Investing is one of the most exciting hobbies around. Reading reports, watching interviews, and analyzing companies is fun. And who doesn’t like buying a stock and watching it skyrocket in value?

Unfortunately, there is a point of diminishing returns.

Allow me to explain.

Beware The Investment Trap

Investing is great, but it won’t make you rich.

If anything, conservative “play it safe” investments result in more missed opportunities and wasted time than whatever monetary yield they produce.

Here’s why.

Financial stability kills creativity. When you’re poor making an extra $1,000 means one hundred hours flipping burgers, mopping floors, or stocking shelves.

This is mental torture, if you’re smart. So you’re going to look for better, more efficient ways to boost your income.

When you’re financially stable, making an extra $1,000 means walking past Jaeger-LeCoultre, muttering “next year,” and then going home to dump your fun money into an index fund.

Not exactly gripping stuff.

This lack of adversity is why most middle-class people rely on investments for passive income. They make enough to be comfortable, so they play the waiting game instead of going out to earn more.

They’ve got the funds, connections, and intelligence to supercharge their income. Yet they’re worried about turning $1.00 into $1.06.

Active Income Solves Everything

What if you focused on turning $1.00 into $10.00?

This gives you a lot more money to save or invest, and building a second stream of income is far less risky than shoveling your money into stocks or bonds.

To generate $1,000 per month in cash from investments, you’d need about $300,000 of capital. Meanwhile, you can get the same returns off a side business with start-up costs around $25 – $50.

And even if you don’t hit a huge number, you can still enjoy a couple hundred bucks a year in no-cost passive income.

That’s still the equivalent of having $10,000 – $25,000 invested into dividend stocks.

Case in point? I took some of my old, “too spicy for Amazon” erotica titles and re-uploaded them to other eBook sites. This took all of an hour, and netted $660 over a 12-month sales cycle.

That’s the same as parking $15,000 in a high-dividend index fund like SPHD.

Likewise, some of my biggest Crypto gains came from affiliate programs which pay in BitCoin. I made more from this (and with less effort), than I did from trying to actively time the market last year.

5 Low-Cost Earning Opportunities

It’s useless to point out a problem without offering solutions. Because of this, I’ve complied five big growth alternatives to the conservative saving and investing route.

1. Get A Part-Time Job

Both the easiest and most hated form of making money.

You can spend all day reading sales books, watching day trader courses, and arguing about dropshipping. Or, you could take your existing skills and use them to develop a secondary income source.

Even if you have no skills, you could still mow lawns or deliver pizzas. That’s far more lucrative than some elaborate trading scheme.

I remember being 18 and doing odd jobs after school or once my retail shift was over.

Helping roof garages or clean out machine sheds sucked. But the extra money paid for a winter vacation trip to the Caribbean, which was awesome.

If you want to make a big purchase, this an excellent route to follow.

2. Start A Website

Mark Zuckerberg and Jeff Bezos own websites, and they’re billionaires!

Jokes aside, owning a website isn’t what it used to be. The days of writing one article a week and enjoying huge traffic / high conversion rates are pretty much over. People are watching YouTube or browsing social media for fun, not reading blogs.

Even product review niche sites take a hit when they go toe-to-toe against YouTube channels or establishment articles (content from CNN or Business Insider).

That said, running a website still has several benefits:

• You get free traffic in the form of SEO or social media shares.
• Your content remains relevant forever (Tweets or Facebook posts are forgotten in a day, three year-old articles still get regular pageviews).
• Less censorship – Platforms like Facebook or YouTube don’t allow casino reviews or “edgy” content. While you could drive traffic from these sites, you can’t post the money makers (affiliate links or landing pages) there.
• You can run multiple sites at once. One benefit of writing is that you can easily adopt new voices, styles, and genres. Many novelists use pen names to cycle between various topics. Same goes for websites. Famous example: Adult Friend Finder and Christian Cafe are both dating sites run by the same company.

While running a website was easier in the past, there are still plenty of advantages to starting one today.

Side note: If you’re curious about domains and hosting, I’d suggest using BlueHost. They’re reliable, have great customer support, and offer a free domain name and free SSL Certificate (this alone is worth well over $100 bucks).

3. Open A YouTube Channel

If the blog and niche site are in decline, YouTube is alive and well.

One of the best things about this platform is this you can monetize your hobbies. If you want to review horror movies or board games, there’s an audience for that.

