Every once in a while, I hit the jackpot.
I’ve read a TON of money books — far more than I’ve featured on this site — and most are not worth much IMO.
Many are just plain terrible, offering mediocre advice at best. Others suggest basic money tips we all learned in third grade.
Personally, I think so many personal finance books are bad because the authors are just that — authors. They are writers covering a subject. But they haven’t lived the subject (and thus don’t know it) and that comes through in spades.
Other books are “fine”, offering a few good tips here and there. But they are not worth buying because they offer so little.
But sometimes, I run into one that breaks into the upper echelon — a book that makes it into what I consider to be the best money books (ones that almost everyone should read).
This is one of them. I’ll be adding it to my list of 12 Books that Will Make You a Financial Expert. It doesn’t happen very often that one of those books is replaced by another. More on this later.
I discovered Passive Income, Aggressive Retirement while searching for retirement books on Amazon. I contacted the author, Rachel Richards, asked for a review copy, and she sent me one.
I read the book in one night and LOVED it! It’s a great review of several vital money ideas — which I think makes it a must-read for those wanting a solid all-around personal finance education.
It’s also one of those books I “hate” because I know if I read and applied it 30 years ago, I’d probably have retired much, much sooner. Dang it!
Over the course of three posts I’ll dig into some major themes from the book. I’ll share what it says and my thoughts on it. From there you can decide for yourself if it’s for you.
Here’s what we’ll cover:
- This post provides an overall of the book, introduces the author, summarizes the importance of passive income, and shares the author’s disdain for saving over earning to fund retirement.
- The second post will cover the five categories of passive income (including an honest discussion that there’s actually a lot of work and/or money involved in creating “passive” income), how the author evaluates passive income opportunities, and how I evaluate them.
- The third part will break the five categories down to 28 total options for generating passive income. I’ll evaluate them all, sharing what I think of each category overall as well as detailing which ideas I like best and why.
Let’s get started — beginning with what this book surprisingly isn’t about…
Not About Retirement
Despite the book’s name, it’s oddly not about retirement. At least not much.
Sure “retirement” is in the name. But it’s way more about financial independence/financial freedom (whatever term you prefer) than retirement.
The book’s basic premise is that you can cover your monthly expenses by developing several passive income streams. If you do that, retirement is a possibility but not mandatory. There’s really very little about retirement, planning for it, etc. — the subjects we generally consider when thinking of retirement. It’s mostly about ideas for generating additional income (which is what I like about it).
It’s also not about passive income — or at least not completely about it.
IMO, there are truly very few (if any) income sources that are completely passive. I’ll get into this more as we progress (as will the book), but I prefer looking at the ideas presented as suggestions for creating multiple streams of income. This does not detract from the book in any way. It just recognizes that almost all income streams take effort to create and manage, especially at the beginning.
The book offers a wide range of income-producing ideas in a non-sleazy manner that makes them approachable and worth consideration — not something other books offer. Most “multiple streams of income” and “passive income” books are hype-fests that rival a multi-level marketing event (case in point is Multiple Streams of Income — which I read shortly after this book. It is almost completely worthless IMO.). Admittedly there’s a bit of over-selling in this book too, but not nearly as much as I’ve seen in other books.
Meet Rachel Richards
When I initially considered the book’s author I scoffed a bit.
Really? This under-30 lady is going to tell me something I don’t know?
Then she shared her bio. Check out this:
I’m 27 years old, retired, and living off $10,000+ per month in passive income. My husband, Andrew, and I now spend our time traveling the world, visiting friends and family, learning new skills, going on adventures, and doing whatever we want.
Ok, that’s kind of impressive. Now I feel like I was a complete slacker in my 20’s. Hahaha!
She then shares how they got to $10k per month as follows:
The next two years were a whirlwind.
In 2017, Andrew and I bought our first duplex together; it cash-flowed $500 per month.
We started a print-on-demand T-shirt business that generated passive royalties.
I published my first book, Money Honey: A Simple 7-Step Guide For Getting Your Financial $hit Together, which also produced passive royalties.
