The Passive Income Lie: Our Cuppa Joe Discussion

The concept of “work hard now so I can play later” bothers me. I like to play, and I don’t want to wait until later.

Luckily, my work = my play.

This is the way life is for me. Hard work is the journey and the destination.

That’s why I get so frustrated when I hear people say “I’m going to work really hard now so that I can sit back and relax later.”

They’re going to build up a truly passive income stream.

In this statement, it would seem that completely passive = perfect purpose.

What? Does that ever happen? And if it does happen, how often do you hear “This is exactly what I wanted! To sit here with nothing to do….”


My Story


Early in my career as a financial advisor, I was told the business was all about building a base of assets. This is a financial advisor’s version of passive income. Management would tell me, “bring on a ton of new clients now and roll over their money. Later on, that pile of cash will be making so much money for you that you won’t have to work hard.” It made sense. If could build my assets under management to $100M dollars and earn half a percent personally, I’d bring home $500k per year.



The Truth


I grew my practice to about $40M under management before I realized that this idea of working hard now so I could have fun later was a lie. ….at least for me.

First, as my practice grew, I attracted more demanding clients. It’s the same if you own rental houses or dividend stocks, isn’t it? As you grow the portfolio, you are pulled in more directions with your time managing assets. Decisions get more difficult. Strategies become more complex.

Every once in awhile, I’d try to take time off. The longest I could get away was two weeks, and by the end of the trip I usually was working about an hour and a half a day. My business demanded my time. How was I going to sit back and do nothing?

Second, I liked what I was doing. It was fun talking to my clients about their dreams. If I owned rental properties, I’d like to fix them up and receive rents. I own dividend stocks and like following the companies and diversifying the portfolio. When I step away, it demands that I continue to work, but it’s also fun.

In short, I’m starting to believe that the whole idea of work hard now/play later is a lie. Sure, I might work less hard. I also might delegate more of the tasks which aren’t my core activities, but I will never, ever stop working.

In fact, I’ve found proof that I probably don’t want to stop.


State of Flow


I first heard of the book Flow, by Mihaly Csikszentmihalyi (easy for you to say) during a USA Today interview with Jimmy Johnson, Super Bowl and NCAA National Championship winning coach. He was hot on this philosophy and had a history of professional success, so I went out and bought the book immediately.

It confirmed my suspicions about the meaning of life.

In the book, Csikszentmihalyi seeks to define what “optimal experience” is for a person. When are we in that state where we’re at one with the universe?

He asks–have you ever set out to accomplish a task and then lost track of time because you were so absorbed in it? He describes that perfect union of task and complete concentration as flow. This complete focus, to Csikszentmihalyi, is the optimal experience for a human.

He backs it up by studying people who play classical instruments. Their chances of becoming wealthy or famous are nearly zero, but they’ll practice for hours on end. Why? They crave the state of flow, where everything is working perfectly in harmony together.

There’s no promise that they’ll be rewarded down the line with riches. But they’re attracted to the work anyway. They’ll practice until their fingers bleed.

Do these people just not get it? Shouldn’t they be working hard at things that will make them money today so they can throw out that stupid instrument? I don’t think so.

I think the idea of sitting around is overrated.

Life is about chasing flow. Working so perfectly that you’re completely absorbed, using all of your energy to be the best you can.


Maybe you agree and maybe you don’t.


That’s what the cuppa Joe discussion are all about….grabbing some coffee and arguing a point.

Maybe the concept of passive income is cool if you hate your job. You want to grow your income in a way that you can work at those things you enjoy rather than those you’re forced to do to bring home the bacon.

I can see tha desire to have multiple income streams. What I can’t imagine is any discussion where I’m working hard now so I don’t work later. I don’t crave completely passive income because I’m pretty sure it’s unattainable.

The idea of my money working for me as I’m also working fires me up. The phrase “don’t work” literally doesn’t work for me.

How about for you? Let’s wrestle this out in the comment section.

