stress Archives - Page 30 of 202

Apache is functioning normally

August 16, 2023 by Brett Tams

If you own rental properties, you have come to learn that time is one of your most precious assets. We all have a lot on our plates, but especially those in property management who oversee multiple properties. Daily tasks can quickly become overwhelming, taking you away from larger business priorities.

As a real estate investor myself, I have experienced this first-hand. My biggest limitation is the time that I have available, so I have found that getting every reasonable task off my plate is one of the most important things to do in order to succeed. Once you are behind on your tasks, all you can think about is how you’re going to catch up, so automating those tasks or finding other ways to outsource them, is the first step toward real expansion and growth.

As most property managers and real estate investors know, the work never ends, so getting through it in the most efficient way possible is critical for success. If you aren’t ahead of the game, you can get buried to the point that you are actually hurting yourself, and your business.

To alleviate the pressure, I recommend automating as many aspects of your business as possible. It can save you time and money, and put you on the road to achieving your long-term goals. Here are some surefire ways to successfully automate your real estate property management business.

Embrace Digital Marketing

Traditional marketing methods to find tenants have gone the way of the wooly mammoth; if you aren’t embracing digital marketing, you’re leaving time and money on the table. Social media, email marketing, and online listings can all effectively reach potential tenants. There are a huge number of quality listing services out there, such as Zillow, Rent.com and many others. Listing your property on these sites can definitely garner some attention, but painstakingly copying and pasting the listing site-by-site is not a good use of time. Find a software that will syndicate the listing for you, sending it out instantly to all the top sites from one central location.

Leverage ChatGPT

Speaking of listings, consider utilizing ChatGPT. It can streamline a number of tasks that typically eat up time in your day. For example, you can use it to write property descriptions, newsletter content, tenant emails, blog posts and more, which gives you more time to focus on strategic initiatives. Open AI, the company behind GPT and ChatGPT, has solutions for you to integrate AI Technology directly into your software, which is what we did at Rentec Direct. Our AI Listing Generator allows clients to generate an enticing property description in a matter of seconds, which typically takes between 10 to 30 minutes.

Offer Virtual Tours

Your AI-created listing generated interest among prospective tenants, now consider how to save time in terms of property showings. Virtual tours are the answer. They have become a valuable tool for property managers. Eliminating the need to be on site to show a vacant property will save you loads of time and give the potential renters all the time they need to peruse the space for as long as they want. Make sure to add as many frequently asked questions to your virtual tour to eliminate the need for a lengthy follow-up meeting.

Invest in Property Management Software

Investing in property management software is one of the best decisions you can make for your business. The right software can help automate many tasks, such as rent collection, maintenance requests, and lease renewals. You can even automate the marketing of vacant properties and syndicate across multiple rental sites with one simple click. A property management software platform can be your ticket back to a healthy work-life balance and take more time-consuming daily tasks off your plate.

Offer Online Rent Payments

Using a check to pay rent – or anything else for that matter – is antiquated. It’s a massive waste of time, and with the expectations and busyness of today’s modern world, it just doesn’t make sense. No one wants to go through the steps of writing, mailing and sending a check through the mail, especially when there are ways to quickly and securely pay online.

Implementing online rent payment can save you and your tenants time and headaches. Not only does it make the rent collection process more efficient, but it also eliminates the need for manual record-keeping. If you are considering implementing a software platform to help automate your business, find one that has online rent payment functionality built-in. Data shows that renters are more likely to pay on time when the rent is automatically withdrawn through an online payment system too. It’s a win-win for everyone.

Use Maintenance Request Software

Handling maintenance requests can be one of the most time-consuming aspects of property management. If it’s not a broken sink, it’s an issue with the air conditioning. These can pile up and easily be forgotten, leading to annoyed tenants and adding to your stress.

Maintenance request software can automate this process, allowing tenants to submit requests online and track their progress. When all requests come to one place, knocking them out promptly is much easier. Plus, the right system will keep records for you – something that’s important come tax time.

Automate Lease Renewals

Managing lease renewals can be a pain, but automating this process can save you time and ensure you don’t miss any critical deadlines. Property management software can automate the lease renewal process, automatically sending out reminders to tenants and generating new lease agreements. The minutiae of the business no longer need to be your primary concern when you understand how to use all of the technology at your disposal.

Not taking advantage of all the ways to automate your business is only making things more complex and putting maximum strain on you. There are many ways to streamline your daily workflow, but in my own experience, automating with the right systems and technology has delivered the largest return-on-investment for me. Your business is unique, so dig deep and find the pain points you can eliminate through thoughtful automation. Nothing can replace the peace of mind that comes with having more time for yourself and your loved ones.

Source: geekestateblog.com

Apache is functioning normally

August 15, 2023 by Brett Tams

Inside: Are you struggling to manage your money? Feeling overwhelmed with debt? If so, it’s time to take action and build better habits. This guide will teach you how to create a budget and start your savings. You need these financial tips for young adults.

The importance of sound financial advice for young adults cannot be overstated.

Often, a lacuna exists in our educational system where personal finance is concerned, leaving many young adults ill-equipped for the financial decisions that await them in their adult life.

Yet, you will encounter situations that require a sound understanding of budgeting, credit usage, investment, and an array of other financial tools without any formal education in these areas.

Financial advice can act as a compass, guiding you on a path to financial health and stability.

This early orientation can help you avoid the pitfalls of needless debt accumulation, poor money management, and inefficient financial choices like I made.

That is why it is of utmost importance to start imparting knowledge and financial habits to young adults as early as possible.

Why Financial Advice is Crucial for Young Adults

Money matters! Especially when you’re young and there’s a world of financial responsibilities unveiled before you.

Understanding financial basics early on is key to smart monetary decisions in the future. Here’s why you should consider this vital:

Knowledge Burst: Understanding finance terms, the implications, and their impacts arm you with knowledge for future decisions.
Saving for Later: Early investment in savings accounts or retirement funds can maximize your funds later in life.
Debts Control: Ensuring debts are paid off faster helps avoid excessive interest in the long run.
Investment: Stock or mutual fund investment can multiply your savings in the right condition.

Remember, your financial health requires deliberate action, start early!

This post may contain affiliate links, which helps us to continue providing relevant content and we receive a small commission at no cost to you. As an Amazon Associate, I earn from qualifying purchases. Please read the full disclosure here.

What is the best saving advice for young adults?

The best saving advice for young adults is to start early and save regularly.

This will help you build up a nest egg that you can use in the future.

Personally, this is my own regret as such it took me way too long to become financially sound.

Also, you want to be mindful of your spending and live within your means.

Best Financial Advice for Young Adults

When you’re in your 20s, the world feels like your oyster, ripe with opportunities and potential.

But among this plethora of choices, the most important decisions you make may very well relate to your finances.

While the excitement of earning and spending your hard-earned money can be exhilarating, it is crucial to remember that wise financial decisions made early on can set the stage for long-term financial success.

We have curated some of the best financial advice to help you make informed decisions and set the foundation for a secure financial future.

1. Create a Budget

Creating a budget can seem like a daunting task. However, once correctly accomplished, it can undeniably make your life a lot easier.

