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Ask HN: What was your best passive income in 2016?
779 points by djadmin on Dec 11, 2016 | hide | past | favorite | 678 comments
Any side projects, Game, OSS, Hacks.

Breville coffee grinders are impossible to get internal parts for. I designed a 3D printed upgrade for the main wear-part in their BCG800XL SmartGrinder.

The storefront is through ShapeWays[1] and I use ifixit[2] to drive the traffic. It's passively making ~$425/mo with about 10 minutes of work per week on my end. This all happened because my grinder failed and I couldn't get parts.

[1] https://www.shapeways.com/product/NASLAGCCP/breville-bcg800x...

[2] https://www.ifixit.com/Guide/BCG800XL+Grinder+Jamming+due+to...

> about 10 minutes of work per week on my end.

... and on the guide.

> Sandpaper and a file are likely optional. They are only necessary if the 3D printed impeller isn't a perfect fit.

Do you get any "support" queries from people who buy the impeller and then try to fit it, and it's tight (by your own admission a deliberate design choice) and they try to email you or return the impeller? Not trolling, genuinely curious.

About once per month. I purposely set expectations low by saying it may take a little sanding. That lets me over-deliver since it's usually a perfect fit. Also, ShapeWays has a decent refund policy and customer service for stuff under their responsibility.

Also, anything that comes up that takes significant back and forth with a customer, I immediately add to the iFixit writeup. All the troubleshooting steps at the bottom were a result of questions that came in at the beginning. This was a lot of work up front, but it's thankfully just a trickle now.

> I purposely set expectations low by saying it may take a little sanding. That lets me over-deliver since it's usually a perfect fit.

Wow. This is genius. You should write a click-baity blog post titled "This Weird Trick will always get your products 5-star ratings"

I think "over promise and under deliver" has been part of business for far before any of us were around :)

Or spoken in more buzzword silicon valley speak - you have to set customer expectations and then aim to exceed them.

I think "over promise and under deliver" has been part of business for far before any of us were around :)

Sorry but isn't it 'under-promise and over-deliver'? Just double-checking...

Pretty sure you're right. Or was there some hidden sarcasm we've both missed there?

> "over promise and under deliver"

I've dealt with quite a few vendors who over promise and under deliver...


Is the material used in the part safe to ingest?

I'm an amateur at this part, but I've reason to believe it's fine.

The material is a Nylon plastic. "Polyamide PA 2200" according to ShapeWays. This link[1] has details on the material when used with laser sintering and in regard to contact with food. The key quote is "[...]are in compliance with EU Plastics Directive 2002/72/EC for the use with all types of foods except high alcoholic foodstuffs[...]"

That said, there is a porosity issue with 3D printed parts and consequently dry coffee coats the impeller and sticks to the surface right away. It's a big problem if in contact with dairy, meat, liquids, etc. because it harbors bacteria. For this reason, ShapeWays does not claim to be food-grade. I don't think it matters for dry coffee though. Nevertheless, there's a writeup about this on the storefront so customers can make the call if they care about stale coffee on their impeller or not.

[1] https://www.sculpteo.com/static/0.30.0-49/documents/material...

Was thinking the same. Looks like the original plastic part is destined to be slowly ground and consumed by the user, the printed one will have the same fate.

and what's the original part made from? that's what I'd want to compare.

This is awesome! I have that grinder, but haven't had this issue (yet...). My only issue is that the lowest grind setting isn't quite fine enough for some beans, but with your pictures I think I can actually see where to shove a tiny shim to make that work better too. I'd always intended to do that but hadn't ever gotten around to it.

Honestly, that’s one of the coolest side projects I’ve heard of this year. Kudos!

This is really cool and I'm sure many here would love a longer write up of your process doing this.

That's so cool! I really admire your creativity and the way you turned a problem into a passive income source

Did you post this in /r/coffee? I think I remember seeing something similar.

Not me. I haven't done much to advertise besides iFixit and a post to an ebay forum.

What's the legality of that?

Hmm, it's my own custom design and not a copy of Breville's. The blade geometry is especially different. Is that the angle you were thinking of?

have you attempted to upgrade to an alloy based blade?

Super cool side project.

Metal is too expensive still. Next step is porcelain. I made one prototype so far. It failed because the glazing process "puffed" the surface out of acceptable tolerance. I plan to inversely deform the mesh to compensate for this when I get around to another attempt.

Young hackers who have a surplus of income and have funds to spare that aren't being channeled toward debt / family / donations, heed me: save as much of your salary as you can, and put it in boring investments (index funds / etc), probably through vanguard.com (no affiliation, I just use them and have heard nothing but good things from people I trust). You can pretty easily set up your job's direct-deposit system so that a portion of your salary goes directly into your investments without you ever seeing it, it's a good set-it-and-forget-it system. It adds up over time!

[Somewhat related: http://www.mrmoneymustache.com/2012/01/13/the-shockingly-sim... ]

This book taught me the fundamentals of passive investing (https://www.amazon.com/Random-Walk-Down-Wall-Street/dp/03933...) and this website is THE online community for Bogle-style, passive investors (https://www.bogleheads.org/), once you understand the basics.

I read that book this year. The entire book can be summarised as.

Don't attempt to beat the market. The market cannot be beat (many examples in the book). Invest in index funds long term which is the right mix of risk/reward for most people.

It does have a chart in the back which tracks your age and situation. For example as you approach retirement you should start to liquidate your funds and buy government bonds so you aren't hit by a bad year when you have to start drawing on your investments.

It did convince me. I opened accounts with Wealthsimple and Questrade the next day.

A great site for fellow Canadians is http://canadiancouchpotato.com/ - you can skip the book.

That's a great summary and advice!

It's crazy there is this giant industry of overpaid people that exists only because people don't listen to that advice.

Disclaimer: I work in said industry.

>The market cannot be beat.

I really would like to believe this, but please explain to me how then how firms like Renaissance can exist ... Not sure whether it's relevant but I'll add that I'm an economics PhD student.

The market cannot be beat by 100% of amateurs piddling away on their brokerage account during a few spare hours a week.

The market cannot be beat by 99.9% of professional investors spending all their time day and night trying and with a team of people helping them.

I'm calling your bluff on you being an econ PhD student or maybe you have been one for a month or two at most...? If you are an econ grad student you know what RenTec is doing more or less. At least in theory if not specifics, people talk and there's plenty of econ papers explaining what's underneath major quant strategies.

People need to chill bringing up RenTec when finance comes up (Buffett too). Just like they need to chill bringing up Facebook when talking about startup valuations. Outliers are outliers.

Academia doesn't pay that much attention to the real world. Most of the papers out there are rubbish and would be considered junior level work, except with way too much detail.

There are pretty much no econ papers that would describe what happens inside the high end systematic firms. (Source: I work in the industry)

Bringing up the outliers is a perfect counterexample when wild sweeping statements are made. These are not even real outliers, they are valid samples.

>The market cannot be beat by 99.9% of professional investors spending all their time day and night trying and with a team of people helping them.

Professional investors pretty consistently beat the market. But not the ones that you see. The louder someone markets their fund, the more likely it is to be a scam. Your sample is of guys who heavily promote their fund and make money from management fees not performance.

The best managers aren't even made visible to you. Why would you attract attention to what you're doing if you have a good thing going?

I agree & the "pro-index" crowd would improve the accuracy, if not the effectiveness, of its message by saying "non-passive strategies can work superbly, but not for outsiders with <$1M in capital" instead of saying "no one beats the market in the long run" / "you can't predict which parties will beat the market in the long run".

>high end systematic firms

I'm not familiar with this term, would you mind giving me a general description of what kind of investing these firms take part in?

"Algotrading" generally refers to execution algorithms only, despite popular culture's interpretation.

When the funds portfolio is decided based on a system your fund is systematic. It's an important distinction.

Illuminati confirmed then right. My bad.

Professional investors are not pretty consistently beating the market...secular! Anyone can have a good year or two.

I'm not talking about dudes talking their book on CNBC. Yes there are shops that beat the market, but if you have beaten the market 5 years in a row, you can't keep it a secret even if you want to.

How exactly do you think the performance is made public, if the fund doesn't want it to be? This isn't about illuminati, this is just logic. You can't hide what you're doing from the institutions you have to deal with, but they won't exactly disclose it to general public.

Why would you promote your fund, if you have all the FUM you need? If you are doing well, why would you tell people about it? It is funny that your position is because you haven't seen it, it doesn't exist.

You say you work in the industry. How long have you been doing this and what do you do?

You don't have to answer but your questions are odd for someone with experience in the industry. But let's get into it:

How is performance made public? The same way people know what "stealth" startups are doing. Sometimes a document leaks and sometimes people talk. Usually both. Let's just say a manager is super secretive. Do you know how many people in the chain know performance anyway... Current and former employees. Current and former recruiters of these employees. Current and former clients. Current and former consultants to those clients. etc... And you're saying all these people also don't have that human urge to brag about these rock stars of the investment world? OK.

