On the topic of earning a high return on my investments, I’m reminded that tomorrow is my favorite fake holiday: National Lazy Day!
You see, some of the productivity hacks that come from spurts of laziness are the ability to refocus, recharge, and tap into new ideas that your brain couldn’t access when it was too foggy with the day-to-day noise. Just ask Zoe, my laziness coach.
But in addition to the mental health benefits, laziness can boost our finances, too.
Like I explain in the About page of my blog, the first two stages of HOMO are active, which I why I chose the verbs “Hustle” and “Own.” Then, once you cross the threshold known as CoastFI, your investments hit the point of generating more passive growth from compound interest than you can add to it each year with the money you actively add yourself. That’s why the last two stages of my HOMO lifestyle are no longer active verbs, but passive nouns: “Money” and “Opulence.”
And in the spirit of passive set-it-and-forget-it investing, below is a list of investments I’ve heard mentioned while following the strategies of millionaires and the FIRE community. Some of these are tied to the market, while others offer alternative routes.
So, girl… stop stressing trying to beat the market with individual stock picks. Just sit back, relax, and let your money work for you.
Are you ready for explosive market returns? Here’s some options to quench your thirst, most of which will reportedly average the annual growth of a hefty 8% or more…
Instead of dealing with tenants and toilets, you can buy into crowdfunded real estate developments. Crowdfunding means that the online community pools their money together, similar to websites like Kickstarter and GoFundMe. I hear Fundrise mentioned from time to time in the portfolios of interviewees on the Millionaires Unveiled podcast. According to a review by NerdWallet, this private real estate investment website has provided annual returns between 8.76% and 12.42% from 2014 to 2019. The word of caution is that your money will be illiquid (i.e. locked up tighter than a chastity belt, probably for several years, while the real estate project is being developed). And also, you need to research the projects you choose to invest in, which means you still carry some of the risk. So, I guess it’s not totally passive. Fundrise was named the favorite of its class for non-accredited investors (people who earn less than $200,000/year) by blogger Financial Samurai.
CrowdStreet is a similar business model to Fundrise, except this option is for the heavy hitter investors. To play in this ballpark, you need to be an accredited investor (earning at least $200,000/year or $300,000 for joint income). According a review of CrowdStreet, investor money with this site is held an average of 2.3 years and $25,000 is the investment minimum.
PeerStreet handles crowdfunded hard money loans for real estate developers who need short-term financing for a few months to a year until they’re finished with a remodel. “Hard money” means the cash needs to available to pay contractors helping with the remodel, and because they can be riskier terms than the banks will want to loan on, the investor can earn a much higher interest rate than a traditional mortgage would charge. Then, after the remodel is finished, the RE developers can refinance into a traditional loan with a lower interest rate. I like this investment option over a peer-to-peer lending website like LendingTree. The reason: with a peer-to-peer loan with LendingTree, if the borrower defaults on the loan, you as the lender are at a loss. PeerStreet is different. If the real estate developer defaults on a hard money loan, that’s actually a best-case scenario, because the lenders (you and the others investing in the hard money loan) would seize the property as collateral and likely make even more money in the deal. Here’s a review of PeerStreet if you want to do more research on this option.
Reliant Shares (12%)
I heard Reliant Shares described on a podcast interview as a life insurance settlements secondary market. According to their website, Warren Buffet is moving into this type of investment to diversify his portfolio with an asset class that will not be tied to any downturns in the market. Note: the 12% average return is based on a study from 2001-2011 which they cite on their website. I didn’t find any other third party or more recent reports of the average returns that can be expected.
This is the go-to passive index fund of the FIRE community. VTSAX tracks the most profitable companies of the S&P 500 and has averaged 8% since inception (and much more within the last few years… obvi). Even though you need a $3,000 minimum investment to get started, I prefer index funds over ETFs because you can have your money automatically deposits directly into the index fund each month from your checking account without needing to manually log in and transfer it yourself… Deliciously passive! At the time of writing this, I would personally not dump a lot of my money into VTSAX, but I do like the idea of starting regular contributions in order to get the ball rolling with dollar cost averaging. In fact, earlier this month I started $500/month contributions into VTSAX which are held within a Roth IRA.
This index fund is very similar to VTSAX, except VTWAX peppers in a handful of the most profitable international companies as well. It hasn’t been around long enough to give an accurate average performance, but so far it has trailed just behind VTSAX. As I hear more millionaires talk about wanting to shift their investment portfolio into international holdings, I plan on watching this index fund to see if it gains popularity over time.
On a final note, I plan to proceed cautiously with these 6 options. My plan: to slowly dip my toe in each one when I have extra cash to try them out. And when I’ve entered “the investing pool” and start to see consistent performance over time, I’ll slowly allocate more money toward the options that are working the best for me.
That’s all I got for you this week. I would’ve written more but I got some laziness to get to now. But before I go, I’d love to hear from you if you’ve tried any of the investment options listed above. Leave a comment to this post and tell us what your experience (and returns) have been like with them.