#(e.g. i was generally brought up more free-range than my peers but

[queenlua]

The crisis of the last year with student protests has made even the richest institutions aware of how much of their presumed wealth can be yanked away from them by a donor class who are increasingly inclined to exert their influence and authority in openly oligarchic ways. The obsession with safety—and the contradictions of that obsession—is as much about financial management as anything else. But that also is a wider sociocultural formation: the American upper middle-class is generally an asset class now who think about safety in the same way as universities both because all institutions with asset-based wealth have to and because they personally have to safeguard their assets in the same fashion, and face some of the same risks from liability exposure. [. . .] Moving away from the caretaker era can’t just be a matter of exposing students to risk and dismantling systems that make safety the mandatory product of an intrusive regime of surveillance and correction. If the people in charge inside the university and outside of it aren’t equally exposed to the natural consequences of their actions and decisions, all this means is forcefully communicating to students—or perhaps all young people—their relative powerlessness and vulnerability. It means deciding that the lesson you really want to teach is that it’s bad to be powerless and thus you should strive in life for power and wealth in order to be beyond consequences. Arguably, if the caretaker era and the bystander era were both aligned with a wider social ideology that was broadly shared across a generation, then this in fact the new ethos of our time—that there is no safety but in power, and that where power believes people are not being sufficiently punished for the things that power disdains, it will find a way to make consequences where there have been none.

bleak essay that nonetheless collects a lot of idle thoughts i've had in one place & puts them together with more coherence than i've ever managed

[wesleybates099]

Ranking The Best Passive Income Investments

After about the 30th day in a row of working 12+ hour days and eating rubber chicken dinners at our company’s free cafeteria, I decided I had enough.

There was no way I could last for more than five years working in a pressure cooker environment like Wall Street. I became obsessed with generating passive income starting in 1999, the year I graduated from college.

We’ve discussed how to get started building passive income for financial freedom before. Now I’d like to rank the various passive income streams based on risk, return, feasibility, liquidity, and activity.

The rankings are somewhat subjective, but they are born from my own real life experiences attempting to generate multiple types of passive income sources over the past 20 years.

The passive income journey is a long one. But thanks to innovation and technology, the ability to generate meaningful passive income is accelerating!

Passive Income Starts With Saving

Generally speaking, it’s much more pleasurable to spend than to save. If saving was easy, we’d never have to read another story again about a multimillionaire who ended up broke.

By far the most important reason to save is so you can have enough money to do what you want, when you want, without anybody telling you what to do. Financial freedom is the best!

Sounds nice right? If only there was a formula or a chart like the 401k by Age chart which gives people guidance on how much to save and for how long in order to reach financial freedom. Unfortunately, saving money is only the first step in building passive income. Figuring out how to properly invest your savings is even more important.

If you can max out your 401k or max out your IRA and then save an additional 20%+ of your after-tax, after-retirement contribution, good things really start to happen.

Ranking Various Passive Income Investments

Below are eight main passive income investments to consider. Each passive income stream will be ranked based on Risk, Return, Feasibility, Liquidity, and Activity. Each criteria will get a score of between 1-10. The higher the score, the better.

A Risk Score of 10 means no risk.

A Return Score of 1 means the returns are horrible compared to the risk-free rate.

A Feasibility score of 10 means everybody can do it.

A Liquidity Score of 1 means it’s very difficult to withdraw your money without a massive penalty.

An Activity Score of 10 means you can kick back and do nothing to earn income.

To make the ranking as realistic as possible, every score is relative to each other. Furthermore, the return criteria is based off trying to generate $10,000 a year in passive income.

1) Certificate of Deposit (CD) / Money Market

There was a time when CDs would produce a respectable 4%+ yield. Nowadays, you’ll be lucky to find a 5-7 year CD that provides anything above 2.5% The great thing about CDs is that there are no income or net worth minimums to invest, unlike many alternative investments, which require investors to be accredited.