Even if that were the case, everyone has a cousin at State Street or HSBC, these people take coffee breaks and love to gossip performance and secrets breakdown there.

This is like Fermi's paradox. If all these funds out there are beating the market, then where the hell are they??

All of the funds beating the market are secretive and successfully secretive? For decades?

If it was as common as you imply there should be more of them known to the public by choice or by accident. That is logic.

Don't be the guy who mortgages his house to buy Herbalife products and tells his wife this is your year.

The comment above said 99.9% are not beating the market. There are thousands of funds out there. All funds are filing Form ADV's now...We know who exists. So yes there's a few people who do beat the market. Those 3 Russian guys in Texas and that story about the MIT PhD's working out of a house outside Miami and so yes, there's a few examples out there. Dinky family offices don't count. But no, there's a not a bunch of professional investors with serious weight under management and outside clients beating the market over a secular horizon.

There's a handful, and if you are at one of them congrats to you. But to come on a forum saying there's a bunch of professional investors beating the market, they just all happen to super secretive billionaires and they don't tell anyone about it. That's misleading. That's tech back office got your info from a e-book kinda talk. And it would be at odds with your original thesis that folks that beat the market are secretive and don't talk. So it makes me think you don't work at one, you just want to believe they exist. But again if you do work at one, congrats. Are you hiring? DM me.

So where are they?


He's wrong because he's assuming the average result of the zero-sum game is the only result you can have.

It's a simple fallacy most people with a statistics background understand, but the average journalist doesn't.

Saying you can't beat the market, is like saying you can't win at boxing, because on average nobody wins (there's always a winner for every loser).. but I would put my money on Mike Tyson in his prime.

Your expected value for investing across the market, will roughly converge to the market because of diversification. ~20 funds will start to approximate the underlying universe of stocks, because the range of views of the fund will be across all of them. All of the alpha will be evened out into beta.

So after fees - you would be better just investing in an index than a basket of funds. But there is dependence, a good fund is consistently a good fund. So if you get a chance, it's much better to invest in a good fund.

But the best funds aren't accessible to the public, so the public doesn't get to understand the market for what it really is. And there's a lot of shit ones that market heavily to the public.

There is also a populist idea to the notion that indexes beat hedge funds etc, it makes the average person feel good to think the top investors are no better than they are. So why would journalists peddle the true narrative?

Renaissance is part of the market, and it's the sort of thing that we individual investors can't beat. "The market can't be beat" doesn't mean no one can see better returns - it means a random yahoo like me simply can't compete with the information, processing power, and access funds like Renaissance have.

Thus, an average investor is a lot better off with an index fund instead of trying to pick individual stocks. (Funds like Renaissance's Medallion simply aren't available to people without tens of millions of dollars to throw around, too.)

So buy into the Renaissance mutual fund. There, you beat the market.

Renaissance doesn't run mutual funds. They aren't taking outside money in the market-beating fund.

Funds like Renaissance's have minimum investments in the millions, are often invite-only, etc. We average investors simply can't play in those leagues.

Past performance is not a guarantee of future returns?

People have been saying that about rentech for the last 20 years. People have also been saying that about berkshire hathaway for the past half century. At some point, past performance IS indicative of future returns.

I'm not sure about any Rentec mutual fund, I don't think such a thing exists, but aren't the funds they have open to institutional investors not doing particularly well?

When most people say Rentec they think Medallion, which while being spectacularly profitable over 20+ years, is now a closed fund only open to current employees last I heard.

Renaissance has hundreds of smart people trying to beat the market. Same with the HFT shops.

You can start one of those firms; in all likelihood, not all the potential profit has been extracted yet. You can hire a bunch of smart mathematicians and/or smart technologists, and spend time working on the problem. And then you'll be in good shape to beat the market. If you're an econ Ph.D. student hanging out on Hacker News, you're already well on your way to doing this with your life, if that's what you want to focus your life on!

But "you", the person with an unrelated day job fiddling with some investing app on your phone in your spare time, starting with a relatively small amount of capital compared to Renaissance's first year, and relatively small risk tolerance compared to Renaissance's first year, and definitely not enough money to hire a bunch of scientists full-time - "you" who's asking on a thread about passive income instead of lifelong career options - you are statistically unlikely to beat the market. That's what people mean by "You can't beat the market."

Two decades ago you might have asked how firms like Long-Term Capital Management can exist


That's a ridiculous argument. From that graph, LTCM lasted 4 years. Renaissance has lasted decades.

Rentech, in particular, data mines weak signals out of gigabytes of historical data, and has a team of PhD mathematicians working to find these signals. Each strategy has some small positive expected value, so in aggregate they can be profitable.

Two reasons you can't replicate this - 'you' aren't a team of super top notch mathematicians with decades of data, and even if you had an exact copy of their trading strategies, you don't have the capital to make the transaction costs, etc, worth it.

This is good advice, attempting to beat the market is something that everyone tries at least once, and repeats until they learn that it is futile. There are bigger interests than the "richest investor you know", and those interests will always win. Every single damn time. Instead, just follow them, and ride the wave.

Why did you choose Wealthsimple and Questrade instead of Vanguard like a lot of people on bogleheads recommend?

You can't buy directly from Vanguard in Canada. Questrade is essentially a very low cost broker (low as in free for ETFs).

You can buy certain Vanguard Funds from Canada. For example: VAB, VSB, VCN.

I think you misunderstood the parent. All three examples are ETFs with Canadian assets, available on the Canadian stock exchange.

OP's point is (most likely) that you can't buy them directly from Vanguard (i.e. using an account on www.vanguardcanada.ca) but will have to buy them using a broker (e.g. Questrade.)

Thanks Huppie, that's exactly what I was saying.

> The market cannot be beat

On average, and when bench-marked against itself taking into account fees. There are funds that consistently beat the market, that you should put money into over the index if given the chance.

But your general notion that the average person shouldn't try is a good one. At the end of the day you have to earn money because you took it from someone else. To think that there is a dollar for everyone is to ignore this simple truth.

Of course some funds beat the market. The problem is, there is no reliable way to know what those funds are until after they have done so.

It depends on your definition of reliability. Is driving a car reliable? There's no way of knowing it will crash but that doesn't stop you from getting in one.

You see it as a problem, if you are used to the idea of earning money instead of taking money I get that angle. But to investors it's not a problem but a fact of life.

How are you finding Wealthsimple?

Can't speak to the tool itself, but the site design and overall aesthetic looks gorgeous..

Ramit Sethi's I Will Teach You to be Rich is the personal finance book that introduced me to all the basics (e.g., paying off debts, how credit scores work, why not investing in index funds across diverse asset classes is moronic, etc.).

Dead practical advice despite the somewhat sleazy writing style (see title of book).

Earlier this year, at my last boring corporate job, I was trading stock trading stories with our head accountant. (Like the time my brother and I were trading stock tips about 10 years ago, when he turned me on to some up-and-coming German solar energy firm and I mentioned to him some small biotech company I had just read about. I invested a couple thousand dollars in the company my brother suggested and it was bankrupt within 24 months. My brother invested in both and the company I had mentioned -- I can't remember its name and only even vaguely remember the conversation -- has gone on to something like 50x return, easily making up for the losses from his lousy recommendation... But I digress.)

I told the accountant, who I always found watching CNBC in the break room and I suspect still dreamed of being a day-trader, that the best investment I ever made was our company's ESPP (Employee Stock Purchase Plan).

He said, "You know what? Same here."

(Standard disclaimer: max out your 401(k)/IRA contributions, first.)

> (Standard disclaimer: max out your 401(k)/IRA contributions, first.)

Minor quibble. Your 401k plan almost always has more fees than index funds at someplace like Vanguard.

1. Contribute to your 401k to get your entire company match.

2. Then max out an IRA, a Roth IRA, or a combination of the two based on your income level.

3. Only then continue to max out your 401k.


It's important to remember that this is putting all of your eggs in one basket to a certain extent though.

Your income, your 401k match, and your ESPP are all tied to your employer, so as long as things are good, ESPPs can be a great way to make easy money, but if things take a stark downturn, you can find yourself with ESPP you lost money on, a slouching 401k, and no job. The chances of that happening are fairly low, but still something that makes me a little uncomfortable about ESPPs.

Obviously your advice to max our 401k/IRA contributions first should mitigate a lot of this, but I think it's important to mention the risk too since there's a certain temptation for younger engineers who think it sounds like easy money and don't realize the full implications of it.

That's true, but I always sell my ESPP as soon as it is purchased. That is an immediate 15+% return. Our ESPP is 15% off of the lower of either the beginning or the ending of the offering. Of course the hope is that it will be the lower at the beginning of the offering so that the sell will be 15% + the amount the stock has risen since the beginning.