Here’s an example:

Last winter, I actually made a few short videos to supplement one of my hobby niche sites. These got more traffic than most articles I wrote, averaging over 1,000 views per video.

While I’m still experimenting with video content, I think it’s completely possible to carve out a niche generating at least $500 – $1,000 per month. Especially if you’re focusing on a specific hobby or concentrated audience (learning a musical instrument, Napoleonic war tactics, woodworking, etc…).

4. Find A Recurring Revenue Service To Sell

If you own a website, you’re probably used to spam emails saying something like:

Hi,

We couldn’t help but notice that your website is leaving money in the table. At GlobalSocial we provide exciting packages that help you maximize your profits, boost your traffic, and…

These are usually sent by companies which are reselling a software service.

They might spend $100 on a tool which helps streamline positive customer reviews, and they’re reselling the offer for $200.

It’s a very simple business model, and you could probably cold call around your city to do the same thing. Even with a handful of clients, the recurring revenue adds up and outpaces any investment returns.

5. Enjoy Yourself

A guy from my hometown once told me that he bought an atomic scale to meticulously record the weight of any meat he buys from the grocery store. If he notices any difference, he goes and demands a partial refund.

Imagine wasting countless hours of free time to save a whopping $50 a year.

Being overly frugal costs time, money, and respect. Pretend that grocery store cheapskate used his time to open a YouTube channel about saving money while shopping. He could post videos like “The Truth About Dollar Store Steaks” or “Generic Vs Name Brand Vegetables: Is There A Difference?” and he’d be able to buy whatever cut of meat he wanted with no worries. And he’d probably have more fun while doing it.

The idea that you need to save and stretch every cent creates a negative mindset.

It’s like you’re telling yourself “I’m not smart or talented enough to generate more money on my own. So getting a small percentage return from stocks or bonds is the best I can do.”

Saving and investing is great, but don’t limit yourself there. Living life and having fun opens your eyes to all sorts of new and exciting opportunities.

It’s almost Christmas, which means shopping season. There’s a good chance you’ll be out buying gifts within the next few weeks, and one of those presents might even be for yourself. The holidays are also a time when many people blow their financial load on high-ticket items, either for themselves or for family. Because of this, I thought it would be fun to look at how you can buy expensive things in a smart, reasonable manner.

Today’s article looks at whether or not it’s worth making expensive purchases. And we’ll examine superior (and more rewarding) alternatives.

Ready?

1. Is Your Brag Worth The Price Tag?

As someone who grew up in the Midwest, I’m always amazed at the number of friends and relatives who move to a coastal city specifically to brag. They aren’t headed to Wall Street or working in the film industry, instead they’re doing menial tasks or have a low paying desk job which could be done anywhere in the country.

Seriously, I know people who live in LA or NYC on less than $60,000 (pre-tax) and destroy their financial futures in exchange for taking Instagram pics or flexing on cousin Dale about “authentic pizza” come Thanksgiving.

The same goes for material purchases.

Most designer clothes are not made for rich people. If you live in a major city (especially one with lots of international tourists) go look at the people shopping at Gucci. They’re not exactly high-brow, sophisticated consumers. Same goes with cars. There are a lot of bus boys or retail workers driving expensive vehicles.

Even high-income earners fall into this trap with endless home renovations, or buying the most expensive house they can finance.

Is it really worth taking out a loan to buy a depreciating asset that’s going to go out of style within the next five years?

2. If You Can Buy It, It Isn’t Status

This ties into the first point. namely, most status symbols are made for middle-class people. A Rolex Submariner or BMW 2-Series isn’t made for some ultra exclusive billionaire. And the fact that you know co-workers or neighbors who own these things is a dead giveaway.

A lot of materialistic status symbols are easily obtainable if you save up a few bucks. You can buy expensive things like watch or new set of golf clubs from doing an extra hour or two of work on the side. Any college student can buy a Rolex if they’re willing to mow lawns or shovel snow after class. True status symbols (or brag worthy accomplishments) are things you can’t buy. Here’s a few examples:

• Being in great shape.
• Not having to work for money.
• Mastering a skill like piano or violin.
• Having leadership status among peers.
• Social and political connections to people with real power.

Being able to take an impulse ski trip or having a great physique is way more impressive than driving a slightly above average car.

3. How To Buy Expensive Things Like The 1%

If you aren’t a high-income earner, don’t even consider buying expensive stuff. Putting the bulk of your net worth into a depreciating asset is stupid.