Anybody can go to their local bank and open up a CD of their desired duration. Furthermore, a CD and money market account are FDIC insured for up to $250,000 per individual, and $500,000 per joint account.

Everybody needs to take advantage of higher short term rates and save more. Just several years ago, money market and CD rates were only 0.1%. Now you can get an online money market account paying 2.3% as of 2H2019.

Risk: 10 (no risk), Return: 3 (as rates have increased), Feasibility: 10. Liquidity: 6. Activity: 10. Total Score: 39

2) Fixed Income / Bonds

As interest rates have been going down over the past 30 years, bond prices have continued to go up. With the 10-year yield (risk free rate) at roughly 2.4% in 2019, it’s hard to see interest rates declining much further. That said, long term interest rates can stay low for a long time. Just look at Japanese interest rates, which are negative (inflation is higher than nominal interest rate).

Bonds provide a terrific defensive allocation to an investment portfolio, especially during times of uncertainty like we are seeing with the US-China trade wars. If you hold a government bond until maturity, you will get all your coupon payments and principal back. But just like stocks, there are plenty of different types of bond investments to choose from.

Anybody can buy a bond ETF such as IEF (7-10 Year Treasury), MUB (muni bond fund),  or a fixed income fund like PTTRX (Pimco Total Return Fund). You can also buy individual corporate or municipal bonds. Municipal bonds are especially enticing for higher income earners who face a high marginal tax rate. You can also directly buy Treasury bonds through your online brokerage platform.

The main concern is the future of interest rates. If interest rates do go higher, bonds will decline in value, all else being equal. That said, so long as you hold the bond to maturity, you should get your initial principal back along with all the coupon payments if you are buying a highly rated bond e.g. AA.

See: The Case For Buying Bonds: Living For Free And Other Benefits

Risk: 8, Return: 5, Feasibility: 10, Liquidity: 8. Activity: 9. Total Score: 40

3) Physical Real Estate

Real estate is my favorite asset class to build wealth because it’s easy to understand, provides shelter, and generates income. The only bad thing about owning physical real estate is that it ranks poorly on the passive variable due to tenants and maintenance issues.

Owning your primary residence means you are neutral the real estate market. Renting means you are short the real estate market, and only after buying two or more properties are you actually long real estate. This is why everybody should own their primary residence as soon as they know they want to stay put for 5-10 years. Inflation is too powerful a force to combat.

In order to generate $10,000 in Net Operating Profit After Tax (NOPAT) through a rental property, you must own a $50,000 property with an unheard of 20% net rental yield, a $100,000 property with a rare 10% net rental yield, or a more realistic $200,000 property with a 5% net rental yield.

In expensive cities like San Francisco and New York City, net rental yields can fall as low as 2.5%. This is a sign that there is a lot of liquidity buying property mainly for appreciation and not so much for income generation. This is a riskier proposition than buying property based on rental income.

In inexpensive cities, such as those in the Midwest and South, net rental yields can easily be in the range of 7% – 12%, although appreciation may be slower. I’m personally bullish on the heartland of America real estate and have been actively buying commercial real estate there through real estate crowdfunding and speciality REITs, which we will discuss more below.

Risk: 5, Return: 8, Feasibility: 7. Liquidity: 3. Activity: 6. Total Score: 29

4) Peer-to-Peer Lending (P2P)

P2P lending started in San Francisco with Lending Club and Prosper in mid-2000. The idea of peer-to-peer lending is to disintermediate banks and help denied borrowers get loans at potentially lower rates compared to the rates of larger financial institutions. What was once a very nascent industry has now grown into a multi-billion dollar business with full regulation.

With a diversified portfolio of 100 or more notes, the leading P2P lenders claim investors can make an annual return between 5% – 7%. The returns used to be higher, but the increased supply of money has brought returns down.

The biggest problem I have with P2P lending is people not paying me back. There’s something that just doesn’t sit right with people breaking their contract obligations.