We bought several additional rental properties that year and the next, and by the end of 2018, we were over the $10,000 per month mark.
These are just a couple examples of a plethora of passive income streams, and we focused all of our efforts on growing them as much as possible. During those two years, we worked harder than we ever have in our lives.
By now the book was getting very interesting to me.
This person had done something I wish I had early in my life as well as something I think many ESI Money readers (and their friends and family) would like to read about.
That said, Rachel’s monthly income report (which you get by subscribing to her newsletter) shows only two main sources of passive income — real estate and book royalties. So +1 to her for generating that much income, but -1 for only doing it from a couple sources (when she’s positioning herself as an expert in passive income.)
Richards then addresses an issue I hear often when I suggest creating extra sources of income — that someone could never make this or that amount (usually a very high number) or cover their monthly spending and since they can’t do that, it’s not worth their effort.
Her thoughts:
Even if you’re not trying to retire early, maybe an extra $1,000, $2,000, or $5,000 per month would make a difference to you. Whether it pays your bills, is spent on hobbies or travel that you never thought you could afford, or is stashed away for a rainy day, you’re inspired by the prospect of earning more each month.
Passive income isn’t all about quitting your job. The biggest benefits are: Freedom, flexibility, and financial independence.
I am positive that every single American has something to gain—not just financially, but emotionally and mentally—from supplemental self-sustaining income.
This is a HUGE (and true) set of statements — particularly this part:
“an extra $1,000, $2,000, or $5,000 per month would make a difference to you.”
If you need to see how much of a difference extra income would make for you, check out my ESI Money financial independence calculator and plug in your current numbers.
Then run them with an extra $1,000, $2,000, or $5,000 per month plugged in. You will see a huge difference expressed in terms of many years.
For example, let’s assume the following…
- Current Annual Salary: $50,000
- 3.00% annual raises
- Side Hustle Income: $0
- Other Income: $1,000
- Saving 20% of total income
- Current Investment Balance: $100,000
- 8.00% annual return on investments
- Expected Annual Spending in FI: $50,000
- 2.50% annual spending inflation rate
- 4.00% assumed annual withdrawal rate or earnings on assets
- Years to financial independence: 31 years
Now add in just $5k extra in side hustle income and keep everything else the same.
Years to financial independence: 28 years.
Now sprinkle in a few other ESI principles (4% annual increases, 30% savings rate, $10k in side hustle income) and you can save a decade pretty easily.
Pretty nice, huh? 😉
Now let’s begin digging into the book.
The Wrong Way to Fund Retirement
In my free email course, Creating a Great Retirement, I talk about the three ways to fund retirement:
- Asset Withdrawal Method – Saving enough assets to withdraw from to meet your needs.
- Income-Based Method – Arranging your assets and/or working to provide an income to cover your needs.
- A combination of the two.
Richards starts the book by addressing what she calls the “Nest Egg Theory”, which is the same as my “Asset Withdrawal Method”.
Her comments:
Traditionally, people have subscribed to what I call the “Nest Egg Theory.” A nest egg is a sum of money saved for the future. Fun fact: the term originates from the practice of putting a fake egg into a hen’s nest to encourage her to lay.
The Nest Egg Theory formally goes like this: save a bajillion dollars by the time you retire and live off that for the rest of your life.
She then spends several pages talking about how this idea is outdated, broken, and nearly impossible these days.
Eventually she gets to this series of statements:
How much money would you say, a millennial needs for such a scenario?
Doing a quick Google search shows that the oft-cited retirement nest egg millennials must attain is, oh, just $2 million.
She says it as if $2 million is an unreasonable number that no one could ever aspire to, which is not true IMO.
That said, she does a decent job of backing up her argument by noting how frequently someone actually reaches $2 million.
Richards continues:
In reality, how often are people successful at saving that amount?
Baby boomers might not need $2 million, but they certainly need more than what they actually have saved. A 2016 study showed that the mean retirement account savings of people in the 56-61 age bracket was only $163,577.
A 2015 study found that fifty-something workers have a total household savings of $117,000 and most plan to work past age 65 or not retire at all.