By the same token, if you are making good money, look to invest like the wealthy. Buy assets first, and let those cover your hobbies. Putting your bonus or record sales month into real estate or stocks doesn’t sound exciting, but do that for a few years and you use the gains to buy whatever expensive things you’d like.

One of the reasons that wealth inequality is a recurring issue throughout history is due to a very simple formula. If you only remember one thing from this article, remember this:

r > g

This is a finding from French economist Thomas Piketty, about why the middle-class is (historically speaking) a fluke of nature. What this formula means is that capital returns (r) outpace economic growth (g). In other words, you make a lot more money owning revenue producing assets than you do working a job.

This is the reason that centuries of aristocracy spend their time skiing or puttering around museum galleries. Someone got land or a hands-off business centuries ago, and it’s supported the family ever since.

The odds of you buying up a small island or owning a Peruvian copper mine are small, but you can still purchase assets which greatly displace your cost of living expenses. For the price of a Patek Philippe Calatrava, or entry-level German car, you could easily buy a REIT or stock generating an additional $1,000 per year in cash payouts.

Suppose you get two big paydays (maybe a sales bonus or your eCommerce products hit a hot streak). You can do the standard activity and go out to buy a bunch of expensive things which depreciate in value (or require that you sell them to recoup any profit), or you can just stick that money into a cash generating asset. If you put $10,000 – $25,000 into a real estate trust or dividend stocks, you can have a free watch or vacation after 2 – 3 years of payouts. And, you’re still making money off your investments.

Final Thoughts

While I sometimes come across as pessimistic about Internet business or sales, I have a long-term positive outlook on most things. Having an online business is volatile, but it is a great way to branch out and create new opportunities for yourself.

That said, you do need to set aside some extra income if you want your money working for you.

There are a lot of people whose first good year of business is also their last, because they go out and spend 120% of their earnings, without thinking to the future. When crypto was big, a lot of people made tens of thousands of dollars recommending hot cheap alt coins on YouTube. A large number of them spent their ad money playing millionaire dress-up and I’d wager that many of them had to sell off their own Bitcoin during the market’s low-point just to pay the bills.

If you practice basic delayed gratification and don’t run out to buy expensive things the second your check arrives, you can build up your capital to the point where it pays for whatever you want. This is often easier than you’d think.

Basic example? If you invested in SPY (the largest, “safest” stock market investment around) back in January, you’d be up over 23%.

(A Very Boring “Bet” With Big Returns)

That’s pretty straightforward and easy. Bitcoin had huge fluctuations this year as well. I’m not a huge fan of crypto (compared to other assets), but if you were going to spend money anyway, you could have bought some at $4,000 – $5,000. And then sold for $9,000 – $10,000 later in the same year. There’s real estate too (commodity producing ground like farm or timberland is relatively cheap). And, you could always just buy a business outright. You could start a landscaping or tax preparation business for well under $10,000, source out the manual labor, and use your copywriting or marketing skills to aquire customers. That’s a lot less volatile than dropshipping or affiliate marketing.

The opportunity of a lifetime comes about once per year. But you need to be ready for it.

Personal finance is one of the most intimidating subjects to learn about. There’s a lot of jargon, and everything seems overly complex. Do you initiate an iron condor on the Elliot Wave? Or buy weekly puts with high theta decay? Today’s article throws all this out the window. This is a basic guide to building a simple investment portfolio which generates passive gains.

You don’t have to be Gordon Gecko or Carl Icanh to understand what follows. Additionally, you’ll discover actual funds and assets to invest in.

I always hate abstract advice like “buy an index fund,” so I’m listing specific tickers to get you started.

Do your own research (obviously) and view what I’m writing as “entertainment only,” but the funds listed are some of the most popular and well-regarded in the industry.

Anyway, let’s get started.

Avoid Day Trading And Options Contracts

There’s a great forum called Wall Street Bets. It’s all about options contracts and short-term investing.

Sometimes you’ll see threads where a reader turns $50,000 into a million bucks. Or you’ll find screenshots where someone made $17,000 in an afternoon. These are pretty exciting, until you look at the other 99% of posts.

Most users lose money, and it’s common to see new traders down $20,000 – $30,000.

If you want fast money, you’re better off sports betting or playing poker. Both are less technically complex and offer a better rate of return.

For Passive Investing, Go As Broad As Possible

I bought a few shares of Waste Management last spring. They’re currently up 16.04%. That’s an amazing return, until you look at it in an actual dollar amount.