Below are some reasons to start budgeting from the start:

Money management: Knowing the ins and outs of your financial transactions helps manage your money efficiently. A budget gives you a clear snapshot of your income and expenses, allowing you to make strategic decisions about spending and saving. This level of control can be incredibly liberating and reassuring.
Financial discipline: Creating a budget encourages discipline when it comes to financial decisions. It can show you areas where you’re spending more than necessary, such as an underutilized gym membership, frequent dining out, or an unused streaming subscription. By addressing these expenses, you could easily save an additional $100 per month.
Alignment with goals: A budget can provide clarity and align your financial actions with your long-term goals. If you are side-tracked and lose sight of these ambitions, the budget serves as a potent reminder to guide you back to the right path.
Effective savings: A budget constitutes a robust tool that allows you to maximize your income and inculcate a savings habit. Essentially, it’s a roadmap that shows you, in real time, where you can minimize and direct those funds into savings. Those savings can then be invested toward achieving significant life goals more efficiently.
Stress reduction: Tracking income and expenditure can culminate in a stress-free financial life. For example, it helps manage unexpected emergencies or allows you to enjoy after-office drinks without any worries about overspending.

To simplify the job, various user-friendly budgeting apps are available.

These digital budgeting tools or apps offer handy features that can streamline tracking expenses and income. These tools can automatically categorize transactions, display visual charts of spending, and send alerts when you’re nearing the limit of a budget category.

Enjoy guilt-free spending and effortless saving with a friendly, flexible method for managing your finances.

Start Your Free Trial.

So, no more wondering where your money went.

With a budget in place, you get to tell your money exactly where to go, and this is an empowering shift from feeling out of control to feeling in control of your finances.

By making budgeting a consistent part of your financial routine, you adopt a proactive approach to your money, making your life easier, and your future brighter.

2. Manage Your Debt

As a young adult, managing your debt is incredibly crucial. Not only does it set the foundation for your financial future, but it also helps to keep your credit score healthy.

Here are some top-notch expert tips on how to effectively manage your debts:

Avoid credit cards whenever possible. Although credit card rewards may seem appealing, they can often lead to unwanted debts. Instead, try using cash, debit cards, or cash app cards.
Don’t finance purchases that depreciate in value over time. Rather than taking a loan for things like cars or other depreciable assets, save up and pay in full.
Minimize education-related costs. This can be achieved by going to in-state schools, considering trade school or community college, living off-campus, and exploring scholarships or work/study programs. Learn how to pay for college without loans.
Pay off your debts methodically. Consider strategies like the debt snowball or avalanche methods to strategically pay off your debts. Use a debt payoff app to find your debt free date.

Remember, being in debt can delay your financial goals.

So, learning to manage your debts early on in your life can have a significant impact on your future finances.

3. Invest Wisely

Investing wisely is a cornerstone of solid financial advice for young adults. It sets the foundation for a financially secure future.

Most people are terrified of the concept of investing and stay away from it, which is the worst decision possible.

Investing is about putting your money to work for you, expecting growth or income over time.

Consistently adding money to your investment portfolio can be more beneficial than staying away or trying to time the market.

Investing is ideally a long-term endeavor. Patience is key – you can’t expect to make big gains or reach your financial goals overnight. It’s a process of steady growth.

Simplicity is key for beginner investors. Buying and holding index funds is a good example of a simple and passive investment strategy. Or you can learn how to invest in stocks for beginners.

4. Educate Yourself about Savings and Investment Accounts

Understanding savings is a fundamental aspect of personal finance, yet many young adults ignore this.

Beginning an emergency fund, no matter how small is one of the oft-repeated mantras of personal finance experts.

Consistently making savings a non-negotiable monthly “expense” not only provides a safety net for emergencies but also contributes to various future goals such as retirement, vacation, or a down payment on a home.

A foundational aspect of mastering your finances involves learning self-control, reducing the tendency to make every purchase on credit, and understanding the importance of saving money before making a purchase.

Taking the initiative to read personal finance books and gain knowledge about managing money can greatly aid in controlling your financial future and making informed decisions about savings.

Starting saving for retirement early is essential to secure financial stability in the future.

Learn how much money should I have saved by 25.

5. Limit Your Expenses

Understanding how to limit expenses can be a game changer for your finances.

Track your daily expenses carefully, even the small ones like your morning coffee, as they can add up and provide crucial insights into your spending habits.

Keep your monthly costs, such as rent, as low as feasibly possible, as this will save you substantial amounts over time and accelerate your ability to invest in assets like a home. Learn the ideal household budget percentages.

This one makes the biggest different to spend less money…Categorize your expenses and set specific spending limits for each group, reviewing and adjusting these as needed to curb any overspending.

Regularly review your finances, specifically your bank and credit card statements, every two to three months to identify and eliminate any unnecessary expenditures.

6. Build Passive Income Streams

Okay, this one is my top financial tip!

Navigating the financial world requires strategy, and for young adults, generating passion income streams is a game-changer. With the decline of traditional 9-5 jobs, it’s crucial to adopt flexible financial strategies.

Start identifying your passions that can be monetized. Think about your hobbies, skills, or areas in which you’re an expert. It could be anything from blogging to tutoring or even food delivery services.
Find ways to make passive income. Remember, every bit of extra income counts, and data suggests diversifying income streams can secure your financial future.
Continuous learning is your power tool here. Aim to broaden your financial literacy, understand investing, explore various earning methods, and strengthen your entrepreneurial spirit.

While cutting expenses helps, growing your income using your passions gives you control over your financial destiny.

So, don’t hesitate in doubling up your day job with your passion-driven side hustles.

Expert tip: One of the best ways to make money online for beginners is a key place to start.

7. Create a Cash Reserve

Understand that surprise expenses can unsettle your financial plan, like a sudden car repair costing $700. Having a cash reserve will keep you financially stable through these unexpected turns.

Start an emergency fund: Alongside your regular savings, begin an emergency fund. Aim to save around three to six months’ worth of income.
Prioritize savings: Consider your savings as a non-negotiable expense. You’ll soon realize you’ve saved enough for significant objectives like a down payment on a home.
Build a rainy day fund: This larger $10k-50k rainy day account will help in those long-term expenses or job loss.
Combat inflation: Choose a money market account to preserve the value of your savings, while ensuring quick accessibility in emergencies.
Automation is key: If you’re forgetful, set up an automatic transfer that channels funds to your savings account immediately upon salary credit.

Building up cash reverses will help you to improve your liquid net worth and have less stress around money.

8. Learn About Taxes

Taxes seem complicated, huh? Well, not grasping tax basics can give you a run for your cash. So, get started young and you might save up a fortune in the long run

Start by understanding your salary. The chunk that you take home (net pay) isn’t the whole amount (gross pay) that your employer agreed on. Learn more about gross pay vs net pay.

If you’re self-employed, remember, you’ve got to handle income taxes, and also the full FICA bundle.

Do your bit of math now and avoid an unexpected cringer next April.

9. Consider a Term Life Insurance Policy

Getting a term life insurance policy while still relatively young is a smart financial move that any savvy young adult should consider early in their career.

This safety net serves multiple purposes, especially in ensuring the protection of your future family if for any reason you’re unable to provide for them.