In fact, according to the Government Accountability Office, around 29% of households age 55 and older have neither retirement savings nor a pension.
She then summarizes with the following:
Let’s re-cap the problems of the Nest Egg Theory:
- Saving $2,000,000 is hard; you can only cut your expenses so much
- You can’t control the stock market
- You could experience a divorce, death, long-term disability, lawsuit, or medical emergency
- Working for 40 years is not appealing
- You could die and not ever reach retirement
- You could become ill and not able to fully enjoy retirement
Several thoughts from me on this:
- Most people don’t live exclusively on their savings. There is Social Security that lowers the amount anyone has to save (maybe substantially). Of course if you’re talking SS, then you’re also NOT talking early retirement as the soonest it kicks in is at 62.
- It’s true that most people don’t have $2 million saved. Facts are facts. So yes, it’s unlikely that many people will save $2 million.
- It’s also unlikely that people will create $10k in passive income streams, so there’s that as well. But again, most don’t have to as the majority of people can live well on much less than $120k per year.
- Yes, there’s risk with the stock market, but many of the income scenarios we’re taking about will require some risk as well. Plus, over a long period of time, the stock market is generally a pretty good investment.
- It’s true that the Asset Withdrawal Method requires a looooong time to accumulate the needed funds. That’s why I recommend the hybrid method for the best results — saving plus having side income. In fact, having a good side hustle (or several streams of income) can dramatically lower the number of years before you become financially independent.
- All the other objections she notes deal with the fact that the longer before you retire, the more bad things that could happen to you. We’ve seen that this is certainly true which is a great argument for retiring as early as you can.
In the end, I don’t discount that accumulating $2 million requires a lot of effort.
But it’s not an impossible task either.
This is why I like both saving and earning as much extra as you can — which is where this book is best.
BTW, while I recommend the hybrid option for most people (because I think it’s the most viable choice for the greatest number of people), I actually use and prefer the income-based method of funding retirement. As long as your income sources are solid and you have margins of safety built in, why wouldn’t everyone prefer a never-ending flow of retirement income to a set of assets that could be depleted if you withdraw too much?
In the end this part of the book isn’t really needed IMO. A different (and maybe better) argument could have been made that was something along the lines of “the more income you have the more you can enjoy life and retire early and this book shows you how to create that income.” That would have kept the rest of the book the same without having to argue against saving for retirement.
Just my two cents.
Anyway, that’s the introduction to this book.
If you’d like to read more on this book, check out Five Categories of Passive Income and How to Evaluate Them.
Russ Maney says
So here’s my key question. I, through a lifetime of ESI efforts, have already saved >$2m for retirement (IRA + taxable investment accounts, all in stock+bond mutual funds), excluding the value in my one (and currently only) property – my home (>$700K in equiity).
All of the best ‘passive income’ stories I hear/read are largely based on rental properties. Does this mean I should take some of my funds out of the markets and invest them in rental properties? It seems to me that the answer boils down to yield, effort, and risk. What’s the better total yield over the long term – rental properties or the markets? What’s the relative risk – the markets surely go up and down, but so do property values and rental income (particularly if a property stays vacant for a significant peroid of time)? And, the effort for rental properties is surely higher, unless you pay for outside management, which reduces the yields.
Yes, I know there are other forms of side hustles – like ESI websites – ha. But, frankly, it does seem the dominant one, by far, is rental properties.
ESI says
What do you mean by the “best”? If you mean something that you’d be most interested in, then I think you answered your own question.
Russ Maney says
It’s not that I’m not interested in rental properties. My career has included so much travel (including living 6 years in Australia and then splitting my time between Europe and the U.S. ever since) and hours/effort that I simply haven’t had enough spare time in one place long enough to develop a rental properties portfolio. But, now that I’m approaching retirement, if rental properties really do have a significantly better risk/reward ratio than the markets, then I could become very interested, even if I have to put more effort in myself, which I would then have the spare time to do.