The only company I've worked at with an ESPP required you to hold the stock for 1 year before selling--not in the sense of tax incentives unfortunately, but you literally cannot sell before 1 year. I didn't realize there were ESPPs where you sell immediately. In that case, woo free money!

Well it is 15% but you are paying income tax on it because you aren't holding it for a year. So depending on your tax situation, it may be closer to 7-10%. Still good though.

The income tax on the profits. If you sell the espp instantly, there isn't much profit, so I'm guessing there isn't much tax?

Well, according to this guy: https://thefinancebuff.com/employee-stock-purchase-plan-espp... it is closer to a 90% return. The example he gives is exactly how my company's ESPP works.

"...the best investment I ever made was our company's ESPP (Employee Stock Purchase Plan)."

This is certainly not true for all companies. I lost over $100K due to our Employee Stock being driven into the ground over the course of a decade by a CEO and board who had loose ethics and no business running a company.

My advice is, before investing in you're ESPP (or Employee Stock Ownership Plan - ESOP), even if you're surrounded by exceptional talent, take a close look at your corporate leadership before purchasing. If they seem sleezy and disingenuous, they probably are and it may be 10 years before you realize you've been totally screwed.

It's good advice to save money and to spend conservatively, if you're poor.

On the other hand, the implicit question of the post was "what did you create to generate passive income" (it's called "Hacker" News, not "Invester/Banker" News).

I think you'll find that the poor generally don't save money -- they spend it, but I digress.

Also: Why isn't interest income considered passive income to you? "The fundamentals" are there for a reason, after all.

Poor people don;'t have enough money to save, by definition.

I don't think this is always accurate; a lot of poor people are poor through spending habits and poor financial management, not through lack of income.

I think that it's also good advice if you're not poor :)

Your second point is absolutely correct, but I still think that my comment answers the root question - how did you set things up such that you're automatically being given money for free on a regular basis? - in a way that is simple, requires very little effort, and has a very good chance of working for many people who are able to try it.

I have read a lot about passive investing (The Intelligent Investor, Mr Money Mustache etc.) but I live in France and it does not seem as simple as in the US to invest in a SP500 index fund for example. Especially if you want something that is quite tax efficient. Does anyone have any advice?

Just want to chime in to say that using a broker to buy index funds should be possible in France as well. I'm in The Netherlands and use DeGiro[1] which is available in France as well, so that might be an option. My investment portfolio basically consists of a few index funds, all can be bought once per month with this broker without a brokerage fee.

As for tax-efficient ways, my french isn't that good so I don't know the details but if I understand this topic [2] correctly you should have some options like PEA, PERCO/PERP, and/or PEE/PEI/PEG

N.B.: There will always be some discussion around this specific broker because their 'default account' contains a clause where this broker is allowed to temporarily loan your assets to other customers. Don't do this. You can get a so-called 'custody account' (which is basically a regular brokerage account) that's only marginally more expensive.

[1]: https://www.degiro.fr [2]: http://redd.it/3oht1m/

Open an investment account in the USA - it's fairly straightforward. I don't know your tax system in france, but you can invest in the US as an individual or an entity, probably worth talking w/ a tax attorney about how to do it - it's certainly done by others.

Don't think it's that straightforward. Probably need a SSN and there will be tax withholding of earnings

Process here. Not trivial but not insurmountable.



Open an ETRADE Securities account if I'm neither a legal resident of the U.S. nor a U.S. citizen You won't be able to open a brokerage account online if you are not a legal resident or citizen of the United States because we will need some additional documentation from you. If you're not sure if you're a legal resident, see the Help topic Determine my residency status. Request a brokerage account application by mail, or download it from our Forms & Applications page. Download a Form W-8BEN. Complete sections 1 through 6 of the application (the section on options trading isn't required). Send your completed application and Form W-8BEN, along with your initial deposit and any supporting documentation, to us at: By regular U.S. mail ETRADE Securities LLC PO Box 484 Jersey City, NJ 07303 - 0484

By overnight mail E*TRADE Securities LLC Harborside Financial Center 501 Plaza 2 34 Exchange Place Jersey City, NJ 07311 1-800-ETRADE-1

France doesn't have an ISA/Roth IRA/TFSA equivalent? Google tells me - PEA (Plan d'Epargne en Actions) - but this info was from 2006.

Thats right. With a PEA you can avoid capital taxes provided you hold your stocks long enough.

As per how to open a brokerage account for alien non US resident, several years ago I managed to open an account at interactive broker while living in hong kong. They have among the lowest fees of all brokers and good software. Pretty sure its also possible to open an account while residing in france.

One thing to note though: as an alien non US resident, any US dividends will be taxed at 30pct in the US, directly deducted by the brokerage company

Invest in a cheap French or Eurozone total market index fund. It only makes sense to invest in a fund that matches your local currency.

>It only makes sense to invest in a fund that matches your local currency. //

Why? Surely investing in a higher growth economy is better?

You're now exposed to foreign exchange risks too

Conversely, it could be a smart diversification move

I put 25k into my investments this year, and I made 40k in unrealized gains, following the above strategy. It works folks.

My blog post about financial independence: http://mays.co/why-financial-independence/

I mean, it does work, but using a sample size of one single year isn't the best way to explain or prove it.

Yes, it works. I've been investing a minimum of $500/week for the past 8 years. Currently I'm investment $1000/week. I make good money and keep my expenses low, and now have more than 33x my yearly expenses in investment/savings. I'm planning on retiring early...

At 33x annual spending you can retire today.

That is already passed the 4% withdrawal rate (can take out 4% every year and never decrease the principle), which is 25x annual spending in savings/investments.


I am aware, but am overly conservative. I just turned 40 so have a few good working years left at least.

Nice blog, but watch out for advising people that putting money in index funds 'pretty much assumes an 8% return'. Returns can vary wildly year by year even if 7-9% annual is accurate over the last 20-30 years or so. Bogle (and others) is estimating the coming year's returns to be lower than 7.

Thanks! I've heard that comment a few times so I think I will make a quick edit. Appreciate it.

Humanity has had numbers for some 200,000 years.

any hacker can, in the next ten minutes, cause their CPU to do more arithmetic than the arithmetic (explicitly adding 2+5, and so forth, multiplying two numbers in their heads) that every single person has done in the history of humanity. okay, but that's just numbers.

Today we live in a connected world where 2,000,000,000 people can be reached in any eight-hour period of time.

Any hacker can find any niche and make a product that will be the first search result within it (by being the first; making something that doesn't exist; and telling people).

Why save a salary, when you can create a business, create value, and scale to the entire Internet and give people some benefit?

Every hacker should start one or several businesses. While it may not exactly be a moral obligation, this brings humanity forward.

EDIT to clarify: I am disagreeing with the suggestion that hackers should save all or most of their money - (put in my parent comment as "save as much of your salary as you can") -- rather than saving it, they should invest it into their businesses, adwords to grow it, other advertising and business development expenses, hiring, etc.

Some of us bring in value by developing existing software packages which amplify the work effort of some critical sector or another. The renumeration for this work is in the form of regular pay. A portion of which should probably be invested smartly.

As software systems grow they turn into complex systems. They become embedded in the processes of the end users, while requiring constant boring work to remain alive.

I fail to see how this maintenance work is less worthwhile than developing new tools. Any complex task requires decades and decades of labour.

This is not to say that identifying niches that benefit from established tecnhinques and require only some domain specific customization would not also be wortwhile.

But claiming "everybody should find such a niche and become entrepreneurs" is quite bit too much. My mental energy is used in my daily work which brings added value to my orgs and our clients. The benefits of this are enormous - I can focus on deep, technically complex work while outsourcing payroll, taxes, liabilities etc. to my employer.

Effectively, I don't think many people can do deep work and become an entrepreneur at the same time. Also, expert skills in one domnain are no guarantee in some other. Star software engineers can turn up shit or stellar business operatives.

I think you are covering the software engineer in some weird halo of infallibility.

That said, I do have enormous respect for people who have created new businesses. But it hardly is the only way to bring in value.

>But claiming "everybody should find such a niche and become entrepreneurs" is quite bit too much.

This is how you end up at conferences where everyone you talk to is the CEO, but nobody is actually making any money (or, in large part, actually doing any business).

I also love entrepreneurship, but it is not, nor should it be, for everyone.

"The remuneration[1] for this work is in the form of regular pay. A portion of which should probably be invested smartly."

I guess my objection was to the idea of saving "as much as possible." I don't mean to imply that you shouldn't work for a salary: but you should take some of that salary and spend it on actively building or backing businesses, not just passively.

Based on your background I think you would be amazed how much business you could create by investing in/overseeing a developer in India or China, for example. Your knowledge/background + $5000 goes waaaaaay farther than you think. (regardless of who the owner ends up.)

To me this is the opposite of the advice to passively save as much as possible!

[1] I corrected the spelling of this word - I mispelled it before too.