Term life insurance policies are typically far more affordable for young adults. The research notably reveals that the younger an individual is, the more affordable the life insurance policy tends to be. Therefore, beginning this investment in your early years enables you to lock in a lower premium rate, thereby saving significant amounts in the long run.

A life insurance policy is an important piece of your financial planning puzzle. Remember, cost increases with age so act fast!

10. Take Action and Stay With It

Taking action and sticking with it is crucial in managing finances well.

First, you’ve got to get clear about your financial goals. Want to set up a passive income stream or travel? Make them specific, feasible, and measurable.

Once you’ve set your goals, break them down into bite-size pieces. For instance, calculate the costs and set quarterly goals. Make sure to these vision board supplies to keep your goals front and center.

Ultimately, this proactive approach coupled with persistence can help you efficiently manage your funds and stay financially healthy.

FAQ

Honestly, this is completely up to you.

The better bet would be to learn about financial management topics yourself.

Finding a fee-based financial advisor will be difficult when you have no significant assets. And then, when you do, a financial advisor can put a drag on your investing portfolio.

If you decide to work with a financial advisor, find a fee-only financial planner who provides unbiased advice – since they aren’t driven by commission.

Financial planning while young—especially in your 20s—is key to future success and financial security. Here are some steps to establish strong fiscal habits:

Firstly, map out your financial goals. Do you anticipate student loans, a mortgage, or potential investments?
Secondly, budget diligently to save more money early in your career.
Next, consider eliminating outstanding debt quicker by applying saved money from part-time or full-time employment.
Lastly, explore investments such as mutual funds and stocks for optimal use of leftover money after bills are paid.

Remember, according to a study of 30,000 college graduates, 70% never took a personal finance course—making self-education critical.

Use These Personal Financial Tips for Young Adults

In conclusion, managing personal finances is a vital skill that unfortunately is not emphasized enough in our educational institutions.

It’s critical for young adults – you – to learn this skill to establish a strong financial foundation for their future. Especially if you are determined to become financially independent.

This begins by developing a sense of self-control and understanding the importance of delayed gratification.
Regularly monitoring your income and expenses, and adjusting your lifestyle to live within your means, is a crucial habit.
Additionally, the importance of starting an emergency fund and saving for retirement cannot be overstated.

By incorporating these financial tips into their lives, young adults can steer clear of unnecessary financial stress and ensure a secure and financially healthy future.

Take this Advice about Money

It is crucial to understand not just the mechanics of money, but also, the long-term implications of your financial decisions.

Take control of your financial future today, and you are sure to reap the rewards in the years to come.

Discerning financial advice from trusted sources, instead of relying on potentially misleading external influences, is also key. Remember, the sooner you start, the better off you’ll be in the long run.

Remember the data-driven fact: small changes in your everyday expenses can have as big of an impact on your finances as getting a raise.

Source: moneybliss.org

Apache is functioning normally

August 15, 2023 by Brett Tams

Passive income refers to earnings derived from an enterprise in which a person is not actively involved on a daily basis.

Unlike active income, where earnings are directly linked to the amount of work performed, passive income flows whether you are working, sleeping, or vacationing.

As Robert Kiyosaki (2017) explains in his best-selling book “Rich Dad Poor Dad,” passive income can be a way to achieve greater financial independence.

Unlike the typical income that requires constant work, passive income typically flows with less hands-on involvement. However, this doesn’t mean no work is involved; it’s often the initial setup that demands considerable time, effort, or capital.

If you’re looking for more passive income ideas, click below:

Purpose and Importance

The purpose of passive income is broad, spanning from financial cushioning to the possibility of early retirement. By generating continuous revenue without daily effort, it offers a means to enhance one’s lifestyle, build financial security, or pursue other interests and hobbies.

The significance of passive income goes beyond mere monetary gain, as it also provides a pathway to greater control over one’s time, a diversified income stream, and potential long-term growth.

EXPERT TIP:

Consider starting small and gradually building your passive income portfolio.

By investing in a diverse array of income-generating opportunities tailored to your risk tolerance and financial goals, you can create a resilient and sustainable revenue stream.

As emphasized by many financial experts, including those mentioned in “The Intelligent Investor” by Benjamin Graham (2003), careful planning and consistent monitoring of your passive income sources can lead to greater financial freedom and control over your time.

This step-by-step approach allows you to learn and adapt, maximizing the potential benefits of passive income without overextending your resources.

How Passive Income Works

Sources of Passive Income

Passive income can stem from various sources, such as rental properties, investments in stocks or bonds, a wide of array of apps, and royalties from intellectual properties like books or patents. Each source has its unique characteristics, risks, rewards, and requirements.

While some sources, like savings accounts interest, are readily accessible, others may need significant financial investment or specialized knowledge, like creating a successful blog that earns ad revenue.

Source of Passive Income	Characteristics	Risks	Requirements
Rental Properties	Steady Income, Property Growth	Market Fluctuations	Initial Investment, Maintenance
Dividend Stocks	Potential Growth, Regular Dividends	Market Volatility	Investment Capital
Peer-to-Peer Lending	Interest Earnings	Default Risk	Platform Registration
Royalties	Income From Intellectual Property	Contractual Risks	Creative Skills, Legal Agreements

Automation and Minimal Active Involvement

Passive income often involves an automated process where money is earned with minimal active involvement. This includes setting up businesses that run themselves or investing in dividend-paying stocks that provide regular income.

Though these may require substantial initial setup, the ongoing maintenance is often minimal. But it’s worth noting that these ventures must be monitored and sometimes adjusted to ensure continued success.

Tax Considerations

Tax implications for passive income differ from those of active income. Passive income may qualify for different tax rates or deductions, depending on jurisdiction and the type of income. For instance, rental income may be subject to specific property tax rules.

Understanding these rules or consulting a tax professional is vital to maximizing after-tax returns and compliance with tax laws. You can read more about here about how passive income is taxed.

Active vs Passive Income

Understanding the difference between active and passive income is essential for anyone looking to diversify their income streams and work towards financial stability or even independence.

What is Active Income?

Active income refers to earnings that require consistent and direct effort. This includes wages from a job, salaries, hourly payments, commissions, and tips. Essentially, active income requires trading time for money.

This type of income is what most people rely on to pay bills, purchase necessities, and maintain their current lifestyle. The major limitation of active income is its direct correlation to time; you can only work a certain number of hours in a day, thus capping your earning potential.

Passive Income Contrasted to Active Income

Contrastingly, passive income is earned with little to no daily effort to maintain, after the initial setup or investment. It includes revenue from rental properties, dividends, royalties, or even a business that doesn’t require daily involvement.

Passive income provides a means to break free from the time-for-money trade and opens doors to greater financial growth and freedom.

Comparison and Significance

The main distinction between active and passive income lies in the involvement and time required to generate revenue. While active income necessitates ongoing work, passive income aims to create sustainable income streams that flow regardless of daily activities.

Active income offers stability but often lacks scalability. Passive income, though requiring initial effort and possibly capital, offers the potential for long-term growth and diversification.

By combining both active and passive income streams, individuals can create a more resilient and flexible financial portfolio, allowing for the pursuit of broader life goals and interests, such as early retirement, travel, or investment in hobbies and personal development. The insights from Kiyosaki (2017) in “Rich Dad Poor Dad” emphasize this balanced approach to building wealth and achieving financial freedom.