BTW, my basic question was, is ‘side hustles’, with some fairly rare/unique exceptions like ESI blogging, really just another name for ‘rental properties’? Or, have I missed something? I’m not trying to be flippant, it’s a been a serious question of mine for a while, as I approach retirement with my fairly large nest egg. What else should I do or do differently, if anything, besides the ‘nest egg theory’ described above? Or, stated differently, why is a real estate portfolio better than a well-balanced stocks/bonds portfolio an as ‘income-based method of funding retirement’? I’m just looking for the best strategy.
ESI says
No, side hustles can refer to a wide variety of money-making activities.
Some I’ve done include freelance writing, refereeing, and consulting.
But it could be anything: dog walking, landscaping, car detailing, etc.
A side hustle is generally more of a business pursuit whereas real estate (which you could call a business if you wanted) is more of an investment IMO.
Apex says
Russ,
I would offer the following.
THE PROS:
1. Real Estate for myself has destroyed returns in the stock market but I got in at 2008 when the returns were better than they had been in many decades.
2. A large percent of people who have gotten quite wealthy have done so with a good allocation to real estate investments.
3. Real Estate offers the opportunity to find value that the market does not recognize because each property is unique and because of a lack of liquidity. The stock market cannot offer this. There are no deals in the stock market. You can argue that some stocks may be undervalued but that is a tug of war with millions of other market participants and you have no way to make the market recognize what you think is missed value. With real estate you don’t have to make the market recognize anything. If you recognize it you simply operate the property in a way that brings that return to your bottom line.
4. THIS IS THE BIG ONE. If you want to have drastically better returns than the stock market this comes through leverage. You need to get comfortable with the idea that you will be using significant amounts of borrowed money. Cheap interest rates make this a huge multiplier for Real Estate returns. This can take returns from 10% to 20 or 30%. This is the major reason real estate returns can so drastically dwarf stock returns.
THE CONS:
1. Real estate has big cycles and there are periods when returns are going to be much better than others. 2008-2015 was a period of great returns. We are now in a period of much lower returns on newly purchased properties. It is much easier to make mistakes in periods of lower returns like the one we are currently in.
2. Real estate will require a good amount of work and effort. Even if you hire a management company you need to be able to understand the business well and manage them well or you will still have significant risk of loss. It is one of the less passive and higher skill required investments. Not that it requires genius level skill but it requires some.
3. Real estate has considerably more risk than investing in stocks. If everyone bought the SP500 fund and did nothing with it for 10 years the odds are extremely high that every one of them would be money ahead after 10 years. If everyone bought a rental property and tried to manage it or even hired a company to manage it, I would bet good money that a large majority of them would do far worse than the SP500 and plenty would have lost money. Real estate is a business and must be run like one and we know the numbers for the success of new businesses are not very good.
My short answer is that I think real estate is one of the best forms of investment returns and best forms of semi-passive income of anything out there. For savvy investors and people with a decent business sense I think it is hard to beat. For the vast majority of average people, I would advise them to stay far away. It’s just too easy to screw it up if you aren’t good at it, and aren’t willing to put in some time.
Karen says
As another reader, Thank you for your specific and detailed information. Much appreciated
Russ Maney says
Hi Apex –
Thank you very much for your thoughtful reply. To your pros:
1. I understand your point on leverage, but if one had a similar source of borrowed funds, they could be used to by stocks and bonds as well, and thereby provide the same return boosting benefits. Of course, the biggest word in that previous sentence is “if” – perhaps having the property as collateral lowers borrowing costs?
2. Ability to find value others miss – I agree the real estate markets are less transparent, but your ‘con’ #3 is the counter-argument – as you say, to get good returns, you have to ‘beat the (real estate) market’ and many (most?) people won’t. I hope I could, but obviously no guarantees.
3. Your and others’ great returns since 2008 – obviously I’ll have to take your word for it. The S&P 500 has more than tripled since the bottom during the GFC in 2009, so if you stayed all in, as I did, you did very well there, too. When I research ‘average long term real estate returns’ online, I get a range of answers around 10%. The same question for the stock market comes in at around 8%. I suspect the 2% premium is the (otherwise unpaid) ‘salary’ for one’s personal efforts to ‘run it as a business’, which I have no doubt is required.