Risk: 5, Return: 6, Feasibility: 9. Liquidity: 6. Activity: 8. Total Score: 34

5) Dividend Investing

Investing in large cap dividend companies is one of the best ways to build passive income. The “Dividend Aristocrats” are a list of blue chip companies in the S&P 500 that have demonstrated a consistent increase in dividend payouts over the years.

Let’s say a company earns $1 a share and pays out 75 cents in the form of a dividend. That’s a 75% dividend payout ratio. Let’s say the next year the company earns $2 a share and pays out $1 in the form of dividends. Although the dividend payout ratio declines to 50%, due the company wanting to spend more CAPEX on expansion, at least the absolute dividend amount increases.

Dividend stocks tend to be more mature companies that are past their high growth stage. As a result, they are less volatile. Utilities, telecoms, and financial sectors tend to make up the majority of dividend paying companies.

Tech, Internet, and biotech, on the other hand, tend not to pay any dividends because they are reinvesting most of their retained earnings back into their company for further growth. But growth stocks can easily lose investors tremendous value over a short period of time.

To achieve $10,000 in annual passive income at the S&P 500’s ~1.8% dividend yield, you would need to invest roughly $555,000. Instead, you could invest only $154,000 into AT&T stock given its 6.5% estimated dividend yield. It all depends on your risk tolerance.

One of the easiest ways to get exposure to dividend stocks is to buy ETFs like DVY, VYM, and NOBL or index funds. You can also use a digital wealth advisor like Betterment to automatically invest your money for you at a low fee. The key is to investment consistently over time.

In the long run, it is very hard to outperform any index, therefore, the key is to pay the lowest fees possible while being mostly invested in index fund. It’s fine to take 10% – 20% of your investable assets and try to pick outperformers.

Risk: 6, Return: 7, Feasibility: 10. Liquidity: 8. Activity: 10. Total Score: 41

6) Private Equity Investing

Private equity investing can be a tremendous source of passive income with the right investments. If you find the next Uber, the returns will blow every single other passive income investment out of the water. But of course, finding the next Uber is a tough task since most private companies fail and the investment opportunities always go to the most connected investors.

The most liquid of the private investments are investing in equity or credit hedge funds, real estate funds, and private company funds. There will usually be 3-10-year lockup periods. The least liquid of the private investments is when you invest directly into a private company.

Access to private investments are restricted to accredited investors, which is why the Feasibility Score is only a 4. But the Activity Score is a 10, because you can’t do anything even if you wanted to. You’re investing for the long term. The Risk and Return score greatly depends on your investing acumen and access.

Gaining $10,000 a year in private equity investing is difficult to quantify unless you are investing in a real estate or fixed income fund. Such funds generally target 8-15% annual returns, which equates to a need for $83,000 – $125,000 in capital.

Risk: 4. Return: 7. Feasibility: 4. Liquidity: 2. Activity: 10. Total Score 27

7) Real Estate Crowdsourcing

Currently, my favorite passive income source is real estate crowdfunding, which allows individuals to buy a piece of a commercial real estate project that was once only available to ultra high net worth individuals or institutional investors.

Owning individual physical real estate is great, but it’s like going all-in on one asset in a particular location with leverage. If the market goes down, your concentrated investment could lose big time if you are forced to sell like many did during the last financial crisis.

Real estate crowdsourcing allows you to surgically invest as little as $500 into a residential or commercial real estate project for potentially 7 – 13% annual returns based off historical data. Such returns are much better than the average private equity, CD, bond market, P2P lending, and dividend investing returns.

Unlike P2P lending, with real estate crowdfunding, you at least have a physical asset as collateral.

For those of you who don’t want to come up with a $300,000 downpayment and a $1,200,000 mortgage to buy the median home in an expensive coastal city like SF or NYC, who don’t want to deal with tenants or remodeling, and who wants to sit back after an investment is made, check out Fundrise, my favorite real estate crowdsourcing company founded in 2012.