The inclusion of both active and passive income in one’s financial strategy offers a multifaceted approach to wealth building. It’s an essential concept for anyone aiming to enhance financial security, diversify income, or explore new financial opportunities.

Feature	Active Income	Passive Income
Effort Required	Daily, consistent effort needed	Little to no daily effort after initial setup
Time Dependency	Directly tied to hours worked	Not tied to hours; can earn 24/7
Income Type	Wages, salaries, commissions, tips	Rental properties, dividends, royalties
Scalability	Limited by time and energy	Potential for growth without proportional time input
Financial Growth Potential	Often stable but limited in growth	Potential for long-term growth and diversification
Risks & Challenges	Job loss, income stability	Market risk, initial investment required

Benefits/Advantages/Pros of Passive Income

Financial Independence

Financial independence means having enough income to cover living expenses without needing to actively work. Passive income is often vital in this quest, allowing people to live comfortably without a regular paycheck. It offers an escape from the traditional work routine, opening doors to new opportunities, hobbies, or even early retirement.

“If you don’t find a way to make money while you sleep, you will work until you die.”

Warren Buffett

Flexibility and Freedom

The freedom granted by passive income extends to various life aspects. Whether it’s spending more time with family, traveling, or engaging in hobbies, the financial flexibility offered by passive income can significantly enhance life quality. It also provides an opportunity for strategic investments, exploring new ventures without the financial strain that might come without this income cushion.

Diversification of Income Streams

Having multiple income streams reduces the risk of financial hardship if one source diminishes or fails. By diversifying across various passive income avenues, financial stability is often enhanced.

Whether it’s investment in different market sectors, rental properties across various locations, or a mix of bonds and stocks, diversification is a fundamental risk management strategy in financial planning.

Potential Long-Term Growth

Some passive income sources offer potential for substantial long-term growth. Investments like stocks may appreciate over time, generating not only regular income but also an increase in underlying asset value. This growth potential can substantially contribute to financial goals, whether saving for children’s education, building retirement funds, or other long-term planning.

Benefit	Description or Example
Financial Independence	Reduced Dependence on Active Employment; Flexibility in Lifestyle Choices
Income Diversification	Spreading Income Sources; Reducing Financial Risk
Potential Long-Term Growth	Opportunity for Compounding Returns Over Time

Drawbacks/Disadvantages/Challenges/Limitations/Cons of Passive Income

Potential Risk and Volatility

The potential risks and volatility in passive income sources must not be overlooked. Market fluctuations can significantly impact investment returns, while real estate investments can be influenced by economic conditions and property market dynamics. Careful risk assessment and strategic planning are vital to mitigate these risks and ensure consistent income streams.

High Initial Investments or Skills Required

Some passive income streams necessitate significant initial investments or specific skills. Purchasing real estate, developing software, or creating a successful YouTube channel, for example, may require substantial money, time, and expertise.

These barriers must be considered and planned for, as they can deter or delay the successful implementation of a passive income strategy.

Regulatory and Compliance Challenges

Different passive income streams come with varying regulatory and legal considerations. Landlords must adhere to housing regulations, while stock investments may involve understanding complex financial laws. Failing to comply with these regulations can lead to legal troubles or financial losses. Professional guidance may often be required to navigate these complexities.

Maintenance Requirements

While often touted as ‘set and forget,’ passive income streams usually require ongoing attention. Whether it’s maintaining a rental property, adjusting an investment portfolio, or updating a mobile app, these tasks, though generally minor, are essential.

This continuous oversight ensures that passive income sources remain lucrative and aligned with financial goals.

Drawback	Description or Example
Potential Risk and Volatility	Subject to Market or Economic Changes
High Initial Investments	May Require Significant Capital or Effort to Start
Regulatory Challenges	Must Comply With Various Laws and Regulations
Maintenance Requirements	Ongoing Management or Oversight May Be Necessary

Building a Passive Income Portfolio

Choosing the Right Passive Income Streams

Identifying the right mix of passive income sources is a tailored process that considers individual risk tolerance, financial goals, and personal preferences. Whether it’s the stability of government bonds or the potential high returns of startup investments, these choices should reflect the individual’s unique circumstances. Proper research, planning, and professional advice can ensure a balanced portfolio that serves both current needs and future aspirations.

In Vanguard’s Four principles for successful investing they stress:

The best way to work toward an investment goal is to start by defining it clearly, take a level-headed look at the means of getting there, and then create a detailed, specific plan. Being realistic is essential to this process: Investors need to recognize their constraints and understand the level of risk they are able to accept.

Vanguard

Strategies and Planning

Creating a successful passive income portfolio isn’t just about choosing the right investments; it requires a well-thought-out strategy and continuous planning. Factors to consider include risk diversification, liquidity needs, time horizons, and long-term goals. Regularly reassessing and adjusting this strategy ensures that it stays aligned with evolving needs and market conditions, safeguarding the financial future.

Monitoring and Adjustments

Regular monitoring and necessary adjustments are key to maintaining a robust passive income portfolio. The landscape can change due to market conditions, new laws, or personal circumstances. Regular assessments and prompt adjustments ensure that the strategy remains relevant, meeting its objectives while maximizing potential returns.

The exploration of passive income is not a simple undertaking but rather a multifaceted approach to building a sustainable financial future. The understanding of various sources, the recognition of benefits, and the consideration of potential drawbacks are essential components in the effective management of passive income streams.

From aspiring to retire early to simply wanting a more flexible lifestyle, passive income provides opportunities and challenges worthy of thoughtful exploration and careful planning.

The Bottom Line – Passive Income Explained

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Passive income might seem like a complex idea, but it’s really about making your money work for you instead of the other way around. From investments to side businesses, there are ways to create a steady stream of cash that doesn’t tie you down to a 9-to-5 grind. Mixing active income from your regular job with passive income can lead to a more relaxed and secure financial life.

It’s not a get-rich-quick scheme, but with some thought, effort, and patience, passive income can be a valuable part of your financial picture. Whether you’re aiming for early retirement or just some extra spending money, understanding passive income is a good first step.

FAQs – What is Passive Income?

What is Passive Income, and How Does It Differ from Active Income?

Passive income is earnings derived from investments, properties, or business ventures where a person is not actively involved daily. Unlike active income, where constant work is required, passive income generally flows with minimal ongoing effort, often after an initial setup phase.

Can Anyone Create a Source of Passive Income, or Does It Require Special Skills?

While some sources of passive income might require substantial initial investments or specialized skills, there are various opportunities available for different skill levels and financial capabilities. Proper research, planning, and sometimes professional guidance can help in successfully establishing a passive income source.

What Are Some Common Sources of Passive Income?

Common sources of passive income include rental properties, dividend-paying stocks, bonds, royalties from intellectual properties, and interest from savings accounts. The choice of sources often depends on individual risk tolerance, financial goals, and personal preferences.

Is Passive Income Taxed Differently Than Other Types of Income?

Yes, passive income may be subject to different tax rules depending on jurisdiction and the specific type of income. It’s advisable to consult with a tax professional to understand the applicable tax laws and ensure compliance.