Obviously, I’m still researching and thinking, so thanks again for your reply. I will no doubt have a ‘side hustle’ when I retire. The question is, which one? I could just earn my 8% long term in the markets and try to make up the other 2% with a paid side hustle. Or, go the real estate route, which would be unpaid, other than the (hopefully!) at least 2% higher returns than I could get in the markets? Time will tell, but best of luck to you regardless.
Apex says
Hi Russ,
Your 3 points are all great opportunities for me to describe how critical leverage is to real estate investment returns.
You have heard the three most important rules of real estate are location, location, location?
The three most important rules of real estate investment returns are leverage, leverage, leverage.
Cash is King. Leverage is Emperor.
1. Leverage doesn’t come from a “similar source of borrowed funds” or from outside sources. That presumes you already have a huge asset base that you want to borrow against for a different investment purpose. While that is possible, it is not likely, it does not compound, and the amount of leverage allowed is likely limited.
Real estate leverage comes from using the real estate itself as collateral to purchase 4 – 5 times more property than you could with just cash and doing so at extremely low interest rates due to the current interest environment which has been in place for well over a deacde now.
You can do the same thing with stocks which is called margin. Margin is usually limited at 50% which means you could buy twice as much as you could with cash which is already way less than you can do with real estate. Margin also usually has a lower limit on your equity percent during down markets which is often around 40% at which point a margin call will require you to sell stock to bring the equity percentage back up to 50%. If you run the numbers you will see that a 17% drop in value would trigger such a margin call which would then require selling 20% of the remaining already depressed portfolio to bring the equity percentage back up to 50%. After such an event your portfolio would be down 34% plus the interest costs on the margin account which are usually around 5% annually. Imagine the returns necessary to get back to even after that. This is the type of an event that happens regularly, usually every few years, sometimes every year for multiple years. Margin is for short term traders. I have never heard a story of a long term investor who just put his money in index funds as a long term hold continuing to use margin for years on end who came out ahead.
The key that makes this work in real estate is running your business well. You have to have properties with significant margin for safety in cash flow. In this case any draw downs in your asset values has no impact on you business so you can ignore it and your earnings from the business continue unaffected by any correction in housing values while you continue to pay down the mortgage and put cash in your bank account. Buying stocks on margin can never duplicate the safety of a well managed cash flowing leveraged real estate portfolio.
This is a critical distinction that most people miss about the use of leverage in real estate. Leverage always has risks but real estate allows you to mitigate those risks to minimal levels when done wisely and with good business sense. As I had stated, it is not for most. Most people will screw this up. That is why there are so many horror stories about real estate investors losing their shirt. It’s not like investing in stocks. It must be done well. But it can be done safely when done well. I don’t know of any other normal investments that can use leverage as safely as real estate can.
2. I don’t actually agree that you need to beat the real estate market for good returns. Some people do that and are very good at it, but it becomes a job unto itself to continually find under performing, undervalued, properties and bring them up to market performance. I never did that. I bought every one of my properties off the MLS. I still do. I am very happy with typical real estate returns. I handily beat typical market returns with one strategy alone … leverage. There are plenty of other things that are important but if you want to really beat the typical real estate returns long term it all comes from leverage. If you find a deal on the purchase price that might give you an outsized return for one year. However, you could then sell that property at market value and extract that value, so after one year your returns on equity are back to normal. It requires constant work to constantly sell and find new news on new properties to continue with outsized returns based on price. With leverage you continue to beat the typical returns year after year, for decades. (Yes it decreases slightly from year to year but this is easily rectified by financing gains out of the property every 5-10 years to purchase new properties still at market rates. I have done exactly that multiple times.)
3. No doubt stock returns have been good too. The typical real estate returns you found of 10% I would agree with. In fact in average times they could well be lower. So why is real estate so much better than the stock market? Queue dead horse, begin beating … Leverage! Leverage takes typical cash flow and doubles it. It takes typical appreciation and quadruples it. That’s how you get to 20-30% returns.
Without leverage total real estate returns are not going to beat the stock market by much. As you say, probably a slight premium for requiring more skill and work.