"you should take some of that salary and spend it on actively building or backing businesses, not just passively."

Active investment is highly context sensitive. I'm not denying someone might be plausibly in a position with sufficient information, domain knowledge, connections and a small amount of capital to operate as you suggested.

Your claim that operating on this manner is the obvious best choice for everyone is highly controversial. For starters, private investment requires trust and communication and just the culture barrier to understand the true rules of business and engagement are non-trivial for someone who's native culture is for example northern european.

Basically, I'm totally clueless. I have no idea how to a) hire an indian software dev for a few thousands b) what value added activity I should require of them and c) to whom to sell their work to.

I do know, however, how to invest into low cost index funds with reputable finance organizations. Thus the latter from economic perspective is a highly more enticing option.

I presume you have some specific situation in mind. Perhaps you could give some 'hypothetical' scenarios and what their profit model is?

Active investment is essentially a second job. Not everyone has the ability or desire to spend even more hours working.

I don't want to start a business and in fact I specifically plan to never start a business. Sounds terrible. All that... business stuff. I shudder to think about it.

I do like programming, and I plan to spend my productive time on this Earth programming on projects that interest me and help humanity in some way, but I just absolutely 100% have no plans to start a business. I admire your excitement about the idea, but I think that maybe not everyone feels the same way :)

(I also recognize that maybe not everyone feels that automatically saving+investing as much of your income as possible is a good idea - I'm mainly attempting to reach those folks who do think it's a good idea and just need a little bit of prodding to actually set it up.)

Serial entrepreneur here. Love your attitude. You play to your strengths and keep it chill. Not my style but a rock-solid strategy nonetheless.

> rather than saving it, they should invest it into their businesses

"Saving it" here is not hiding it under the mattress. Buying stocks is literally investing it, only into other people's businesses. Buying corporate bonds is lending it to other people's businesses so they can grow. And investments into existing established businesses could easily be argued to have at least as large a potential impact as starting out on your own with a minor project that is more likely to fail than not.

I'm all for entrepreneurship but the original question asked about passive income. Your suggestion is clearly very active.

Yes but why answer the question when you can get on a soapbox instead?

My soapbox was prompted by the words, which I'm not embellishing, "save as much of your salary as you can".

I don't think there's anything wrong with saving or with passive investments. But it shouldn't be as much as you can. Engineers have other very good uses of their money, which I outlined.

> Why save a salary, when you can create a business, create value, and scale to the entire Internet and give people some benefit? Every hacker should start one or several businesses. While it may not exactly be a moral obligation, this brings humanity forward.

How does starting a business bring humanity forward? Maybe I'm just pessimistic but as far as I can tell the pursuit of money largely just ruins things.

I would think that a "hacker" would make things just because they can and enjoy it, without concern for things like profits or market value. Indeed weren't the very first hackers amateurs and not professionals, in the literal sense?

I'm not saying that people should just forego money completely of course, as I am just as guilty of anyone of wanting more money. I just don't understand why "every hacker should start one or several businesses." if we're solely concerned about humanity.

> Why save a salary, when you can create a business, create value, and scale to the entire Internet and give people some benefit?

Risk tolerance.

If, for whatever reason, my business doesn't turn as much of a profit as I'd hope, and I've spent everything I could on it, I'm in an awful position: both as a person who needs to keep a roof over my head, and as someone hoping to do good things for humanity. If I'm on the verge of bringing humanity miles forward, and fail, I've done less good than if I reliably brought humanity a few inches forward.

On the other hand, if I do save my salary up, I can choose at some later point to spend all of my time and energy on something cool, and keep spending that time and energy until something happens, because now my risk tolerance is much higher. And then it's much more likely I will bring humanity forward by the miles I wanted to.

For what it's worth, my best passive income was from investing as much of my income as I can part with paycheck to paycheck. No boring investments though, always the exact same two funds: UWTI and DWTI, both of which are gone, they delisted on Dec 8th.

That said...there are many funds like them, those in particular are 3x leveraged crude oil ETF's. That means if the price of oil rises 1%, UWTI rises 3%. If it falls 1%, DWTI rises 3%. Crude oil as a market has "predictable volatility", that (simply) means that within a given day, the price will rise/fall repeatedly within a sane range(given no extraordinary circumstances). Identify this range, and buy and sell on both sides(short and long) to take advantage of the range. Follow the big money(banks), and you'll be just fine. Never go against the flow, you will (virtually) always lose.

This is very bad advice. 3x funds are not meant for long term buy an hold. They experience contango and even if they index end up flat you can still lose money from the gyrations of the market. Nobody should b investing in in leveraged etf longer than a few days.

I didn't say to buy and hold it...that would be very foolish unless you know something that noone else does(which is unlikely). I was talking about using the daily volatility to profit from following the banks. ie: day trading. My positions in leveraged funds last less than 60 minutes, and the average is probably closer to 10 minutes.

Before you jump into 2x or 3x, you should be able to reliably generate returns from a non-leveraged ETF tracking the same commodity.

So what happens to UWTI when the price of oil falls 1% and to DWTI when it rises 1%?

They'll move 3x. When oil falls 1%, UWTI rises 3% and DWTI falls 3%. That's good for a short term bet if it goes your way. In the long term it corrodes the value.

Lets say UWTI is trading at 100 today. Oil is trading at 50.

Day1: Oil falls 47.5 (5% drop). UWTI will fall to -> 100 * ( 1 - 3 * 0.05) = 85

Day2: Oil rises back to 50 (5.26 % rise). UWTI will rise to -> 85 (1+ 3 * 0.0526) = 98.42

So even though oil price recovered, you lost $1.58. Over a period of time, rise and fall in oil prices corrodes the value of UWTI & DWTI (and similar leveraged ETFs)

http://earlyretirementextreme.com/ is a bit nicer to read and goes a bit deeper than mrmoneymustache.

I would also add that the author's book http://earlyretirementextreme.com/ere-book is great, and lets one get the essential points of what he has to say without trawling through numerous posts.

Any tips for something solid vanguard-like in the EU?

GERMANS: Be aware! Don't buy any US ETFs when you pay taxes in Germany. There is pretty heavy penalty tax on ETFs. Depends on the difference of the price on the first day of trading of the year and on the last. If unlucky you can pay 50% tax on your gains. I did just this year pay 45% and I won't be getting it back. Read thru this first: https://www.justetf.com/de-en/news/etf/steuereinfach-in-etfs...

I have read the link you posted and I'm still not clear on how you would end up paying ~50% and not be able to get it back.

If your ETF is "ausländisch thesaurierend" ("foreign accumulating"), declaring it will be a bit more complicated but not that hard. Would you mind explaining your situation a bit better? Maybe I'm missing something (and I wouldn't want to, since I'm looking into this topic myself at the moment).

Do you mean also for accumulating ETFs? Are you supposed to list all ETF purchase prices/start-of-year value, and the end-of-the-year value in the tax declaration, then?

Do Germans not have any practical way to invest in accumulating funds?

DENMARK: Similar problem - you pay yearly capital gains tax on foreign ETF :(

You can buy Vanguard via their ETF funds using any broker. I do.

Just beware of taxes.

Rules are a bit different. I'm in the UK and you need £100,000 to go direct with Vanguard and thus you need to go with a broeker.

https://www.charles-stanley-direct.co.uk/ is a good shout, but there may be better depending on how you'd like to invest.


For non-EU/US residents I got a recommendation for http://int.tddirectinvesting.com/

I use Nutmeg, had a return of 7% over two years, and I've also just opened an account with MoneyFarm.

Nutmeg has a really nice looking website and is heavily promoted, but I'm not really sure it's a great recommendation as the associated fees are higher than competitors.

Is there a value add that I'm missing?

I'm using DEGIRO (based in the NL), seems to be OK, decent website and low fees. They have this weird thing about loaning out your shares in the regular accounts; I couldn't quite get the risk I'd be exposed to in that case, so I went with a Custody account.

Same here. Just wondering, are you using the Ireland based Vanguard ETFs (i.e. VWRL, VEUR, etc.) or the US-based ones (VTI, VGT, etc.)?

Neither :) I'm using an Amsterdam based one: https://www.euronext.com/en/products/etfs/IE00B3XXRP09-XAMS

While traded on the Amsterdam stock exchange, the domicile of the fund is still Ireland.[1]

Anyway, since you're in Europe, curious why you chose this fund (S&P 500) over something with more exposure outside the US?

[1]: https://www.vanguard.nl/portal/instl/nl/en/product.html#/fun...

Ah, right, I didn't pay close attention. I selected the S&P mostly as a simple "default" choice to start. It doesn't really matter, since it'll be a while before I can invest any significant amounts.

I get vanguard in the Uk via HL, some funds are on there and the fees are not too bad for the most part.

If you're on HL, you could also look at their 'core trackers':


For example, that provides the FTSE all-share through an L&G fund:


Which has fractionally lower fees than the Vanguard equivalent:


The fees on HL are quite high though, it's worth shopping around the brokers. http://monevator.com/ is a great resource for this stuff.

