you to believe. I set up a database to capture price feeds, then used some free technical analysis tools to produce buy and sell signals automatically. I then plugged the signal feed into my trading api (which I wrote from my original bot) to execute my orders.
Here's some useful links: http://ta-lib.org
Books: Reminiscences of a Stock Operator gives you an insight into trading psychology
Market Wizards (there are 3 books in this series): http://en.wikipedia.org/wiki/Market_Wizards
That sounds interesting but do you think it's doable for someone without a business degree or something like that? I mean... I am fascinated by everything that's related to bitcoin but I never felt like I could do anything about that because the learning curve is just too steep. I studied sociology so I have some statistical data analysis background but I always felt that competing with guys who major in Economics would be like hobby cyclist trying to beat pros at Tour de France.
Could you please share some more info about your previous experience with trading, your educational background and anything that you think is important? It would be tremendously interesting to me.
Anyway stop wasting your life on stuff would be my tip.
Or
Learn to cook well(healthy and tasty) over a few months, it'll save you money and health costs. Great tax free not wasting money passive habit to pick up.
Edit: Weakness - language. Solution get a bi-lingual friend who can suggest a non English success story. This in reverse http://www.businessweek.com/articles/2012-02-29/the-germany-...
It's not cheating if you're merely getting your fair share :)
By "very boring" I mean: necessary for a certain line of business and not well addressed by current competitors and not inherently interesting to work on and full of ugly gotchas and corner cases.
In general, solutions to these problems will be very profitable because they represent untapped markets. The only difficulties are: finding a problem sufficiently boring, and how much of it you can tolerate before it crushes your soul.
[1] http://www.amazon.ca/The-Lean-Startup-Entrepreneurs-Continuo...
It may be better to search for something that can be started small but that you can eventually scale.
Once a product is good enough for people to start signing up for and using, it often doesn't require much more development work. As long as people can find it, more people will sign up than cancel in any given month.
"Passive" is a really good way to describe the experience of owning one of these little businesses, once you've dialed things in so that the support workload is measured in hours/month and you're firing up the IDE maybe twice in a heavy month.
Just curious: what if a new competitor moves in? Or is does that not happen often?
A business is a business; the amount of labor you'll have to put into it will be proportional to the supply and demand that exists in that specific market.
Sorry, but there's no free lunch.
Also, while I sort of agree about the "no such thing as passive income" point, I think he just means 1-2 hours a week level passive.
If you want to be sold a "passive income mega business", go and have a look at Blackhat World, the scummiest place on the internet.