If you invested $10,000 (I didn’t), you’re up $1,600 for the whole year. Not bad, but certainly not enough to live off. Even if you picked 10 stocks and they all generated $1,600 returns, you’re still making less than a Wal-Mart greeter.

Realistically, you’re better off building your active income, while putting surplus cash into an index fund or ETF.

There are a lot of options to choose from, but two of the safest are the Vanguard S&P 500 (VOO) and the Vanguard Total Stock Market (VTI) these track the US economy, keeping you well diversified.

You can can buy these funds through Vanguard themselves, any major brokerage account, or the Robinhood App.

Keep A Cash Reserve To “Time” The Market

On December 24th, the Vanguard High Dividend Yield ETF fell to $73 per share. I bought an extra 50 of them, figuring prices would bounce back.

At the time of writing, each share is worth a tad over $82. That’s a $9 gain per share, meaning I saved $450 by buying the dip.

While it’s fun to pretend you’re a big-baller online, you’re better off saving your money during good times so you can profit during bad ones.

(Using My CIT Account For Extra Cash)

Personally, I try putting $300 – $400 a week into my “opportunity fund.” If you can do more, do more. If you’re on a budget, do whatever amount you’re comfortable with. Either way you’ll build up a pretty good chunk of investable cash.

Then, when an opportunity arises, you can seize it.

Understand The Classic “Lazy Investment Portfolio”

(Jack Bogle Explaining This Strategy In His Guide: The Little Book Of Common Sense Investing)

The “lazy portfolio” is a simple set of three long-term funds meant to perform well during most markets.

The traditional set up goes like this:

• 40% invested in: Vanguard Total Bond (BND).
• 40% invested in: Vanguard Total Stock Market (VTI), or S&P 500 (VOO).
• 20% invested in: Vanguard Total International (VXUS).

This keeps you well diversified and protects you from most risks. It’s also a low-cost portfolio where you aren’t paying insane management fees or constantly churning through stocks.

To quote Jack Bogle (again): “Don’t look for a needle in a haystack. Buy the the haystack.”

My Personal Portfolio

With my current balance, beating the market with a 10% return on investment would yield under $5,000. Not worth it!

Because of this, I keep a very simple investment portfolio that’s pretty similar to the lazy model mentioned above. In 2019, I’m building my account to over 1,000 stock shares total. And here’s what it will look like by the year’s end:

• 33% Vanguard S&P 500 (VOO) – Currently sitting under my target percentage. Mainly because of last year’s wild economy, and the fund’s low dividend payments.
• 33% Vanguard High Dividend Yield (VYM) – Way over the target amount right now as I wanted to build this one up to 330 shares as fast as possible. It’s payouts help fund all the other assets.
• 33% Vanguard Total Bond (BND) – With VYM all built up, this the next big area for improvement. I want to hit 330 shares by summer so the dividend payments can help buy more VOO.

Once this is done, I’ll evenly dollar cost average into the three funds on a monthly basis.

Closing Thoughts

Building an investment portfolio doesn’t require insane financial skills or incredible insights.

If you’re not stock picking or day trading, buy a broad fund and hold it long-term.

You’re getting steady, stable gains without the hassle of trying to predict the performance of single stocks.

A recent study shows 40% of Americans live paycheck to paycheck. Another report claims most citizens have less than $1,000 to their name. This sounds unbelievable, until you look around.

During my recent Christmas vacation to the USA, I was amazed at the sheer number of payday loan centers and pawn shops.

Much of America looks like the bad timeline in Back To The Future Part II.

Rather than complain about it, today’s article offers actual advice on how to stop living paycheck to paycheck. This works whether you’re making minimum wage, or a decent salary. And I’ve included a wide variety of different strategies and techniques.

1. Spend Less Or Make More

The easiest way to stop living paycheck to paycheck, if you have a high-paying job, is to simply spend less.

I have a cousin who racked up $30,000 in credit card debt. He lived at home for the next 12 months, spent as little as possible, and had the whole thing corrected within a year.

Not very fun, but it fixes your finances.

If you have a low-wage job, focus on making more money. If you make $10 an hour, switch to a $13 an hour job. It’s an instant 30% raise. Then get a part-time job too.

The nicest thing about earning very little is that any extra income seems enormous.

I remember doing Fiverr gigs after my regular job and being ecstatic from making an additional $30 or $40.

If you have a career, leverage your skills and expertise into higher paying gigs. A lawyer, for example, could do consulting or set up LLCs as their side-business.