Nutmeg might be worth looking at. I've used it for my pension pot since I left my perm job and went contracting/freelance.

That probably depends a lot on which country you live in.


I user interactive brokers and just buy VOO (vanguard S&P500 etf)

Oh, I invest the automated way too and figured that's the best way given I know this is important for nest egg and such and I want to spend as little time as reasonably possible managing investments .

For my Indian friends here (or people interested in investing in the Indian market), I'd suggest http://scripbox.com (no affiliation, just a happy customer).

I started a year ago when I was 25, and am glad I started this early(-ish).

Do you have any thoughts or sources on Indian micro-loan investments? It looks like a way to help people in need while gaining some profit off their success. I'm more interested in the former, but I do not wish to simply donate. I do not believe it to be the way to go about these things.

Do you mean something like Kiva or Zidisha? They're quite popular, but there's a very real chance that the borrower can default on your investment. Not a huge deal though, because if you're micro-lending then this is expected. I don't think the interest rates are good either.

Doing it for charitable reasons is fine, but it's not a great way to make money IMO.

I recommened reading the parents link but if it's all a bit too much for you vanguard does funds that are already diversified and deals with the rebalancing on your behalf.


Thumbs up, this is what I use.

Do I have any rational expectations to beat inflation by having well diversified index funds?

Historically, as a guideline, you'd have made about 7% p.a. on average, well above inflation. The question is whether you can handle the drawdown (can you keep your nerves during a crash?)

then again: beware of averages. Historical PE ratios are quite high (though EV/FCC would be more instructive) - so it is unlikely that the next couple of years will bring 7%. We're living in a world of free money: if central banks change interest rates the party could come to an end.

Not necessarily. If the interest rates are reduced because the economy improved, then the growth could stay similar.

Aren't interest rates reduced to stimulate a struggling economy, and increased if economy improving?

Right. If interest rates are increased, that's a sign of a stronger economy and the market might go up in response. On the other hand, traders might decide the Fed is mistaken, the economy is not in fact stronger, and they'll react to the higher interest rates by taking fewer loans and the market will go down.

Basically, the change is already priced-in and you shouldn't worry about timing the market. Buy and hold.

Interest rates go up when the economy is improving.

Oops. That's what I meant to say: s/reduce/increase/

>Do I have any rational expectations to beat inflation by having well diversified index funds?

You should get inflation + some economic growth + risk premium for holding equity.

How confident can I be of this? Why are banks struggling to get even 2% return on their investment if I can just go on and get 7% on average?

There's no guarantee at all. In a really bad year (2008?) you might get -50% or worse. Then you might get some really nice returns in the years after (or not!). If you average over several decades, historically, the returns have been around 7 or 8 per cent per year, but the standard deviation is enormous. Just look at a long-term chart of e.g. the S&P 500 at https://finance.yahoo.com/chart/%5EGSPC - click "Max" and "Settings" -> "Logarithmic" (you'll want a logarithmic axis so that equal percent changes are equal distance on the plot). You'll see that on average it went up over the decades, but between June '07 and February '09, it lost over 50%, and tripled since then.

I encourage you to read up on this, but someone else with more knowledge should recommend some books.

All of this is correct, but the standard S&P 500 index doesn't include dividends, so your typical index fund will (should) do 1-4% better each year than the S&P 500. The S&P 500 does have a lesser-known version that includes the total returns: https://www.google.com/finance?q=INDEXSP%3ASP500TR&ei=WWJNWK...

Index funds such as SPY do include the dividends. VGO (specifically) also has a 1.94% yield.

Banks operate on a completely different model so it's not a useful comparison, but the answer is that they are borrowing at ~0% and lending 2%+ so they view the world differently

banks are heavily regulated and cannot just put deposits (the money you put into a bank constitute a loan to the bank) into stocks. They have to invest more conservatively, e.g give money to solid companies or hold low risk bonds. See Basel-rules to learn more about risk weighted assets (RWA): https://en.wikipedia.org/wiki/Basel_III

>if I can just go on and get 7% on average?

I didn't mention any numbers. If economic growth is low, and inflation is non-existent, you will not approach 7%.

>Why are banks struggling to get even 2% return on their investment

Where do you get that information?

risk --> reward.

bond etfs have been sold off, so they are cheap and yields are up.

This isn't really passive income outside of the 2% dividend yield of a total market index fund, which isn't all that great. A $500,000 investment only yields about $10,000 annually. (Not to mention the significant risk of a market drawdown in a given year.)

I think the idea is that you can plan on withdrawing 4% every year as well. The more flexible you are with your expenses, the more you can withdraw while ensuring you will have sufficient income throughout your retirement. I like the hybrid constant-percentage / constant-dollar withdrawal method where you keep 7.5 years of withdrawals in bonds and the rest in stocks. So a $1m portfolio produces $40k per year so 7.5x * $40k is $300k in bonds, and $700k in stocks. https://www.bogleheads.org/wiki/Withdrawal_methods#Combinati...

... otherwise known as a 401k.

Probably don't do this (use taxable investment accounts) unless you have at least 15% going to your tax-advantaged retirement account(s).

Good point, I forgot to mention that. I think that it's possible for a lot of young people in our industry to save significantly more than 15% of their income, and so I should have said: max out your contributions to retirement accounts every year and then set things up such that you're automatically saving as much of your remaining salary as is comfortable (e.g. if you're a recent college grad working in SF, and you have roommates, you might find that this percentage is pretty high!).

I was on the "max out retirement accounts" train when I was younger. When I got older and home prices got massively inflated, I wished I kept more of that in non retirement accounts to be made more easily liquid for a home without steep penalties.

Saving tax while something grows is great, unless you need that cash sooner. Then it is not too helpful. I wish there were a tax advantaged vehicle to use for setting aside money for a home.

So yes, definitely invest in tax advantaged accounts, but do so with a solid understanding of your expected financial needs as best you can model for the next 5-10 years. If you need access to that money sooner, what you'd lose on tax may be worth the flexibility of having those investments somewhere more easily liquidated.

You can avoid the 10% tax penalty for early withdrawal for your first home if it's in a Roth IRA, up to $10k. It's not very tax advantaged though.

[1] https://www.irs.gov/publications/p590b/ch02.html

This is confused.

EVERY contribution you make to a Roth IRA/401k can be pulled out, tax-free, at any time for any reason. It's the earnings you have to be careful about. But for example if you have contributed $20k to your Roth IRA or Roth 401k, and it is now worth $35k, then you can pull out $20k at any time for any reason, while for the other $15k you have to wait until 59 1/2, or use SEP withdraws, etc.

In addition, for a first-time home purchase you can pull out up to $10k without penalty (but with normal income tax applied) from a traditional IRA or 401k.

$10k is well within the variance of fees and fluctuating interest rates on a home purchase. On the scale of real estate (in and around the cities that have significant tech employment) it's pocket change.

You can also loan yourself a bit of your 401k to buy a home. It's not a lot but at least helps https://smartasset.com/mortgage/when-to-leverage-a-401k-for-...

Has anyone invested on a peer-to-peer lending platform? Curious of how the risk & reward for such platforms compare to those of ETFs and index funds.

This is if you don't need that capital to create your own businesses or other streams of revenue.

What are the returns, in percentage?

Vanguard is index funds, so the returns are as good (or bad) as the market.

Wouldn't it be a better idea to invest in bonds or more stable sources of investment for the next few years until we can make sure of the impact of Brexit-Trump? I wouldn't be surprised if AAPL and other giant third sector companies fall in value right now.

You're talking about market timing which is incredibly hard (some say impossible) to do over a long period of time. Sure, you might miss the down here (if there is one), but then you also might miss the move back up. There is a saying that time in market is much better than timing the market. If you consistently put money in, you'll naturally also buy the downs. At that point, you just need to periodically rebalance, and with age start to shift to less risky investments.

In investing terms, you're talking about a "less risky" rather than "better" idea. You'll only know if something was better after the event in question has passed.

Passive investing when you have many years before retirement means you worry about long term trends rather than short term risks.

Ah, you see, because the market is famously perfectly efficient, equity and bond markets have already priced in the expected effect of Brexit-Trump. So investing in equities now essentially gets you a discount over what they would have cost had Brexit-Trump not happened.

Whereas (more seriously) investing in "more stable" things like bonds forces you to pay a premium, because every man and his dog has desperately been chasing stability, safety, yield, etc since 2008, in many cases using quantitatively eased money to do so.

while coupons (e.g. the regular payout) might be stable, bonds, too, can fall in value. One interest rate hike by the FED or ECB would send bond prices tumbling.


> liberal hubris

When a thread takes a turn for the worse, please don't reply unless you can make it better, not worse still. Political name-calling makes it worse still.