What real estate without leverage will give you is far higher cash flow than stocks will give you. So it will put cash in your pocket much quicker than dividends on stocks will do but that will come at the expense of much slower appreciation than stocks. If you want higher cash returns and higher appreciation than stocks over long periods of time, it comes from leverage.
In 2008 if someone wanted to buy real estate with all cash I would have said you will get great returns, go for it. In 2020 if someone wanted to buy real estate with all cash I would ask them what their goal was. If their goal was to get higher passive income with much lower appreciation and they were happy with that, I would say go for it. If they said they wanted to get the best overall return I would tell them not to waste their time. It would be a coin flip. They might as well just buy stocks.
THIS IS THE CRUX: Market based real estate investing without leverage does not have any significant total return advantages over stocks over long periods of time.
Jess says
This is so useful. Thank you! Do you have books you recommend on leveraged real estate investing that would help a reasonably intelligent person start learning to be better than the average real estate investor?
Jess says
Do you have books you recommend on leveraged real estate investing that would help a reasonably intelligent person start learning to be better than the average real estate investor? Thanks!
Apex says
Hi Jess,
Do you have any specific questions about leveraged investing that I could address? I don’t spend much time reading books on investing so I don’t have any to point you towards. I would be happy to share any thoughts I have from my experience though.
ThomH says
Good article and discussion. Looking forward to the follow up. Also, as a long time reader and one who has significant rental real estate, I wanted to thank Apex for writing yet another extremely concise response… probably one of the best I’ve seen on any blog. Thanks for saving me the time of responding and contributing all the things I wanted to state, but doing it in a much better way than I ever could have conveyed. Great response Apex.
Apex says
Thank you for the accolades. As you can probably tell from some of my responses there are certain things that are so clear to me from my experience that I am passionate about trying to relay that information in a way that others might be able to benefit from it. It is always encouraging to hear when I might have hit the mark.
C-S says
Agreed – good info as always, Apex!
Btw, when’s your interview coming out? And when is ESI setting you up with a sub section on this site? 🙂
ESI says
Interview is in the works!
ThomH says
It was great information, and I appreciate your passion. My wife and I (both) early retired at the ages of 50 a few years ago, and currently own +50 rental units at this time. Some we own outright, as we’ve had them for a significant periods, and some leveraged for greater ROI. It’s such a simple concept, it’s difficult to understand why there’s often such a stigma for stock market investors, when it comes to real estate investing returns. I pursue both, as they each have specific advantages and disadvantages, but both have important roles in our investment portfolios at various stages. Cheers to your outstanding ability to share great financial advice!
ESI says
BTW, stay tuned for this series on extra income streams. I eventually get to my rankings of the top ten…you can see if you agree with them.
Russ Maney says
Great to hear. I’ve definitely curious about the other 8 (besides rental properties and blogs – ha). I am a loyal reader and will definitely read (and perhaps comment on) this series. Thanks!
Bgeste says
Why no mention of Dividend Income as a passive income stream? I am successfully funding my retirement this way.
ESI says
We’ll get to the list of ideas later on in this series…
Dan Murray says
Great post. I’m looking forward to reading the next two in the series.
Paper Tiger (aka MI-27) says
This was interesting but not that relevant for an old fart like me. The one thing that I am trying to do with our finances is to eliminate altogether the need for side hustle income. Ideally, I never want to have to rely on ANY withdrawal strategy other than living off the passive income generated from our existing income sources and interest/dividends that our investments may throw off. Let the principal continue to grow and compound and only be there as a backup if our original plan stumbles.
I will admit to being a baby boomer and having many advantages that allow us to pursue this strategy. These would include:
1. (2) significant pensions from my wife and I both being employed by the same employer for 18 years and 20 years, respectively. My pension started 2.5 years ago and hers starts next April. Combined, they cover the majority, if not all of our current living expenses.
2. We both will have maxed out social security payouts based on paying ~36-40 years into the system and I believe we are old enough that we will probably be lucky enough to see most, if not all, of our payments in our lifetimes.
3. I have deferred compensation from a previous employer paying out until 2032.
4. As an only child and only 1 surviving parent in her mid-80s, I will receive a fair amount of inheritance at some point in the future.