But more on that in a minute…

2. Get A Real Bank Account

(Don’t Bank Like This!)

Wal-Mart offers one of the biggest check cashing services in America. This shocks me. Especially since the store charges users a fee.

You pay $4 for for any check up to $1,000, and $8 for anything over that. If you’re making $10 an hour, you’re spending 1% of your income on check cashing services.

That’s insane!

Most local banks aren’t much better, with their annual service fees and low-interest rates.

In fact, the average bank offers a measly .1% annual interest on savings accounts.

Don’t settle for this and open a high yield savings account instead. I have two of these (one with Ally, one with CIT) and they’re both great.

Ally Bank (no affiliate) offers 2% annual interest, and CIT now offers 2.49% returns.

That’s considerably better than what most places offer.

Also, since there’s always some controversy about the “best savings account,” here’s a video covering several options:

Having a high yield savings account is the closest thing to a guaranteed return on investment. It’s also a great way to build up your emergency fund.

3. Read These Two Books (They’re Free)

There are a ton of personal finance and business books. Most of them are overly complicated, or not applicable unless you’re already a high earner.

If you’re making $10 – $12 an hour, it would take years of savings to even reach the minimum deposit requirements for many big index and mutual funds. Likewise, reading an Elon Musk biography probably won’t help you much.

Instead, I’m going to recommend two practical books with a lot of easy to follow advice.

Number one is The Richest Man In Babylon. You can buy it for under $10 on Amazon, or listen to it for free on YouTube:

The second book is Letters From A Self-Made Merchant To His Son. Another book for under $10 on Amazon, but also free on YouTube:

These two titles cover all the basics of personal finance, debt management, and building wealth. Read them, follow their advice, and you won’t have to worry about living paycheck to paycheck again.

4. Start A Service Business

(Old Screenshot From Freelancing On Fiverr)

Passive income is great and I love picking up zero-effort royalty checks. However, it takes a lot of work get these results.

It’s tough to recommend creating information products unless you’re already an expert on something or have superhuman levels of self-discipline (writing takes time).

Most people are better off starting a service business instead.

This require a lot less work upfront, have a lower barrier of entry, and are fairly straightforward. You perform a task, then get paid.

These jobs can range from blue-collar activities like lawn service, to high-end ventures like consulting. Personally, I used to do freelance writing. But there are a ton of other options as well. Think about your personal skill sets, figure out which of them you can monetize, and then create a service business around this.

Even if your service business never takes off beyond a few weekend gigs here or there, it’s still going to help you break the cycle of living paycheck to paycheck. You’ll have some business contacts, plus an understanding of how to make money independently.

When there’s a government shut down or corporate layoff, you can always use your side-business to stay afloat.

5. Reframe Status (The Easiest Way To Stop Living Paycheck To Paycheck)

What is “cool?”

When I was 17, there was a whole group of slightly older guys who didn’t go to college. Instead, they got low-effort minimum wage jobs, rented a sh*tty ranch house, and threw crazy parties every weekend.

As a teenager, that’s a cool lifestyle.

At 25, that’s embarrassing.

What’s cool is always subjective.

This goes for lifestyles as well as fashion and social trends.

In 2013 I made $10 an hour, I also bought more consumer goods than I have in any other year.

In 2018, all these purchases are complete junk with zero value.

Consumer goods are depreciating assets. Likewise, popular brands are often the most mediocre. $160 Airpods are a big status symbol right now. Yet you can buy regular earbuds with better sound quality for $20.

Buy higher-quality but lesser know brands, then invest the difference into yourself.

If you’re working a low-wage job, use that money towards starting a business or creating active income.

If you’re middle or upper-middle class, do the same thing. Or, buy revenue producing assets.

I live near a big luxury mall and it’s amazing to see the number of guys who rush out and blow their entire Christmas bonus on depreciating assets. If you have enough disposable income to buy a new car or high-end watch, you also have enough to make a substantial investment generating long-term wealth.

Or, as Dave Ramsey famously put it: “Live like no one else now so later you can live like no one else.”

Closing Thoughts

Your choices compound over time and seemingly insignificant decisions can have a huge impact on your future.

This is why it’s important to develop good habits. Especially with money.

At 19, I saved up $4,000 over the course of an entire year. That’s not some huge amount, but it taught the importance of living below your means and having self-discipline.

Mastering your money is crucial, no matter how much you make. So you might as well start now.