Since I had to ask you to keep partisan politics out of HN threads only a couple days ago, I'd like to emphasize the point. This is not what Hacker News is for. Please (re)-read:



How is the comment you replied to liberal hubris? There is uncertainty with regard to Britain voting to leave the EU. Since the U.S. election the bond market in the U.S. has fallen quite a bit. This is unusual given that the only new information comes from the election. Clearly there are impacts from the election that an average person wouldn't be aware of. Hence the comment about adopting a wait and see attitude. While this may not be a good strategy it hardly qualifies, necessarily, as liberal hubris.

Average..? Ex., 1%-5%/yr

It depends on the fund. I just did a report on this for one of my classes. https://github.com/wihl/stats107-project/blob/master/writeup...

All the code is in the same repository as R Markdown.

MOOC or are you at Harvard? Was the course worthwhile?

Through the Extension school, all online. I found it worthwhile.

7% in the long term, but with big fluctuations.

Which fund? According to whom?

SPY / VFIAX / S&P 500 has a CAGR 4.9% from Nov 2000 to Nov 2016.

Not too long ago the long term rolling returns for the S&P 500 where still somewhere around this number. This article [1] is from 2012, not much has changed in the last four years.

"The average 30-year rolling total return for the S&P 500 starting with 1926, is 2,478% or 11.21% annualized (geometric mean). There were several 30-year periods that had annual returns between 8% and 10%."

Having said so, past returns don't guarantee anything for the future. They might give you an indication though.

[1]: http://allfinancialmatters.com/2012/08/29/sp-rolling-total-r...

Edit: Here's [2] a better (?) graph of the S&P 500 with the 30 year rolling returns, inflation adjusted and dividends reinvested. Source[3]

[2]: http://imgur.com/Ja1xOcA [3]: http://redd.it/3fsdex


Mr Money Moustache has 2 or 3 rental properties which are wealth appropriating not wealth creating. He's using the wages of other families. He goes on about how $10 is a lot yet takes far, far more in rent each week.

What's wrong with renting properties?

>which are wealth appropriating not wealth creating

Literally everything anyone buys is paid for by a portion of their wealth, not sure what you are trying to say here.

Not sure where to start here. Are you suggesting money gained is a proxy for wealth created? It's the product of an imperfect system. Some people add more value than they are paid for, others the inverse. The system heavily favours economic rent extraction via land. Almost all new debt is issued via land.

Quite simply people have figured out it's a rigged game and are piling in, hence the asset bubble and the fallout effecting an entire generation, which perhaps you missed.

I'm not really interested in discussing this with you either as just pointing out things are paid for is just taking the existing system without any question as "correct".

I understand what you are saying, but I think you are missing an important concept. If you created more value than you spend, you have an extra. Other people want to spend more than they created. So what happens is that people who have the extra, can loan their value to those who have a deficit. This loaning can also be considered a service. People are not forced into renting. What Mr. Money Mustache is saying is "Hey, don't be the guy with the deficit, be the guy with the surplus, because everyone with the deficit will work for those with the surplus". What I hear from US with all their credit cards, it seems it's a culture of spending way more than you earn. Spending money that you will receive at the end of the month. Which is pretty stupid.

He's saying "i live frugally, be like me" then doing something that doesn't scale. We can't all be the landlord, rent seeking.

He says: Earn a lot, spend little, invest the difference. Once the revenue of your investments covers your spending, retire. That's what he's saying. And the key is indeed living frugally, which makes it all easier. And yes, he rents out houses, that's his investment. I don't see anything wrong with this.

If everyone was a landlord, then that would be a pretty bad investment now would it?

I disagree with his wealth appropriation and the idea that he is somehow living frugally whilst relying on that appropriation. Fundamentally we cannot all claim the labour of others using the system to force their hand.

> we cannot all claim the labour of others using the system to force their hand.

What does this even mean? He is providing a good/service, and people are willing to pay him for that good/service. He's not living off the pain and suffering of others...

This was pretty accidental, but to motivate myself to complete the arduous application process for my professional engineering license, I creates a WordPress blog documenting the process. Also because I thought I would learn something new (setting up WP blog) and this seemed very "shippable". I completed the application process over the course of a year and haven't written a blog post in over a year.

Thanks to a complete lack of material in this niche, the site (http://pengapplicant.ca) gets a decent amount of organic search traffic given the niche size (2k page views per month) and I make about $15/month in Adsense. Recently I was also contacted by someone who sells materials for the application and exam and have become an affiliate for them. It's only been one month, but i've already made one referral which netted me $100. So passive income on this after hosting costs is probably $220-ish and will be more in 2017 hopefully with more affiliate sales. Obviously very small potatoes, but I never set out to make any money for this and it looks like now it will at least cover my yearly professional dues ;)

To be honest, the best part is the messages I get from people saying how I helped them get their license. That's a much nicer feeling than the $.

Hey, just to give you a trailhead into a service that I've used before for automatic ad-placement optimization, try Ezoic (ezoic.com). They did very well for me (150% increase in Adsense revenue) and their site says on average they double Adsense earnings. It's totally legit, they're a publishing partner with Google, which is eventually what made me sign up with them after some initial skepticism. But they delivered for sure.

Thanks for the recommendation. It looks very promising and I tried signing up, but unfortunately they require a minimum of 10k monthly uniques and I'm not anywhere close to that.

Go ahead and sign up anyway. I didn't have that when I signed up, either.

FYI, I tried it and I think they've closed this loophole. Before any ad testing can begin, your account needs to be manually approved by someone who can verify your Google Analytics numbers. I was told I needed 15k uniques minimum.

By changing ad placements, and adding a more ad units, you can increase your Adsense earnings significantly.

And add banners pleading to disable Adblock, right?

I would think a few relevant amazon affiliate links (text books, calculators, etc) could out-earn the current $15/month ads as well.

You should offer paid content through Gumroad or something.

That said, the PE exam was a breeze for me (took computer engineering exam). I'm slightly horrified that the failure rate is 50%.

Thanks. The affiliate that I work with offers paid content that is miles better than something could come up with over short period of time, so I'm happy referring business his way. Pouring more hours into this project isn't really worth the opportunity-cost for me at this point (consulting + bootstrapping a startup).

In my jurisdiction (Ontario, Canada), if you graduate from an accredited engineering school and gather the requisite work experience, there is no technical exam, it is the same ethics and law exam for all disciplines (PPE or Professional Practice Exam). Documenting your work experience is probably the most work-intensive task as they want you to lay out what you did and how it qualifies as engineering in great detail. Probably the biggest reason for my traffic is that I published my (anonymous) experience record, since real life examples of this document are nearly impossible to find on the web. For the exam, I basically studied for the better part of a week. It's a 3 hour exam where your answers are typically paragraphs or pages long. I get the sense that some engineers struggle with it due to language issues more than anything else.

Ask for permission to publish, or do interviews of those that sent you messages about their own process. Ask them for their criticism of what on the site helped and didn't help and publish that, too. That might help others.

Previously, as a developer evangelist with Twilio, I had to know the tech events and tech leaders in my local community. While I didn't figure out a repeatable approach then, in late 2015, it hit me.

I built a bot network that reads tech events - mostly meetups, some conferences and workshops - for a given city from a variety of sources and tweets them. I use machine learning to determine hashtags, time of day to tweet, and new data sources. When I launched Austin - https://twitter.com/ATXTechEvents - in September 2015, I got 900 followers the first month. I suspected it was a fluke so launched Dallas FW and Houston to test. It wasn't a fluke.

In 2016, I've launched 45 different cities in the US and the network has 100k followers collectively, has its own automated weekly mailing list, and is generating 1.4M+ impressions/month. Revenue is affiliate fees for conferences (we are a media partner for O'Reilly) and workshops and selling the ad blocks in the newsletter. Almost all of that is automated. The revenue is pretty minor right now but growing and I spend 1-2 hours on it a week.

The landing page is here: https://techeventsnetwork.com/ (only some of the cities) and the full list of cities is here: https://twitter.com/TechEventsNet/following

Btw, by plugging into meetups first, I found a super receptive audience. After a decade+ of planning UGs, I knew the most important but easily forgotten step is promoting the group.

The Tech Events Network tweets most groups either the morning of or night before and five days in advance, so you have a couple chances to notice. Further, occasionally it mentions the meetup group's twitter handle so easy RTing.

(All automated and sometimes I'm surprised about what it's found.)

> I use machine learning to determine hashtags, time of day to tweet, and new data sources.

can you elaborate more this?


My last startup - Clarify.io - did automatic speech recognition through machine learning. Since I was doing the roadmap and API design, I wanted a better understanding of ML and started digging into it.

For context, I started by studying the Austin tech community since that's what I know and could manually check the conclusions.

The basics:

Overall, the system tracks 5500+ groups, conferences, etc which is close to 60k events. It grows as it discovers new groups and events via a few channels.