About the Author

Jeff Rose, CFP® is a Certified Financial Planner™, founder of Good Financial Cents, and author of the personal finance book Soldier of Finance. He was a financial planner for 16+ years having founded, Alliance Wealth Management, a SEC Registered Investment Advisory firm, before selling it to focus on his passion – educating the masses on the importance of financial freedom through this blog, his podcast, and YouTube channel.

Jeff holds a Bachelors in Science in Finance and minor in Accounting from Southern Illinois University – Carbondale. In addition to his CFP® designation, he also earned the marks of AAMS® – Accredited Asset Management Specialist – and CRPC® – Chartered Retirement Planning Counselor.

While a practicing financial advisor, Jeff was named to Investopedia’s distinguished list of Top 100 advisors (as high as #6) multiple times and CNBC’s Digital Advisory Council.

Jeff is an Iraqi combat veteran and served 9 years in the Army National Guard. His work is regularly featured in Forbes, Business Insider, Inc.com and Entrepreneur.

Apache is functioning normally

August 14, 2023 by Brett Tams

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Welcome to NerdWallet’s Smart Money podcast, where we answer your real-world money questions. In this episode: Get an inside look into strategies and pitfalls of the high-risk, high-reward world of day trading.

Hosts Sean Pyles and Andy Rosen discuss the high-stakes world of day trading and shed some light on your statistical chances of finding success. Then, Andy welcomes seasoned traders Sierra Smith and Michael Sincere to the podcast to share their perspectives. They pull back the curtain on Sierra’s typical trading morning, break down concepts like options trading and highlight the rollercoaster ride of market highs and lows.

They also discuss the profound role of social media in day trading, the importance of discipline and emotional control and the potential pitfalls and real challenges in day trading. Drawing from their personal experiences, they shed light on how they’ve learned to take profits quickly, prevent losses from spiraling and maintain a realistic perspective on potential returns.

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Episode transcript

Sean Pyles: There was a time back, oh, about 30 years ago when headlines were filled with stories about people using newfangled technology to trade stocks minute by minute from the comfort of their couches. Today, you can trade almost second by second, but that doesn’t mean it’s a good idea.

Sierra Smith: In the beginning it’s definitely not all sunshine and rainbows. When you make mistakes in trading, those are very expensive mistakes that you are making. Especially when you’re doing day trading with options, it’s very volatile, so it’s very much high risk, high reward.

Sean Pyles: Welcome to NerdWallet’s Smart Money Podcast. I’m Sean Pyles.

Andy Rosen: And I’m Andy Newfangled Rosen.

Sean Pyles: Today we have episode two of our Nerdy Deep Dive into next level investing. And Andy, let’s just start out with the caution we mentioned last episode, which is that here on Smart Money, we still think the vast majority of people will have more success with very basic investing strategies, like using the buy-and-hold strategy, investing for the long-term, utilizing low cost, lower risk index funds, seeking out safe returns like high yield savings accounts.

Andy Rosen: You’ll get no arguing from me on that, Sean. But as we noted last time, some people do want to do more on the markets. Maybe they have some playing around money, maybe their risk tolerance is higher than the average bear, or bull. Maybe they’re just curious about all these terms that they hear on the nightly news. Does anyone watch the nightly news anymore?

Sean Pyles: Nope.

Andy Rosen: Yeah, and as we also noted, it’s good to be educated about the different ways investors use the stock market and other markets, because all of it has an impact on the overall economy, which affects everybody.

Sean Pyles: Right. Well, frankly, when I hear the phrase day trading, I just think the odds are really against people. There’s research showing that only about 1% of day traders consistently make money, and some kinds of day trading, like trading options, you can actually lose more money than you put up. If you don’t know what you’re doing or your expectations are not aligned with the reality of what you’re doing, you can get into a desperate situation pretty quickly.

Andy Rosen: It is absolutely true that people can get over their heads quickly, and there are a lot of people on social media that make day trading seem like it’s easier or more profitable than it actually is. Think of it this way, if you were losing a lot of money day trading, do you think you’d go on TikTok and brag about it? I doubt it, right?

Sean Pyles: Probably not.

Andy Rosen: Yeah. If people want to try this, they need to be aware of these percentages and aware of the risks and the time and effort that is involved. You really have to be watching moment to moment to see what’s happening. But the fact is that there are a lot of day traders out there and they do help move markets, so let’s hear from a couple of them to try to understand what they do and how it really works.

Sean Pyles: Let’s do it. But before we get to that, a reminder from the lovely folks on the NerdWallet legal team, we Nerds are not financial or investment advisors, we will not tell you what to do with your money. Everything in this episode and this series is to provide you, our dear listener, with the knowledge to make informed decisions with your own money.

And listener, we want to hear what you think, too. To share your thoughts around next-level investing with us, leave us a voicemail or text the Nerd Hotline at 901-730-6373. That’s 901-730-NERD, or email a voice memo to [email protected]. Andy, who are we hearing from today?

Andy Rosen: We’re hearing from two day traders, one former, one current. Sierra Smith is a trader and social media creator who runs a Discord server where she and other traders talk about strategy, trading concepts, etcetera. She’s based in Houston, and you can find her on TikTok or YouTube as well.

Michael Sincere is an author and speaker about investing topics. Among his books is “Understanding Options” and “Start Day Trading Now.” And he’s also a financial columnist for MarketWatch. He’s based in Miami.

Sean Pyles: Hey, Andy, before we go any further, let’s take a second to talk about what a Discord server is and what it means to run one. A lot of folks might not be familiar with this. You said Sierra does this, right?

Andy Rosen: Right. Without getting into too much detail, Discord is basically a chat service organized around a specific topic or interest group. And they’re particularly popular among video gamers, that’s where the service rose to popularity, but they’ve developed a big audience in the online investing world. Content creators like Sierra will often use Discord servers to connect with their audiences. If you haven’t used Discord, think of it as something like a mixture between Slack or Microsoft Teams with a little bit of Reddit mixed in.

Sean Pyles: OK, cool.

Andy Rosen: Sierra, Michael, welcome to Smart Money.

Sierra Smith: Thank you for having me.

Michael Sincere: Thanks for having me, too.

Andy Rosen: The first thing I want to know is, I guess I’ll start with Sierra, did you do any day trading today?

Sierra Smith: I actually did do some day trading today.

Andy Rosen: Tell me, just as an easy example to pull out of your head, what did you do? Just talk to me about what your morning went like.

Sierra Smith: This morning specifically I did live trading with my Discord server. We got on around 8:15, I marked up three different stocks for them, so that way they could have a variety to choose from if they chose to take some trades. I personally took Apple today, I traded Apple. I took calls, which essentially means that I believe the stock is going to go up, for those who don’t understand options terminology or anything.

Yeah, that’s what my morning was today, day trading. And then afterwards we just did some education. We did some trade recap for some people who didn’t win on their trade, we went over why they didn’t. Yeah, that was pretty much my early morning today.

Andy Rosen: And can you tell me what you saw in Apple this morning, in layman’s terms, that made you feel confident about making those short-term trades?

