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Jun 10 2021

Passive Income is My Superpower

Shirt open showing Superman-stylized $ symbol

“Yeah, I know, you can do all these amazing things and sometimes you feel like you will just go bust unless you can tell people about them.”
– Jonathan Kent, Superman (1978)

One of the coolest things about having passive income is that I feel like I have a superpower or at least a rare ability that very few people possess. Passive income is beyond most people’s mental radar, thanks to society’s conditioning. Far too many people think that one has to be rich to be an investor or that passive income is reserved only for the rich, both of which are completely wrong of course.

When most people think of passive income, the first thing that comes to mind is bank interest. Back in the days of 5% interest savings accounts, that was a good option as it didn’t risk the principal. But that’s in the past and one has to think “outside the box” (gawd I hate using that cliché) to make decent returns. Beginning in 2008, I took a more risky route and built a stream of income that doesn’t come from trading one’s time. An unexpected result is that sometimes I do feel like some alien or mutant that’s capable of performing unusual feats (well, at least feats that can be accomplished with money).

So what kind of “superpowers” does passive income grant? Let’s see what those are…

Strength
When one’s sole source of income is a paycheck, financial strength is measured by one’s annual wage, but when one’s wage is augmented with a passive income stream then that’s akin to wearing a powered armor suit. I have the capability to do things that cannot be done when relying solely on a single source of income. With a secondary source of income, I have more options and it raises the limit of how much I can financially bench press.

Bullet-Proof
With passive income, not only can I do more, I’m also less vulnerable to the financial bullets that life can randomly shoot. For example, when one is laid off or fired and the bi-weekly paychecks abruptly stop coming into one’s checking account. This would be a serious financial wound, to say the least, as most people (especially those living paycheck to paycheck) in this situation would immediately scramble to find a job, any job, to staunch the bleeding from their emergency savings account (IF they even have any savings, which most Americans have little or none of). With my dividend investing portfolio, I have enough cash flow to cover nearly half my monthly expenses, which helps stretch my savings. Unlike my tax deferred 401(K) and traditional IRA, my dividend investing portfolio is liquid so I could sell off some stocks to cover expenses. Of course, this would slowly reduce my dividend income, so selling off assets isn’t something I like doing unless the situation requires it.

Mental Power
While doing investing and making passive income doesn’t grant me a super-human intellect or mental powers such as telepathy or telekinesis, it does let me build my mental powers of diligence, patience, and perseverance. Examples of these powers include doing careful research into companies or funds before investing (diligence), playing the long game and not worrying about the market’s ups and downs (patience), and the ability to keep one’s cool while everybody is losing theirs during a correction or market crash (perseverance). Financial self-discipline is certainly an uncommon ability and it is required for any degree of success as an investor.

While these superpowers are great to have, there are downsides.

Like a comic book superhero, I feel like I’m living a double-life when I limit the number of people who know about my uncommon ability to make money without trading my time. Not for their protection from my enemies, but for the sake of my privacy and the fact that my financial state is nobody’s business but my own. Also, talking money is usually considered crass (especially among friends and co-workers) so people generally keep mum about their personal finances. Sure, folks discuss things like the hot stock tip, the rising or dropping stock market, real estate valuations, the company’s annual bonus, etc. But when personal finance talk gets a bit too personal and/or specific, people usually clam up and keep their cards close to their chest. The number of people in my social circle who know about my dividend investing and this blog are limited to my wife, a few in-laws, a couple friends, and only a few trusted colleagues.

It has been my experience that a second source of income, whether from having one’s money make more money or having a paying side hustle, seems to be an almost foreign concept to many people. Whenever I have brought up the idea of having a second income stream with co-workers, most believe “second income” means “second job.” I understand where they’re coming from, because I once thought the same way myself. Investing isn’t seen as sexy because it’s slow and rather abstract to most minds. Americans are so heavily conditioned by the media, movies, and their peers to think that money=job, investors and entrepreneurs are magical beings, and that achieving wealth is an event not a process.

Keeping my dividend investing and passive income on the down low may be necessary but I really wish I could be more open about it. I would love to share my knowledge and results with those around me, inspire others, and let them know that non-trivial passive income CAN be done. While my story is ongoing and I’m far from attaining financial independence, I have achieved greater financial strength and resilience from my modest dividend income.

Image Credit: tom_bullock (flicker.com)

 

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