As it finds and imports groups and then events, it categorizes each based on how they're described. If it's from Meetup.com, the category data and topic are reasonably good so it starts with that. If the source is Eventbrite, less so. If the source is an event website, even harder.

After ~15 months, it's discovered about 105k keywords/phrases, some only barely related. Of those, only about 7500 are actually useful. Not surprisingly, they include languages, frameworks, companies, products and combinations of words. (Side note: I've found words like "hacking" are less of an indicator now than when I started.. because everyone is "hacking" something.. marketing, cooking, etc.)

From all that, groups are qualified in/out based on their overall score. I manually review things that are borderline but that's 2-3 most weeks. That keyword/phrase list also feeds into the hashtags that get used.

The first version of this - hardcoded, no ML - was hacked together in a day. I've rebuilt it from the ground up to wire in the ML processing to scale across all the cities.

I later did some major refactoring to have pluggable output so it can broadcast into a Slack channel (done & released) and eventually send you a reminder DM or text (via Twilio!)

Oh, and I'm careful to disqualify job fairs. You might find a session about resume writing or "getting a better job in tech" but not the fair itself. I've gotten a bunch of thank you notes and tweets about that aspect.

They have their place, just not in my system.

Solid idea! I think this will be supporting you in a year and will be killing it in five. Quite impressive.

I'm based out of Baltimore and I follow your Baltimore Twitter bot. If you need any help or Quality Control for Baltimore events let me know!

Well played sir. And thank you.

Unfortunately not 2016, but two years ago when the Samsung Gear Watch came out a friend of mine got it right away. We went out drinking the same day and when we came back at night we put together a watch face while still being drunk. We uploaded it, set the lowest possible price 1$, and... Nothing happened. Everywhere in the admin panel it showed 0. 0 downloads, not a single dime earned, even after a few days. We were devastated.

But than I found another tab in the utterly shitty admin panel and it hit me like a rock. The numbers on the dashboard were a monthly overview and in fact we earned already hundreds of dollars and downloads in just a few days. I went back to the computer, but together an even better watch face, set it to 1$ again and watched it selling like hotcakes.

However it tried out quite quickly after that. People started to copy stuff and giving it away for free and I never bought the watch myself, I just used the emulator to test my apps. So I took them out of the store at the end because dealing with taxes and sharing the income does not make it worth it if you get support requests like "how can I change the time on my watch", "what do I care, its your shitty watch and Samsung's shitty interface"... So yea. That's my best story about unexpected passive income. Selling stuff fast on a new platform seem to work!

Edit: Found some screens. First one: https://i.imgur.com/TIVsPKO.png Best selling one: https://i.imgur.com/9L8TetO.png

You created an apps in a few hours while drunk, set the price to the lowest possible, and when you thought you had no sale after a few days, you were "devastated"?

Look. We were very emotional at the point. We thought the binary clock was a good design and the booze helped us to believe we were going to get very rich of it. ;-)

Love the honesty of your answer!

So roughly how much did you make overall? A few hundred, a few thousand?

A few thousand over the course of a few months. The first three months were working out really good. But than it dropped to a fifth of the previous month and it went downhill from there. Anyway. It was still worth it. What took most of my time was setting up the store pages. (Which I couldn't look up by myself because I didn't own the device so I could not access the store at all. I didn't know the ratings on my apps either. Or the ranking in the store.)

I run a number of side projects and have done since the mid 1990's. I started in business when I was 21 and I'm now 47, so definitely considered 'old' to some of you on here! I've been o reader of HN since it came out, but rarely a contributor. A few comments from me and a link to some of what I've done and how they have done in 2016:

- Rich Dad, Poor Dad got me into the idea of 'passive' income. Nothing is truly passive of course, but it makes me think about what I do

- SourceGuardian. This is encryption software I set up in 2002 as I had a need myself and the nearest product was $6000 at the time. It has generated a great passive income since then. Enough to pay all my bills. 2016 was no different. I work with 2 other people on it, one of whom I've never met (he's in Russia) and it works well

- Competitor Monitor. This used to be a side-project 5 years ago, but it has grown significantly and in the past year we are up by 35% and we have grown our team. Strangely this has now become passive in the sense that I have created a structure and systemised the business (read The Emyth Revisited book) and that has allowed me to step out. I am not more of an investor than a day-to-day contributor

- UKscrap.com. This one died in 2016. The site is still there, but competition and my lack of interest killed it

As I said, nothing is truly passive, but you need to have a passion for whatever you do and I would try to create a 'passive index' for your ideas. How much time will they take to get off the ground, how much to run monthly, what is the product life cycle (if you can work that out!). From when I started there are a HUGE number of resources to help you also. Feel free to ask for help or advice, for what it's worth!

EDIT: I actually met my SourceGuardian partner once in Prague for 2 days. Forgot that when I wrote the above!

Hi! I would like to know the language and LOC of both SourceGuardian and Competitor Monitor, to see the what's the complexity of code people are selling. Thanks

Both are relatively complex now and I don't have a precise answer for 'lines of code' for you. Competitor Monitor has evolved for 5-6 years and has various subsystems including image matching, crawling, proxy management and much more. Both started out as MVP's and have evolved. Competitor Monitor is built in Python and Go predominantly, however that shouldn't mean anything. The language, platform and complexity of someone elses product should not be any guide for you on your own. Looks also like you created a throw-away account purely to write the request

Thanks ;) yes I did

i own a decent amount of tesla stock and 2016 was a great year for lending it out.

since tesla is such a controversial company, lots of people want to own the stock (expecting it to go up) and lots of people want to short sell it (expecting it go down).

if you're a stock holder, certain places (like interactive brokers) will let you lend your stock holdings to people that want to sell it short. you earn a premium on this loan, but its basically risk-free since the brokerage bears the counter-party risk.

because short interest is so high, there was a substantial portion of 2016 where there weren't enough shares available to satisfy short sellers' demand. TSLA became classified as "hard to borrow" and borrowing premiums would be anywhere from 8% to 100+% depending on the day/demand. this is money short sellers pay on top of the cost to purchase the shares (and one more thing to bear on top of the risk of short-selling, but that's another story).

the premium is paid daily, and the brokerage usually takes a chunk of it (often half), so if you had $100k of tesla stock and the premium was 50%, you'd earn (100,000 * 50% * (1/2) / 365) = $68.50 for each day that someone borrowed your shares. the rate fluctuated daily, but this still netted me several thousand dollars of truly passive income, since i was planning to hold the stock either way. this is also a huge income stream for institutional shareholders that are sitting on millions of shares.

Thank you for teaching me something new about the stock market -- I had no idea this was a thing!

Ditto. Never heard of this or if I did, it totally didn't register

What would be a good starting place to learn more about doing this? Also, is it possible to do with a small amount of shares in individual companies if the bulk of my investments are in indexes?

If you were set on doing it, you could compare this list of heavily shorted companies (http://online.wsj.com/mdc/public/page/2_3062-nasdaqshort-hig...) with the rates paid by your broker. if you're using Interactive Brokers, this is listed under "SLB (Stock Loan/Borrow) Rates".

If you own index ETFs then you can loan out those shares. QQQ is on that list and it's a NASDAQ index ETF. If you primarily own indexes though then you don't really own shares in the individual companies comprising that index, so I don't think you have something to loan technically. Like you might sort of own a lot of Apple through an S&P index, but you can't really deliver shares of Apple to a short seller.

Two columns to note in the link above:

* if you look at the "% Float" column in the link above, you can see that TSLA is at 32.0%, meaning that 32% of all TSLA stock is held by people that are shorting it. this calculation is a little more nuanced than this because shorts are only borrowing it and the stock kind of has two owners, but it paints the general picture: 1/3 of Tesla stock holders are there because they hope Tesla stock decreases in value. I think they're dead wrong but that's how markets are made.

* the "days to cover" column means that if all the short sellers tried to close their position (ie, buy stock in the company), how many days would it take that to happen at an average day's volume? this can be an indicator of companies ripe for a short squeeze, where a company announces unexpected good news and shorts rapidly try to close their position but not enough people want to sell and so the stock price skyrockets. This famously happened to Volkswagen: https://www.quora.com/What-are-some-of-the-greatest-short-sq...

be aware of a few things in general:

* these rates are completely out of your hands. GOGO of Gogo inflight Wifi is listed at 43% float and 21 days to cover, but its borrow rates are around 8%. I don't know why.

* in many cases, there is a short argument worth listening to and there's a reason many people are shorting a stock. GoPro/GPRO is currently paying 86% for people to lend out their shares to short sellers. You could buy GoPro and lend out your shares but then you run the risk of owning GoPro and it's a big question mark how big that risk is. I face that same risk in owning Tesla, but I think the short argument is garbage and I really believe in the company and that's enough for me.