Sierra Smith: I think Apple was the price in the pre-market. There’s pre-market and post-market, and there’s actual market hours. Pre-market with options you cannot trade. But in the pre-market it was sitting within this demand zone, I believe. And so if it’s within a demand zone, that essentially means that the stock most likely will go up from there.

I just facilitate, I’m going to take Apple calls today, because it’s within that zone, which is the whole chart analysis that we did before the market opened. And so that way when the market actually opened, we were able to take that trade based off of that prior analysis.

Andy Rosen: And Michael, I know you’re not really doing day trading anymore. Tell me what your daily thinking about your portfolio looks like.

Michael Sincere: Right. What Sierra was doing was something I did do in the past, mostly when there was a volatile market. And I would jump on some of the hot stocks and ride it higher. And I stopped it because it’s wonderful when you’re on the right side, but if you’re not, it can turn around really quickly.

To answer your specific question, I switched from day trading to a more traditional buy index funds. And I sell covered calls, which is also an option strategy, but to me it’s a lot less risky than day trading.

Andy Rosen: Just for the people out there: When you sell a covered call, basically what you’re doing, if I’m understanding correctly, is you are selling an option for someone else to buy a stock that you already own. So if your trade doesn’t work out, you at least have the stock to back it up. You’re not going to have to buy a stock at a higher price than you might want to pay for it in order to sell it. Is that accurate?

Michael Sincere: It is, and I’ll give you an example. Let’s say I bought Apple, and then what I would do is I would rent out those shares to Sierra, who’s buying calls. I’m selling those calls to her, she’s buying them. I wouldn’t make as much money on it, but I do get an immediate income. And so what I do is I sell them to the speculators, and I’m like the landlord. I get my income and I just want my nice income and I don’t have to go through the stress of watching it all day long, every minute, can’t even go to the bathroom. That lifestyle I decided to walk away from. But by selling the covered calls, basically Sierra or another speculator, they basically own the rights to it, and they can sell it from me at any time. So I just wait a month or whatever timeline that I decide to sell those calls on.

Andy Rosen: Got it. Maybe you folks have met before, even without knowing.

Sierra Smith: Probably.

Michael Sincere: Absolutely. I hope you enjoyed those calls I made and bought today.

Sierra Smith: I did.

Michael Sincere: Thanks.

Andy Rosen: Let’s go back and hear a little bit about each of you with your origin stories. Maybe start with Sierra. How old were you when you started trading? What made you start? Tell me a little bit about how you got into it.

Sierra Smith: I started trading when I was 18 years old. After I had graduated high school, I had a friend, and he had posted on social media, he had bought his dream car at 18. And I’m like, what? We just graduated high school, so it doesn’t make sense for you to be buying your dream car at that age, or so I thought. And so I asked him, I was like, “What do you do? How did you buy that car?” And he told me that he traded options. And I’m like, hmm. I’ve never heard about options trading before, all I knew was I can buy a stock if I so wanted to.

And so he taught me how to trade options. And then from there I just started trading. I spent a lot of time looking at charts. I’ve just fallen in love with trading. I’ve just been trading, I would say I trade at least four out of five days of the week, even now.

And it’s just because now I think my shift with trading has focused from not trying to trade to survive and make a living and provide for myself, but now it’s just trading just to make some income. And just because I love trading, I really do love what I do. I’m really passionate about it. Because I think when people hear trading, they have a whole negative stigma around it. Or when it comes to financial stuff in general, people get leery. No matter what it is, whether it’s trading or investing or whether it’s buying something off the street, people get a little leery when it comes to putting their money in certain places. I just think being able to de-stigmatize trading as a whole is something that I love to be able to do.

Andy Rosen: You talk about how you love it. What makes you love it? And do you love it every day? There can’t be all sunshine and rainbows, can it?

Sierra Smith: In the beginning, it’s definitely not all sunshine or rainbows. When you make mistakes in trading, those are very expensive mistakes that you are making. Especially when you’re doing day trading with options, it’s very volatile, especially the way that I trade. So it’s very much high risk, high reward.

Obviously, the days that I win, I’m having a great day. I love it then. But obviously those losing days are really hard. After you get more comfortable trading, you realize how to take losses with a grain of salt. Those larger losses, those hurt. But when it comes to options trading, you just have to build up a sort of mental fortitude, especially if you trade the way that I do. While I do agree, there are definitely less riskier ways to trade, that’s just how I personally do it. Because like I said, I’m 20 and I like to make risks. It works for me.

Andy Rosen: Got it. I’m 39 and I use a robo-advisor.

Michael, I know you’ve done a lot of research and writing about various aspects of navigating the financial world, but you’ve done some specific research into the world of day trading. I was wondering if you could give a really quick Cliff’s Notes about how this became a normal part of the financial world. It wasn’t too long ago that regular people could not just log onto their computer and trade stocks on their own. You would’ve had to go through a lot more hoops than you can do now. Can you talk just a little bit about the history and maybe you can segue into how you became acquainted with it?

Michael Sincere: Well, the history goes back to the ’90s, when I was beginning as well. All of a sudden I discovered trading. And I think it started with Netscape, which I think went up an unbelievable amount of money in one day because of something called the internet, which was suddenly discovered. Before, if you were day trading or any kind of trading, it would cost you as much as $100 per trade. And once the internet came and these companies started switching to online trading, it went from $100 per trade to maybe $20 a trade. And as you know, now it’s pretty much free. But that’s when I got involved.

And in the ’90s, the day trading was unbelievable. It seemed like any stock you bought related to internet, you could make $20,000, $30,000 a day. And that’s when it really got really popular. Unfortunately, it all came to a screeching halt when the market, I think it was around 2000, when it all crashed. And all the day traders started losing money. All their money.

I was on these websites and I saw them just panicked as they … I’m trying to think of some of the stocks they bought, but many blew up, like Pets.com and all these others. And people got sick of day trading for many years. The majority did.

And then now it’s made a resurgence again, or at least it did over the last few years. And so Sierra, what she’s doing is it’s, as she said, high risk, high reward. It’s intense. You have to sit, be in front of the computer all the time. And day trading options is even more speculative. And I wrote books on options and on day trading. But when you combine day trading with options, the way options work, they can switch in a minute. You could be up and then the next minute you could be down. I have a lot of respect for anyone who can book a profit.

For me, I was trying all types of trading and decided to write books about it. Because I made so many mistakes, lost so much money at first, and so I was trying to help other people. And that’s when I both wrote books on day trading and options. I think I wrote about eight books on both.

Andy Rosen: I did want to ask, both of you in different ways have made part of your living out of talking about trading, and talking about the financial world with people. And I think this is true of a lot of people who get into this world. There is this content aspect to it. Tell me why you think the public-facing aspect of it seems to be important to a lot of traders, from the influencers to the authors.

Sierra Smith: I know from my experience, I can say I recently started utilizing social media to talk about trading. And so I had made a TikTok about it online, and it blew up and it went viral. And so many people were like, “Oh, I’m super interested in trading, and I would love to learn.” And for the first time in two years I was like, you know what? Maybe I will start teaching. Because I’ve never wanted to teach people about trading. I just would do it by myself and go on about my day. But I think when it comes to the social media aspect of trading, I think people have to see that it works for other people. They have to see how it works, why it works, in order to want to get into it. Because everybody knows you can buy and sell stocks, but no one really knows how profitable it could be or what that looks like on a day-to-day basis. I think the social media projection of it really helps bring people into the trading industry, if you want to call it that.

