Lots of boring and small ways, just a few of them include:
- Some CD's that were opened back when the rates were actually paying decent amounts.
- I live in MA so I put solar panels on my roof. They not only result in my electric bill being zero, but because I live in MA I get paid for the electricity they generate (that I use) until 2020. They will pay for themselves in about 3 1/2 years, after which they will continue generate a passive income until 2020 (and still no electric bill).
- As for stocks I have a few that are provide dividends.
- Like most company 401k's one of the options is an index fund which is where that all goes.
- Simply having cash in a savings accounts generates a small amount of monthly interest.
- Putting this years passive income back into next years IRA/Roth makes that passive income "worth more" come tax time v.s. just spending it.
- Contributing to my child's 529
- Real Estate in the sense that I have a mortgage I am paying it down
- various other similar smaller items
But a chunk of it is indeed in stocks. I have spent the past few years learning and very much lean to the Benjamin Graham / Warren Buffett teachings. Under the assumption that I plan on retiring some day that means at some point between now and then I will either want to be able to handle my own finances or pay someone to. As it isn't that much right now and I wanted to learn anyway I started hitting the books, reading corporate finance reports, etc and have been selectively choosing boring, safe and undervalued companies (much easier the last few years compared to now) that I would like to hold for several years at least to not keep giving the profit away in taxes.
As long as I don't overspend having a buffer of extra cash means I can take advantage of deals when buying larger items be it a new car at Christmas or a $5K tool that I was planning on getting some day that suddenly shows up on craigslist for only a few hundred or even small things like stocking up on basic supplies when they are sale at the grocery store. This isn't directly "passive income", but if I was living paycheck to paycheck on my passive income it would have to be larger because you would miss out on the deals. Being able to max out my 401k as early in the year as possible is another long term strategy to get a little more that you can only do if you can afford to put down that money right away each year.
At the end of the day it is about total personal net return. I would put down a number of other "investments" that generate long term net returns, but perhaps not in cash to me, but smaller bills. First paying off credit cards or school loans (or really any loans) means that future earned income will go to generating income for me and not for the owner of the loan so at the end of the year I will have more left over each year. Same goes for simple fixes around my house to improve my heating and cooling (oh and for the curious from the article the other day yeah my solar panels help keep my house cooler in the summer)
So pretty boring wouldn't you say? "Guy saves some money each paycheck!" It isn't exactly headline grabbing. Spending less than I earn, saving and re-investing when the right opportunity comes around combined with some time and you should be able to become financially independent, not overnight, but not that long either.
As long as I don't overspend having a buffer of extra cash means I can take advantage of deals...
You've hit the nail on the head with how the rich can get richer (or conversely, how low cash can make you have less cash). If you have spare cash you can buy things that you need when they are cheap, you can buy in bulk and get economies of scale. It's similar to the "Samuel Vimes 'Boots' theory of socioeconomic unfairness." http://www.goodreads.com/quotes/72745-the-reason-that-the-ri...
But a chunk of it is indeed in stocks. I have spent the past few years learning and very much lean to the Benjamin Graham / Warren Buffett teachings. Under the assumption that I plan on retiring some day that means at some point between now and then I will either want to be able to handle my own finances or pay someone to. As it isn't that much right now and I wanted to learn anyway I started hitting the books, reading corporate finance reports, etc and have been selectively choosing boring, safe and undervalued companies (much easier the last few years compared to now) that I would like to hold for several years at least to not keep giving the profit away in taxes.
As long as I don't overspend having a buffer of extra cash means I can take advantage of deals when buying larger items be it a new car at Christmas or a $5K tool that I was planning on getting some day that suddenly shows up on craigslist for only a few hundred or even small things like stocking up on basic supplies when they are sale at the grocery store. This isn't directly "passive income", but if I was living paycheck to paycheck on my passive income it would have to be larger because you would miss out on the deals. Being able to max out my 401k as early in the year as possible is another long term strategy to get a little more that you can only do if you can afford to put down that money right away each year.
At the end of the day it is about total personal net return. I would put down a number of other "investments" that generate long term net returns, but perhaps not in cash to me, but smaller bills. First paying off credit cards or school loans (or really any loans) means that future earned income will go to generating income for me and not for the owner of the loan so at the end of the year I will have more left over each year. Same goes for simple fixes around my house to improve my heating and cooling (oh and for the curious from the article the other day yeah my solar panels help keep my house cooler in the summer)
So pretty boring wouldn't you say? "Guy saves some money each paycheck!" It isn't exactly headline grabbing. Spending less than I earn, saving and re-investing when the right opportunity comes around combined with some time and you should be able to become financially independent, not overnight, but not that long either.