Wow. Last week, I published a post asking you what you’d like to see on cheerfulegg that could make a difference in your life. A BUNCH of you emailed me back with super awesome suggestions.
(Side note: The amount of email that I get from cheerfulegg has quadrupled over the past couple of months, so I’m really sorry if I can’t reply to every email. But please keep on sending them – I read every comment, suggestion and feedback that I receive.)
For example, plenty of you wanted to learn:
- How to figure out all the different types of insurance in Singapore
- How to be more patient to get even better results <— Love this one
- How to start a business in Singapore
- How to think faster
- How to earn extra money on the side
- How to set financial targets
- How to appreciate life or people more
- How to keep your focus
These are all great suggestions, and I’ll definitely try to address as many of them as I can this year.
However, today, I’d like to talk about some suggestions I received last week that weren’t so great. Check these out:
- “How to build passive income without having too much risk?”
- “If investment can help me earn $100 per day, so that I can consider quitting my job and to live life.” [sic]
- “What stocks are you planning to increase your position in the next 6-12 months?”
Can you guess what the common thread is here?
Yes – These readers were all looking for an easy way to make “passive income” – the Holy Grail of every single personal finance strategy since the beginning of time.
Unfortunately, by using “passive income” as their starting point, these people are doomed from the start. Here’s why.
The Misguided Allure of Passive Income
The mantra of passive income has been trumpeted over and over again by countless financial schemes. Pick dividend stocks so you can earn passive income! Put ads on your site so you can earn passive income! Join our MLM company so you can earn passive income!
Many people spend their lives searching for passive income, probably encouraged by sleazy salesmen who sell them visions of themselves sitting at home in a singlet and shorts, surfing Facebook and watching the ca$$hhh moneyyyy roll in.
But ask if they know 5 ways to improve their finances using the resources they already have (e.g automating their finances, getting promoted, building a sensible long-term portfolio, launching a valuable business, freelancing on the side), and most of them will have absolutely no clue.
If you’re waiting for that weird nerdy eggy blogger to spoonfeed you the answer of “How to boost passive income with no risk” or “10 stocks you should buy in the next 6 months”, you’ve already lost. You don’t understand the massive amounts of time, work and value it takes to truly become wealthy.
I’m sorry, but there’s no such thing as a magical switch you can flip and instantly watch ten thousand dollars roll in every month. Instead, here are three ways to truly improve your finances, using the opportunities you already have:
- Be patient
- Work your ass off
- Add massive value
Okay, so you wanna earn passive income? Here’re the two easiest ways:
- Automate your savings into a high-interest savings account. Do this throughout your entire working life.
- Build a solid, diversified, index-based portfolio, and contribute to it for the next twenty to thirty years.
Not quite the sexy solutions you were expecting, right? Notice that I never said anything about “Trade using the RSI!” or “Buy stocks on the 11th day during the third cycle of a full moon!”
Yes, there are savers and investors who earn decent “passive income” from their investments. But they almost certainly spent decades researching, monitoring and consistently building their portfolios. Not to mention the countless times they’ve had to grit their teeth and hold on when their investments didn’t look great.
Savings and investing are the easiest ways to get rich, but they aren’t necessarily the fastest.
That doesn’t mean that you should ignore them though. Anyone can set up a proper system to save, invest and build their wealth slowly and steadily. Once your system is set up, just be patient. In the meantime, focus on the rest of your life and:
Work Your Ass Off
I know of several people who make tens of thousands of dollars a month. Some of them even do it “passively”. But here’s one thing they have in common: All of them work their asses off. You won’t find a single one lying on the beach being fanned and fed grapes by beautiful women.
Other people see their results and go, “He’s so lucky!” or “It must be soooo nice to be able to work for yourself”. What most people don’t see is the immense amount of work, failures, and sleepless nights that goes into those businesses before they actually succeeded.
I’m nowhere near the levels of success of these entrepreneurs, but I can tell you that it takes a massive amount of work to build something that people will take their wallets out for.
Take my recently launched guide Automatic Investing, for example. Before ever writing it, I spent years researching and refining the best investing system I could think of for young Singaporean investors. In 2012, I spent 4 months writing a first draft that I eventually threw away because I hated it. When I started writing again in 2013, I spent 6 months waking up at 5.30am, writing before going to work and after coming home exhausted from the office. I had absolutely no social life.
Does that sound anywhere near “passive” to you?
The truth is, improving your finances takes work. It doesn’t just apply to entrepreneurs – if you want to get a raise or a huge bonus at work this year, you’re going to have to put in the time and sweat that sets you apart from the rest of the world who aren’t prepared to make those sacrifices.
But you can’t just do any form of hard work, you’ve also got to:
Add Massive Value
Everyone loves to complain about how lousy their salary is. We all do this. I’ve done it myself. But whenever I do, I catch myself and ask, “Have I produced any results for the people who pay me to deserve a higher salary?”
The truth is, most people who spend their lives whining about their pay don’t probably don’t deserve a higher salary in the first place. It’s not enough to work hard. You’ve also got to add massive value to whoever’s paying you. Give them something valuable first, and then you’re in a position to negotiate for a higher salary or to sell something that people will buy.
- Are you doing amazing work that helps your company generate more sales or cut costs?
- Are you shipping products or services that actually improve other people’s lives?
- Do you have raving testimonials from your colleagues, customers and superiors?
If not, focus on becoming a top performer in these areas first instead of searching for some mythical “passive income” stream that doesn’t help anybody.
So right now, you have a choice. You can continue your search for hotshot stock-picking strategies, or try to game the system using scammy SEM/SEO techniques. You can even continue browsing the rest of my site or email list for the “secrets” to living a rich life.
But longtime readers of my site will know that there really are no secrets to improving your finances. Be patient, work your ass off, and add massive value – that’s it. Along the way, I’ll do my best to lay it all out in these three areas to help you live the life you want. Now it’s up to you.