Sean Pyles: I saw on one of your — I think it was a TikTok video that you made — I saw you talking about how there’s a lot of people on social media that will tell you, “Oh, I did these three trades that I made this amount of money,” and you were warning people it’s not that simple.

Sierra Smith: Yeah.

Sean Pyles: What do you think are some of the pitfalls of social media based investing?

Sierra Smith: I think one of the pitfalls of it is everybody wants to make trading seem like it’s perfect. And then people always want to post what they’ve made in their profits, but they won’t talk about their losses or they won’t talk about what they put in.

I know as far as options goes, it’s a lot about percentage. That’s how I see it. For example, if I tell you guys that I’ve made $10,000 in a day, it’s not because I turned $10 into $10,000. It’s usually because, OK, I made a put at 40, it made 25% on that trade.

I think the pitfall, the major pitfall when it comes to trading and social media, is that people don’t advertise the entirety of what it is. And a lot of people end up getting into trading thinking that they’re going to turn $50 into $5,000 in two days, and that’s just not realistic.

Andy Rosen: Michael, obviously you’re maybe not as active on social, but you’ve done quite a lot of content around these kinds of activities. What’s your perspective on it?

Michael Sincere: Well, first of all, by writing these books I was able to speak to some of the best traders and investors in the world, like Peter Lynch, Mark D. Cook, who passed away. But Mark D. Cook was one of the top option traders in the world, and was successful for many, many years. I used to interview him all the time and he became a friend, so I learned a lot from him. And it took him five years to become successful. It was very difficult those first five years, and he wanted to give up many times trading options. But then he found his system.

And what I learned from him, and my own experience, is it’s really the emotion that gets everybody. It’s really the discipline and emotion. Everyone talks about the discipline, but they don’t really know what it means until they start trading. And what I mean is you’re in a losing trade and you’re ready to lose $10,000. And you have to figure out very quickly whether you close the trade, whether you add more to it, whether you hold, and these are lightning-fast decisions that really hurt a lot of people.

I’m sure Sierra’s gone through this many times. I’ve found from my experience, it’s very difficult. Beginners have high expectations about how easy it is to make money, as Sierra said. But it does take a long time to find your own style. And trading’s not for everybody, too.

And some of the pitfalls I’ve found is, one, a lot of people turn from trading to gambling. It’s very easy to do. You think you’re trading, you’re following everything, but you’re betting way too much money on a trade. Which means, yes, you can make $100,000, but you also could lose that exact same amount if you’re not careful. Which is why I tell people the number one rule is to trade small, especially when you’re beginning. Do not try to make $100,000 in one day, try to make a few hundred. If you can do that consistently over a long period of time, then you may have a shot at it. But if you come in there trying to make big, big bucks, nine out of 10 are going to blow up their account, in my opinion.

Sierra Smith: Yeah, I’m definitely seeing more people fail than succeed when it comes to starting out in trading, and that’s just because so many people think trading is going to be so easy. A lot of people don’t exercise proper risk management, which is something that anybody that’s been trading for a while will tell you to exercise.

Or the way somebody with a larger account size trades is entirely different in the way somebody with a smaller account size trades. For me, I have a larger account size, so I can put tens of thousands of dollars into a trade and be OK with it with the way that I trade. But the strategy that I use may not work for somebody who only has $500 in their account. And so I think a lot of people just assume that you can just make all this money overnight, and they end up just getting so discouraged beyond trading. Which sucks, because trading for me obviously has changed my life, and I think there’s so many good and positives to it, but I just don’t think people are really fully educated on what trading really is.

Andy Rosen: I do want to get back to some things that might help those beginner level people who just know this term and want to get a sense of it. Michael, if you would be willing, could you just tell us a little bit more about how you moved off of day trading? You talked a little bit just about the lifestyle and why it didn’t work for you, but just a little more detail on how your views evolved would be awesome.

Michael Sincere: I kept coming back to the fact that the strategy that worked again and again — and I used to have long conversations with John Bogle as well, who was the father of indexing — and I found out that over and over I was making more money on a longer-term basis just by buying and holding these index funds. At the same time, I was trying to make fast money using the strategies Sierra’s using, like momentum trading. And I actually did do option trading with momentum. I found it extremely stressful. I found out I had to devote entire days to it. I tried to get out by noon. That was my goal each day, get in at the open, ride it and then get out. And yes, on the good days, I’d make pretty good money. I’d make $10,000 on good days. Once I made $30,000 and I was riding high. Three days later, I believe, I lost it all.

I found out after about a year of this, it was not for me. You have to know your own personality. And I found, for my personality, I couldn’t take the stress of it every day. And so I pretty much stopped day trading, and I wrote books on helping people manage the risk part of it. Anyone can learn about the technical aspects of it, like the charting and the indicators, but it’s the emotions that are the difficult part to manage. That’s what really ruins most people. I emotionally did not have what it takes to be a professional day trader, especially a momentum trader. And I saw that it was easy to blow up my account. And some days I’d blow up that day or that week, and I got out of it.

Andy Rosen: Sierra, it must also take nerves of steel to stop after a couple minutes. If you’re doing well, it’s probably tempting to say, oh, I could get more. Right? It seems like one of the things you’re describing is managing that and knowing when to stop. I would love to hear either one of you talk about when to stop. When it’s time to stop, whether you’re having a good day or a bad day. When it’s prudent to take a deep breath.

Sierra Smith: One thing I always tell my students is that when it comes to day trading, green is green. It doesn’t matter if you made $500 or $5. Because I promise if you saw $5 on the ground, you would pick it up. I think I have lost so much money in the markets just holding out on trades and just like, hey, you know what? It’s going up. I could hold this out for five more minutes, 10 more minutes, and then it ends up reversing back down against my trend. And the minute that I see I’m in profit enough that I’m happy with, I will end my trade. And I think the reason why I trade like that, again, is because I’m at a point where it’s not like I’m trading trying to compound my account and secure my lifestyle.

That’s all said and done now. I feel like now my trade’s very relaxed. It’s just get in, get out, make something for today, and then go on about my day. That’s why I’m OK with just being in trades for a few minutes. Sometimes I will exit a trade and then the stock will run three more dollars and I’m like, man, I could have made so much money. But as long as I left with something, I’m good.

Andy Rosen: And what about on a bad day? There’s got to be a temptation to chase a loss to try to get it back. How do you manage that?

Sierra Smith: I have trading rules, actually. I have personal rules for me when it comes to trading. If I take a loss, I’m just going to be done for the day. Honestly, I could have a risk or a probability of being able to make that back, but I would rather take one loss than take two losses or three losses trying to keep revenge trading and get that back. Lost a lot of money doing that also. I’ll no longer be doing that when it comes to trading. I just think when you take a loss, you have to make sure that you don’t let your losses lose that battle, if that makes sense. Obviously you have to have a stop loss and proper risk management, so that way it’s not like when you do lose, you’re losing your entire account size every single time.