(photos: Coffee Shop by dailylifeofmojo, Flickr; Immaculata Symphony by Jim Capaldi, Flickr)

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Author: Average Joe

A 16 year veteran of the financial planning and financial media circus. Lover of hamburgers and ice cream.

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    • That was exactly what I was going to say. I’ve found that when I work hard and do a great job (finish early and under budget), my boss only gives me more work! And with that more work, I don’t get paid more. Work and play should both happen now.

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      • I hadn’t even considered the boss man, TB! That’s a great point.

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  1. I’m with you 100% and in-fact I’m a financial advisor as well. I used to HATE my old jobs, but I pursued a job as an advisor/coach because I thought I’d love it. That’s proven to be correct.

    I don’t have the desire to eventually sit back and do nothing. I personally think you’d get bored out of your mind and it’s proven that people in retirement that “do nothing” die younger.

    My only issue is that I have to work a lot of nights. So building some sort of passive income stream will allow me to dictate my hours and not have to consistently pursue new clients. I’m not saying I wouldn’t ever have to work nights, but instead of working 4-5 nights a week, I could work 1 or 2 at the most.
    WorkSaveLive recently posted..Begginer Blogger Challenge – Q&AMy Profile

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  2. We were working on a post to say the exact same thing. The blug-0-sphere, especially the young ones, is so focused on saving every last penny and racing to their “cross-over” point. For what? Where is the balance? What if someone was racing to whatever goal they had, putting off vacations, working extra jobs and not seeing their family and they suddenly die right before they make it to the end? Do they die happy? We don’t know. If that was me, I certainly wouldn’t be happy and dead.

    Personally, I would much rather be a SAHM to spend time with my kids than become financially independent. And I would rather have a nice vacation than save an extra couple grand (or more!) this year. These are the things which are important to us. If eating tuna fish out of the can and wonder bread is your big splurge and that makes YOU happy, by all means you are the man/woman! But, save for and do the things which make you happy.

    We’re not saying to max out the credit cards or abandon all saving, but to find a balance. So, if you kick the bucket tomorrow, you don’t leave a bunch of regrets and “I wish I hads…” on the table.
    Bichon Frise recently posted..Roth IRA = Traditional IRA, a case for thoughtful Roth considerationMy Profile

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    • @Bichon Frise – I have to say that I completely agree with your comment. I have been blogging for around 5 weeks and one of the first things that I noticed were all the really young folks talking about saving every last penny. My thoughts were exactly like yours – what if you died tomorrow?

      Some people may live well into their 80s or 90s and appreciate that they have a nice some of money to live off of. But some people die much earlier than that, and if all you ever do is work and save money, what kind of life have you really had? As you say, the key is to find a good balance.

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  3. Although work is not exactly a worship for me still, I like my work and love to continue for as long as I can. Unfortunately current situation do not let me have a lot of play time but a simple internal switch can let me that too, I guess. But yes. its important to enjoy llife along with working your b.. off.
    SB @ FPR recently posted..Capital One InterestPlus Savings Account ReviewMy Profile

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  4. Well, considering my retirement goal is to then open my own non-profit dog rescue, I’m pretty certain I will also never be happy if I’m not doing something.
    In fact, thinking about it, I’d better get all my traveling in now, while I’m still “working”, because we certainly won’t be able to jet off when we have that many animals depending on us.
    I like what I do, and don’t see myself leaving my field until I retire (in 30 years or so). It actually really gets on my nerves to see all the people who push passive income as the only way to build wealth or have a quality life.
    shanendoah@the dog ate my wallet recently posted..The Financial Side of our Decision to AdoptMy Profile

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  5. I don’t think such a thing as totally passive income exists. There will always need to me a form of management. Definitely agree that you need to be doing something you truly enjoy, even if it’s not for the money.

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    • Moneycone, you go and ruin my happy-feelie post with some good, practical advice? Come on, man….

