Don’t Fear the Road Less Traveled When Pursuing Your Income Goals


This is a guest post from Dr. Anonymous. Seriously, that is what he prefers to be called. It's quite ironic seeing as I just revealed myself last week and he wants his identity to remain hidden.

Well, I agree with so much of what he has to say that I wanted to share it with the world. Let me know if you agree as well. Enjoy!

Daydreaming about the financial freedom additional streams of income can provide is one thing, but creating those streams is quite another. As simple as the concept might seem at first glance, generating passive income is equal parts art and science, even for those with enough capital to rigorously test the passive income waters.

In fact, while the issues that can plague a passive income investor are many when lacking a well-informed approach, only a handful routinely impact even seasoned investors. Of course, some of those impediments hold true for nearly every type of investing, passive income instruments included.

For those striving to generate steady streams of income, however, strategic mistakes don't just slow or eliminate appreciation as they do in growth stocks. In passive income investing, these mistakes can prevent you from realizing the specific daydreams driven by additional streams of income.

Popularity and Effectiveness Don't Always Align

The markets aren't lacking for publicity. On any given trading day, numerous business channels, internet sites, social media and countless other outlets saturate the landscape with coverage over market-driven minutia, never leaving a stone unturned. With endless words spent on volatility, alpha, rumors, and innuendo, passive income investors can feel like a proverbial leper simply from the blatant lack of passive investment coverage.

Sure, you might hear a story about a REIT or bond coupons every now and again, but, for the most part, appreciation is what garners the media attention, particularly in choppy markets.

However, passive income investors must never interpret this lack of attention as an indictment on a passive strategy's effectiveness because, as history has a knack for pointing out, the two are often mutually exclusive.

Don't let that lack of media attention cloud your vision and obscure your passive investment tactics. As the old media adage says, “If it bleeds, it leads,” so a more subdued passive investment approach shouldn't make splashy headlines in the first place. Let the media focus on the more audacious side of investing while you enjoy the financial and lifestyle benefits that multiple passive income streams can provide.

Market Timing Is a Fool's Errand

In a perfect world, you'd always buy low, sell high, find robust rates on high-grade debt instruments, and never spend a moment worrying about entry points. Unfortunately, this is not a perfect world, and volatility often plays a significant role in investor behavior, even among passive income strategies that tend to cause less seasickness than their open ocean, appreciation-minded brethren.

For many passive income investors — whether that involves dividend-yielding stocks, bond ladders, real estate investments, or a variety of other passive income vehicles — the topsy-turvy nature of the equity, debt and real estate markets can make you a bit shy to dive into the pool. Much of that dynamic is strictly attributable to human nature and the fight-or-flight instincts still hardwired into our DNA.

However, unlike our hunter and gatherer ancestors, we have significant amounts of historical data and logic at our disposal which, collectively, tell us that markets go up and markets go down but, over the long term, entry and exit points into investments find an average.

Every once in a while you might have perfect timing and get into a dividend-yielding stock at a low, but those moments are rare and in no way should be relied upon to make a repeat performance.

In other words, don't hold off on investing with hopes of better timing down the road. Likewise, don't let fear relegate your investment strategies. Fight against those hardwired instincts that tell you to fear the unknown and cause you to procrastinate, sleep on the decision for the hundredth consecutive night, or just indefinitely set it aside. To the passive income investor, every day on the sidelines is a day you're losing income yield.

Keep an Open Mind

There's no hard and fast rule, right or wrong, in choosing the most appropriate passive income strategies for your specific temperament, skillset, knowledge base or goals. Additionally, with the vast online environment now at your disposal, an effective passive income strategy can include everything from traditional avenues like dividends, CDs, bonds and real estate to blogs, self-published e-books and streaming informational videos.

While there's absolutely nothing wrong with sticking to the more traditional passive income paths, that doesn't mean that you should close yourself off to the thought of exploring newer routes as well.

Like any marketplace, passive income strategies evolve, mainly as technology advances, so what might seem like a novelty today could soon very well be the norm.

Keep an open mind and don't create barriers for yourself that might prevent you from exploring useful new sources of passive income.

Whether it's a lack of media attention, fear of unfortunate timing, hesitancy to explore new strategies or any other obstacle you place in front of your passive income dreams, there will always be one common denominator shared by them — delay. It's far too easy to keep yourself on the sidelines, deliberating and dissecting any variety of factors when all such behavior does is impede the income you seek.

If you do your homework and make well-informed, appropriate decisions (like us doctors know how to do), there's nothing to fear about the road less traveled. It merely means you're finding the best path for you and your passive income goals.



  1. Luckily I think passive income (thanks Peter) is starting to get more and more into the consciousness of physicians and will hopefully become mainstream.

    It is tough to find out some venues for passive income due to stipulations such as those imposed on private syndicators (can’t market it actively) so it seems to be almost a back of the room hush hush word of mouth on a particular company. When you find one that you trust it becomes a lot more comfortable investing in this class.

  2. So, all this makes sense…and we would probably want to extend the conversation by saying that developing passive income (at least with stocks and bonds) can take a LONG time.

    You just need to invest a lot, consistently and for a long period of time. On an average US income – say between 40,000 and 60,000 most people could put away maybe 10% or 20% of their income. At that rate, it would take decades to build up an sizeable passive income.

    As a final note, interest rates are creeping back up, so CD ladders and/or short term t-bills are becoming viable passive income strategies again.

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