Andy Rosen: Tell me, if there are listeners out there who are thinking, this sounds fun, this is something I might be interested in, I would like to try it out, where do you recommend people start? What’s the first step someone should take? Thinking of someone who might not even have a brokerage account and just wants to figure out if day trading is something they could ever do.

Sierra Smith: I think people who want to start, should start with not by learning anything about brokerage accounts or charting or anything, I think they just need to learn what trading is and what trading is not. Because I know a lot of people want to start when they hear how much money that people have made, but they have to understand what trading is. What trading really is and what it isn’t.

And then after that, I say people need to start with just looking at charts and just seeing if they can find some that make sense to them. And the biggest thing that helped me learn how to trade was having somebody who walked through it with me. Because you have to know what type of learner you are. Some people can read books on options training and learn. Some people watch videos, some people need one-on-ones with people. So just figuring out how you learn and using that and applying that to the trading world.

Andy Rosen: Michael, what do you think?

Michael Sincere: I think that people should, again, as I said, start small. I think if they know nothing about the market at all, they should start with opening up an account, starting with index funds or mutual funds. Start at that level. They really need to understand the stock market first. If you want to become a day trader of stocks, do a small amount, open up. But you have to start with the brokerage account, you have to learn the different aspects. And that means learning about the indicators and learning there’s a lot to the market that a lot of people don’t know.

Now, eventually, if you want to trade options, you should first start by learning the different aspects of options. There are great books on trading and on investing with options. But again, there’s no rush. If you’re coming in trying to make big money fast, that may not turn out so well. Basically, become a student of the market.

Andy Rosen: Both of you. Thank you so much for coming onto the show and telling us about your perspectives. Thank you so much.

Michael Sincere: Thank you.

Sierra Smith: You are so welcome. Thanks for having me.

Sean Pyles: Hey, Andy, I’ve got to tell you, I am pretty torn after hearing that conversation. Sierra seems to be living a super cool and successful life at such a young age. And there’s part of me that wants that, but there’s another much more rational part of me that knows that it’s just not realistic.

You hear about all the money she’s made, and it can be easy to forget that the vast majority of day traders lose money. I really view Sierra’s narrative as a cautionary tale, maybe, for her followers online more than for Sierra herself, because people might view her TikToks or courses, or those of another day trader, and think that this is a secret path to instant wealth, but it’s really not. Again, in all likelihood, you’re going to lose money if you do what Sierra does.

Andy Rosen: Sean, I think I have to agree. Obviously, Sierra does seem to be living a super cool life. She seems to be having a really good time, and that’s her life. And a lot of people have tried this and had very different results. And so, yeah, you might wind up like her and you might envy her, but on the other hand, you could wind up like the majority of traders and not get the kind of results you’re looking for, or wind up losing something that’s important to you.

You may be able to improve your chances by doing very scrupulous research, paying really close attention to your investments and how they’re performing moment to moment. But on the other hand, your research may lead you, as it seems to have done Sean, to the conclusion that this investing style isn’t for you. Maybe you don’t even have the time for it. And many people spend hours doing this every day and still lose money. As we said before, those are not the people you tend to see promoting their trade as much as the winners do.

Sean Pyles: No, and that’s why at the end of the day I know that I’m much more of a Michael than a Sierra. I love to do some research and have a solid understanding of what I’m going to be doing with my investment strategy. Plus, like Michael, I do not have the emotional fortitude to weather the big ups and downs that Sierra experiences on a daily or hourly basis.

All right, well Andy, how about a preview of what’s coming up in episode three of this series? Are we going to Vegas?

Andy Rosen: Well, some people would say we are, because we’re talking about options trading, short selling, derivatives, and contracts, all of which can have huge upsides and huge downsides. But they’re also very important in the market, so it’s worth hearing how they work, who might want to include them as part of a diversified portfolio, and how to know when it’s time to leave it to the pros.

Sam Taube: The risk and reward tends to be a lot higher than with just stock ownership. Because generally, with derivatives trading, you’re either going to get a big payout, double your money or something like that, or you’re going to lose everything you invested in a particular contract.

Sean Pyles: For now, that is all we have for this episode. If you have a money question of your own about investing or anything else, turn to the Nerds and call or text us on the Nerd hotline at 901-730-6373. That’s 901-730-NERD. You can also email us at [email protected]. Visit nerdwallet.com/podcast for more info on this episode. And remember to follow, rate and review us wherever you’re getting this podcast.

Andy Rosen: This episode was produced by Tess Vigeland and me, Andy Rosen. Sean and Liz Weston helped with editing. Chris Davis helped with the fact-checking. Kaely Monahan mixed our audio. And a big thank you to the folks on the NerdWallet copy desk for all their help.

Sean Pyles: Here’s our brief disclaimer one last time. We are not financial or investment advisors. This Nerdy info is provided for general educational and entertainment purposes, and may not apply to your specific circumstances. And with that said, until next time, turn to the Nerds.

Source: nerdwallet.com

Why Financial Advice is Crucial for Young Adults

What is the best saving advice for young adults?

Best Financial Advice for Young Adults

1. Create a Budget

2. Manage Your Debt

3. Invest Wisely

4. Educate Yourself about Savings and Investment Accounts

5. Limit Your Expenses

6. Build Passive Income Streams

7. Create a Cash Reserve

8. Learn About Taxes

9. Consider a Term Life Insurance Policy

10. Take Action and Stay With It

FAQ

Use These Personal Financial Tips for Young Adults

Take this Advice about Money

Purpose and Importance

EXPERT TIP:

How Passive Income Works

Table of Contents

Sources of Passive Income

Automation and Minimal Active Involvement

Tax Considerations

Active vs Passive Income

What is Active Income?

Passive Income Contrasted to Active Income

Comparison and Significance

Benefits/Advantages/Pros of Passive Income

Financial Independence

Flexibility and Freedom

Diversification of Income Streams

Potential Long-Term Growth

Drawbacks/Disadvantages/Challenges/Limitations/Cons of Passive Income

Potential Risk and Volatility

High Initial Investments or Skills Required

Regulatory and Compliance Challenges

Maintenance Requirements

Building a Passive Income Portfolio

Choosing the Right Passive Income Streams

Strategies and Planning

Monitoring and Adjustments

The Bottom Line – Passive Income Explained

FAQs – What is Passive Income?

About the Author

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My First Apartment Mistakes

Big Items for Your First Apartment Checklist

1. Mattress

2. Bed Frame & Headboard

3. Couch

4. End Tables and Lamps

5. Dining Room Table

6. Kitchenware

7. Patio Furniture

8. Grill

9. Storage Items

10. Decor

How do I prepare for my first apartment?

First Apartment Checklist for Bedroom

First Apartment Checklist for Kitchen

First Apartment Checklist for Living Room

Technology for Your First Apartment

First Apartment Checklist for Bathroom

Cleaning Your First Apartment

Things you need for an apartment that you wouldn’t think of

Renter’s insurance is instrumental for various reasons

How do I budget for my first apartment?

Step 1: Make a Budget

Step 2: Save Money

Step 3: Start a Side Hustle

First Apartment Tips

1. Make a list of apartment essentials

2. Consider your budget

3. Research apartments

4. Check apartment listings for features and amenities

5. Think about the size and layout of the apartment

6. Look for apartments with good security

7. Make sure you get a good deal