* the tesla situation was kind of a perfect storm because it has a lot of fervent believers on both sides. companies that people are really passionate about might be hard to come by.

also, as a side anecdote about short squeezes: people were really expecting one these past few months with Tesla regarding its SolarCity merger. The thought was that since there was a potential merger coming up, shareholders were going to need to vote on it one way or the other. That meant that Tesla's institutional shareholders were going to have to recall their loaned shares from short sellers because if the stock were loaned out at the vote record date then the institution technically didn't own it and wouldn't be able to vote on the merger. Since Tesla has such a large percentage of institutional ownership this would trigger a short squeeze.

For whatever reason this never materialized but I don't know why. There's a possibility it may have been against SEC rules or that institutions gradually recalled their shares so as not to disturb things too much.

its basically risk-free since the brokerage bears the counter-party risk.

Well, unless the brokerage itself goes under, no?

Yes, but I would think that's always a risk.

That's part of what you are getting paid for. You are getting paid for providing TSLA liquidity and risk of default on loans.

That's true. The only point I would add is that my loan is with the brokerage and they put up cash collateral. I'm not having to deal with individual short sellers and whatever risk profile they might have.

If the brokerage puts up cash as collateral where is the risk?

i don't really know of any aside from the brokerage itself going under.

i would imagine brokerages want to make this as low risk as possible as it encourages more transactions, so they can charge more fees. and they also get their cut of the premium.

How do you set this up in IB? I have a decent amount of long positions that this seems really useful on (especially since they will be selling float regardless)

What are the best brokers that do this? I always assumed brokers just did this behind the scenes with your shares and kept the money?

The only ones I know of off the top of my head are Fidelity and Interactive Brokers. Maybe Schwab as well? I think in general Fidelity and IB have similar rates.

I co-wrote a book on user acquisition and co-created an accompanying video course to climb out of debt left over from a failed startup.

Made $104,000 in revenue since June (turns out the user acquisition stuff actually works), about 87k of which is profit, so we'll say ~$11,000/month part-time. It still makes me a solid $2,000/month now with zero work, and hopefully more once the book is officially published. (It's done and delivered to backers, but won't be on bookshelves and Amazon until after it's typeset.)


I know the marketing will be over-the-top for HN. Just know it sells because the content is really, really good.

Vincent Dignan, one of the worst twitter spammer I've ever blocked (more than once since he likes/liked to ignore complaints, open a new account and do it again...to the same people!).

If spamming all of twitter in alphabetical order is an example of the growth hacks....

I see the account he used to do most of the spamming has been suspended by Twitter now https://twitter.com/vdignan

Ya, we had a sit down about that and I made him stop. It does work, but I don't care

Would you not spam Twitter if you were in debt and could make 11k/mo? I agree it's lame but gotta pay the bills :)

There are alternatives to wasting thousands of people's time, such as getting a salaried job doing something that's a net positive for society.

I know that I wouldn't. It's called moral compass and knowing how it would make the internet a shittier place the more people it would do.

You can deal crack too, it pays the bills.

> I agree it's lame but gotta pay the bills :) reply.

Yep. And like Floyd Mayweather said, "Skills pay the Bills." Like it or not, Mr Vincent Dugnan is very skilled at making 11,000 / month spamming on twitter and social networks. So that's that.

>I co-wrote a book on user acquisition and co-created an accompanying video course to climb out of debt left over from a failed startup.

I hope the startup didn't fail because it couldn't attract users?

No, it failed because even with 500k users/month it couldn't make money

Grasswire? I used to go there sometimes (found it through your blog posts), and being in a similar space I'd agree that the news/article traffic is extremely tough to monetize. We've since slightly pivoted and are confident we're on the right track now. I'm also glad you found your thing!

Can you answer me a quick question? I notice you use the Twitter widget/embed on Grasswire. How do you like it?

I've always felt it was kind of redundant to show the same content that's already on the site. The reason why I'm asking is because while doing my "due diligence" about blogging/bloggers (our target market after the pivot), I've noticed that a solid 10-15% of all blogs use it (or a similar widget from Pinterest or FB). I can see how they CAN be useful, but the fact that they are mostly "consumption only" and mostly curated by one person, means that there is a lot of room to improve them, which is exactly what we're trying to do with our community platform. I'd love to partner up/work together and join forces in some way. Let me know!

Yes, Grasswire.

Honestly Grasswire is now entirely open sourced/crowdsourced and I haven't touched it in the past ~year or so, so I haven't really been involved in that decision making process and don't have a strong opinion.

I don't really run Grasswire, it's kind of an open collective community, so you can convince people to participate but we can't really "partner" with anyone easily.

Making money selling a book isn't proof that the content of the book contains good advice for making money.

Not directly, but the main method of driving revenue was giving away the first few chapters. We know almost exactly how many sales we'll drive based on how many people read those chapters.

I would really like to buy a digital copy of this book now, is that possible?

Yes, the starter pack on the link I provided gets you a digital copy of the book.

Writing a book is not exactly passive.

I'm going to assume from your reply that you've just not heard the term before but passive income refers to income from something where you do the work up front and it continues to pay down the road.

A book is a perfect example of that.

I'm trying to work out what would count as passive enough to satisfy the grandparent commenter, if writing a book doesn't qualify. Maybe inheritance? Even robbing a bank requires some upfront effort, so it's hardly passive.

A new book is not a perfect example of that, it's a shitload of work - very likely more work per dollar earned than a day job. Passive income is related to using capital rather than effort to generate money. If the IP of the book was passed down to his kids and they continued to make money off it, or enough money was made from it to surpass a regular working wage for the hours spent, maybe then it becomes "passive". Right now it's just a lot of underpaid effort on credit.

You are correct that it is not passive income in traditional sense, but in HN, "the passive income" has come to mean something that generates automatic revenue after the initial work without requiring significant maintenance/upkeep work.

The prime example of passive income used here is patio11's Bingo Card Creator.

One also could say that in traditional investing, the upfront work is the research work to find right index funds or buying property in real estate investing. They might be less work than writing a book, but revenues e.g. from passive index fund investing are also significantly less than from writing a book, if your starting capital is small.

> One also could say that in traditional investing, the upfront work is the research work to find right index funds or buying property in real estate investing

This is the key point. In absolutes there is no such thing as passive income. Anything will take at least 1s of effort, and $0.001 of capital. The spirit of the term, is income that is heavily skewed towards being generated from assets rather than effort.

A new book is the edge case. While making money off IP is generally the perfect example of passive income. Quitting a job to become an author, is not. There is an implied lack of effort and cost in the question. Additionally, and importantly, there needs to be a sense of "free" in there.

The prototypical case:

- [bust your ass at work] >> [get evened out with paycheck] >> ["free!" passive income from savings]

New book case:

- [bust your ass writing] >> [nothing, world still owes you] >> ["free?" passive income from book IP]

Until the "nothing" gets filled in with the equivalent of a salaried wage, I'm not a fan of calling it "passive income".

> Until the "nothing" gets filled in with the equivalent of a salaried wage, I'm not a fan of calling it "passive income".

Would you also consider creating a static "how to" site that generates revenue from ads to not be passive income? I think that's the most basic example of what HN considers passive.

I think it depends where you are in the cycle. If you just finished putting in 50hrs of work, and have so far made $100, I wouldn't consider that true passive income. Fast-forward a year, and your income from the site has surpassed $2500 (the equivalent of your salaried wage for those hours), with minimal additional effort - now you are making passive income.

We're just defining words here anyway. I think a core component of what people think of when they think "passive income" is making a disproportional amount of income relative to effort put in. Until those proportions get dis'ed, you're just working at a sub-optimal job.

2k/mo with zero work is indeed passive.

Yes, and not only is it not passive, but you actually have to say something interesting, which means you have to have some business knowledge in some field. And even then, it actually makes money only if it works. Which is rare, probably more rare than a successful startup depending on the specific domain you are writing about.

Yeah thats exactly what you should do to promote something like this.

Tell anyone how much you made with your own tipps without proof/proof of your specific case and use it to sell it

What part of "$103,892 USD total funds raised" on the provided link was difficult to parse?

And why assume the other is lying? This Ask HN is specifically about passive income, and calls for people to share their profits. It's not about them posting their IRS returns or other proof. If you're gonna doubt them, might as well skip the whole post.

It is the same crap Tim Ferriss is doing. People like the idea, think they can use it as well only to never understand that they are a part of a pyramid scheme which is ultra flat and has only him or someone like Tim Ferriss on top.

If it's ultra flat then it's not a pyramid scheme. It's only a pyramid scheme if it trickles down to ever diminishing returns.

At worse, what you describe is a snake oil sale.

But people can genuinely learn things from this or from Tim Ferris work too, so it's more like any self-help book/product sale basically. As long as it contains useful stuff that the buyer didn't know before on their own, it's legit for me.

Of course if the content is good, it still relies on the determination of those applying it. And some luck besides.

Well, looks like it got $103k in crowd funding, so it's not totally unsubstantiated.

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