The problem is how long and what you have to do to get that 3-5 million number. No one who is drawn to the “passive income” hustle is thinking “work a normal job for 30 years, live under my means, and invest everything I can”. They want to get much more immediate results so they can enjoy life on easy street because grinding it out for so long sounds extremely depressing.
What you describe is a retirement plan, not a passive income lifestyle. Kinda the opposite of escaping.
This is literally the traditional definition of passive income - using your capital to generate more capital.
There is no free lunch, you need to provide something to get $$$. If you are providing labour it is by definition not really passive. That leaves land or capital.
If you have to grind out making millions over the course of a decade or three, that's simply called having a regular job. That's the status quo.
The passive income folk are all about finding some "hack" where you can be clever or smart or out-hustle the next guy and unlock some secret method to making passive income without capital. That's the entire "industry" in a nutshell. They are not going to folks with $1m in the bank telling them how to make 4% returns on it by tossing it into low cost ETFs. They are going to folks grinding out a living saying they have a shortcut to not needing that capital base to start off with.
tldr; If you already have capital, you don't need to think about passive income. It just happens.
being a professional investor (what you’re referring to) is especially terrifying in a low interest rate environment.
So I moved to a cabin in the woods in a country with a low cost of living, and stuck pretty much all of it in the markets.
Had I not done that, I would have had to go back to work - instead I lived a modest life (€500/mo, max) off the income from putting my apartment on Airbnb, and regained my sanity after a decade of relentless work while my investments did their thing.
Anyway, it’s a decade on, still haven’t done a jot of “work”, and the assets are now worth several million, and are being redeployed to continue to maximise value growth - and we now treat ourselves to spending months travelling at exorbitant budgets, real estate, expensive toys - and had enough stability to decide to have a kid.
So yeah, it’s possible - although had we grown at 6%/yr rather than an average of 80%/yr, it would be a different picture - but I firmly believe there are plenty of other opportunities for rapid capital growth elsewhere in the markets, and yet to come. I’m just some average dude who buys equities on vibes and then sits on them for a decade. If I of all people managed it, others can.
Plus, the kind of investing I do would never fly in a hedge fund - I’d just make the risk desk piss itself with laughter.
I stick with the fields I know and understand - tech, engineering, sciences - don’t go for long bets so much as “if this relatively predictable set of circumstances arises, who will inevitably benefit”.
For example, in 2017 I was keeping abreast with ML research, and realised that within a decade this stuff was going to be huge - so I bought Nvidia and their supply chain and sat on it. Also Tesla as I figured as if I saw them as an adjacent incumbent beneficiary of an AI boom, then others would, too.
I’ve followed that chain of logic through - caught the nuclear renaissance in its entirety, as well as predictable resource squeezes.
So - that’s just one of my trees of bets - but my whole thesis is “predict a future, model out what that looks like, place bets accordingly”.
Thats all it comes down to
Passive income through assets is the basis of our entire society, trying to out earn the base line is the entire economy. Banks wouldnt lend, employers would do something else, if they didnt believe they could earn more doing what they do, instead of owning US treasuries or earning dividends from stocks.
Sure there are the scammer/grifter types who just want a super easy mode get rich quick scheme, but a lot of these folks are somewhere in the middle which is where they get taken by the actual scammers. They get told if they just hustle harder than everyone else for a few years they can achieve escape velocity.