5. My wife is 4 years younger than me and is a Sales VP in a large company and if she has her choice, she plans to work at least another 5 years.
6. We have a pretty high NW that will throw off significant dividends/interest without taking into account RMDs.
7. No debt and mortgage-free by the time my wife retires.
If all of this goes as planned, it will supplant any need or desire for side hustle income. Of course, this whole plan would be different if our true goal had been early retirement. I was able to retire at 57, which isn’t that early, but my wife enjoys what she does and will probably get close to 64-65 before she retires, assuming good health and the decision to continue working remains in her hands.
Nothing ever really goes completely as planned so we have contingencies in place if things change. These comments are not meant to say, “ooh look at me and how well we did.” It is to demonstrate that working longer, retiring later with careful planning, discipline, and some luck can allow you to retire to a lifestyle that does not need to be further supplemented with additional sources but also means we don’t truly enjoy financial freedom until later in life. As we all know, there are tradeoffs to every decision we make. These were just the decisions we made for ourselves and are not meant to say our way is better or worse than what anyone else may choose to do.
MI-109 says
Paper Tiger,
I am in a similar circumstance as you – I retired at 57, my wife continues to work at a job she loves, and I am receiving two pensions that cover a very large portion of our expenses. I have a “side hustle” as a part-time corporate pilot, so, at least for a while, I have a little extra coming in. As time goes on, I plan on being in the “Asset Withdrawal Method” camp. I agree with your assessment and wish you much luck as you go forward with your plan.
ESI, I love your book reviews. Thanks for the effort.
Paper Tiger (aka MI-27) says
Part-time Pilot is a great side gig. I don’t blame you for taking advantage of that. Best of luck to you as well.
Stay safe out there and “up” there!
B says
Great review of the book. Looking forward to the next two posts.
MI-119 says
If I continue to hire others to do the active work in for my business over the years, and generate income there, as well as my real estate, interest, stock dividends, etc. can I call myself officially retired, even if I continue to maintain a 7 figure annual income doing that?
Or is that a stretch to call retirement? A bit more semi-passive than passive though. Comes back to the definition of retirement evolving.
Still over a decade away from being able to withdraw anything from my retirement accounts without penalty, and two decades from full retirement age.
ESI says
I think you can call it whatever you want! 😉
getagrip says
I believe there are multiple ways for people to become financially independent, to include building up a nest egg. People who have done what has worked for them often see their way as the “best” way and more often than not promote it as “the” way to get ahead, at it’s worst acting like you are an idiot for not doing it “their” way. My joy in reading this blog, other blogs, books, etc. is that I see multiple ways to not just live various lifestyles, but get ahead. Some things resonate with me, other don’t, but it’s all good because it allows you to expand your options if you chose. That said, much of the author’s downside for the nest egg theory can be argued as fear of getting older or “missing out” IMHO. After all you can get sick, divorced, have legal trouble, etc. at any age, not just when you are “older” like your parents. You *gasp* can actually enjoy your life while working! Really, it can be done, I’ve seen it happen and experienced a bit of it myself. Not everyone thinks their job sucks, some people really like what they do even if it doesn’t make them tons of money outright. Some people really love their communities and being around lots of family versus near constant travel. Obviously the best part of becoming financially independent is choice, both in how and when you get there and how and what it entails for you. If what this author promotes resonates with you, more power to you.
ESI says
Very well said!
this is why i try to cover a lot of options on ESI Money — some will work for some people, others will work for other people.
I try to get into a lot of ideas and then let people choose for themselves what works for them.
Debt Free Dr says
You seem to find the best dang books! Thanks for giving an intro to this book and very much looking forward to your other articles even though I just ordered the book.
Also, I think many docs, like myself, should focus on the “hybrid” model as we max out our practice’s retirement accounts and then focus on passive apartment syndications.
Not only does this allow us to lower our taxable income (401Ks) but also take advantage of building passive income so we can retire EARLIER if we choose to NOT see patients until we’re 70 years old.
Andrew says
Well, now I have another book to add to my reading list. 🙂