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  6. I am privileged to talk to people/patients/clients (whatever the ‘in’ word is these days) daily and have for 27 years. I have many who are happily working in their 70′s, most of whom have jobs that they can dictate their hours somewhat. They tried the “retired” thingey and it didn’t work for them. Being home 24/7 with their husbands wasn’t the life they were looking for.

    (how do you get two week vacations, I’ve NEVER been gone from my practice longer than a week????)
    Dr Dean recently posted..Killer Jobs: Do You Have One?My Profile

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    • Three words: ten year anniversary.

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  7. What jumps out for me is State of Flow.

    I have worked on projects in my life time where I was so into what I was doing and getting them done that I did completely lose track of time.

    I also found that it completely took my mind off of everything else, including any thing that I normally worry about.

    The second thing that I find (and it could be to my disadvantage) is that when I am in a state of flow and loving my work I tend to forget to keep track of my hours or I just completely do projects for free because I love the work so much.

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    • It sounds like this book will resonate with you as much as it did with me. Luckily, it’s a thin book and actually isn’t a difficult book even though the author is clearly an academic.

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  8. job satisfaction is pretty huge for me, when it comes to overall happiness. if i am miserable at work, it can be hard for me to set it aside when i get home.. but i certainly do try..

    i don’t think i could stay at a job i hated for too long.. there are things about my job right now that are certainly not ideal.. and i am working on changing those things. and if they don’t work out, there are plenty of other fishing boats in the sea..
    jefferson recently posted..I Made Some Cash- Volume 4; Coffee TalkMy Profile

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  9. Great post! I’m still lazy enough to work on something now so it doesn’t have to be done the hard way later, but it no longer sounds good to put yourself through something you really don’t care for at all just so you can stop doing it later.

    A lot of the big goals that are attractive to us when we’re young seem to fall into the later category. Spending all your time living a life you don’t want is just as much of a mistake as thinking that low-yielding investments are “safer” when you need to accumulate a large portfolio.

    For those who manage a business or a practice it’s even harder because you can easily grow your income faster but that often means choices you don’t like and might eventually drive you away from the work. It’s hard to say no but if you do things the way that works for you it’s still possible to do very well over time and you’ll have more energy to take it further.
    Value Indexer recently posted..Look Out For Falling Stocks!My Profile

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  10. Insightful post! I don’t know if I think it is a lie. I guess it is about teaching people delayed gratification, which seems to be lost in our society. However, I will say that I’m a big fan of celebrating all the way along. The scale may change, but that doesn’t mean you shouldn’t be acknowledging your progress and the fact that you are a part of very cool process.
    Roshawn @ Watson Inc recently posted..Is it Better To Be Frugal or Earn More?My Profile

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  11. That happy retired couple walking on the beach with rolled-up pants is just good marketing. In reality, they’re fighting over the TV remote in some retirement condo.

    Interesting concept, flow. I don’t even notice the hours speed by as I work in the garden. But much like being a musician, gardening (farming) pays crap.

    I’m heading off for a two-week vacation as well. First in 10 years.
    101 Centavos recently posted..Travel Notes: Just Say Ahn-Nyeong Hah-Seh-Yo and Kon’nichi WaMy Profile

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    • Two weeks! Enjoy the break, 101!

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  12. Everybody starts out with this plan. Usually, you have to be really old before you stash enough away to live off of passive income. Life is long, and what you do every day to make money is . . . most of your life. Is being miserable in a job worth messing up a big chunk of your time on this mortal coil?
    Astro Gremlin recently posted..The Real Swiss Army KnifeMy Profile

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  13. The journey really is the reward, wouldn’t you say?

    I’ve had a great time growing FS and Yakezie, but it hasn’t all been milk and cupcakes. The struggle and the oopsies make everything more fun.

    After all, we live in America, not Kabul, where everything is pretty hunky dory!

    When you want to do the interview? I’m around next week.

    Financial Samurai recently posted..Refinance Your Mortgage BEFORE Leaving Your Job PleaseMy Profile

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