In mid-2017, I sold my San Francisco rental property for 30X annual gross rent and reinvested $500,000 of the proceeds in real estate crowdfunding to take advantage of lower valuations across the country with much higher net rental yields.

Coastal city real estate has become too expensive, and I expect people and capital to naturally flow towards lower cost areas of the country.

Risk: 7, Return: 8, Feasibility: 10, Liquidity: 7, Activity: 10. Total Score: 42

8) Creating Your Own Products

Finally, if you’re a creative person, you might be able to produce a product that’s able to generate a steady flow of passive income for years to come. At the extreme, Michael Jackson, makes more dead than alive due to the royalties his estate makes from all the songs he produced in his career. Since Michael’s death, his estate has made over $2.1 billion according to Forbes.

Of course it’s unlikely any one of us will replicate the genius of Michael Jackson, but you could produce your own eBook, e-course, award-winning photo, or song to create your own slice of passive income.

In 2012, I wrote a 180-page eBook about severance package negotiations that regularly sells about ~50 copies a month at $87 each without much ongoing maintenance. The book has since been revised and updated for 2019 to teach people how to negotiate a severance to give themselves a financial runway for their next chapter in life.

In order to generate $51,000 a year in passive income from the book as I do now, I would need to invest $1,275,000 in an asset that generates a 4% yield. To earn $10,000 a year in passive income would therefore need roughly $250,000 in capital.

Who would have thought a book about engineering your layoff could regularly generate so much revenue? We’re so busy with our jobs that our childhood creativity sadly vanishes over time.

Informational Source

[edene1023]

The Consequences of Design  (and systems)

Introduction, Reading III (New Materiality of Design) by Suvi, 6th Oct 2019.  

How often do you think of what kind of objects shape our habits in everyday life and how? Some of these artefacts and systems have become invisible but quite essential part of our mundane life. Also, information is organized with carefully designed standardizations. I started reading with a brief definition of What is Object-Oriented Ontology, continued with Nadel Vossoughian’s Workers of the World, Conform! and finished with “Where are the masses?” by Bruno Latour. The texts led me to think about not only the impact of design of various things in societal level, but also provoked numerous thoughts from the deeper meaning of different kind of objects to morality, ethics and happiness. I couldn’t examine all of them here in detail, but instead, I’ll try to make some sense in the mass of my thoughts.

Especially Latour’s text made me perplexed at first – it wasn’t an easy task to see his point. However, it’s the one that fascinated me the most: he peers in his text to laws, ethics, morality, habits and rules and dichotomy between technology and human. He plays somewhere in-between the extremities, creating divisions and juxtapositions like human vs. nonhuman, novelist vs. engineer, extrasomatic vs. intrasomatic, prescribed user vs. user-in-the-flesh, figurative and nonfigurative characters, persons - things.  

Universal systems set us free ...or do they?

Based on the texts, universal systems and standardization are mainly built through social communication, common rules and culture. To me, it resembles some kind of co-design. Latour’s and Vossoughian’s texts made me aware of the number of various standards existing in modern world. Efficiency seems to have always been the driving force for developing standardized systems and universal formats (Wilhelm Ostwald). In the end everything always comes back to producing more and faster. But is it also just a natural result of the human nature?

It’s fascinating that according to Latour the skills (learned by a support of designed system or standards, e.g. the seatbelt in a car) become so incorporated that we don’t need specific (written) instructions anymore. “From extrasomatic, they have become intrasomatic. Incorporation in human or excorporation in nonhuman bodies is also one of the choices left to the designers. -- The beauty of artifacts is that they take on themselves the contradictory wishes or needs of humans and nonhumans.” Without even realizing it we have so many this kind of activities in our everyday life.

Happiness comes with harmony

Human mind is eager to find patterns and harmony. The invention of standardized paper sizes is a great example of how life can get easier and national and cultural borders can be crossed with universal design. Vossoughian mentions that with the right technical adjustments and systems society can be liberated, which is kind of true, but at the same time they create silent boundaries. In Latour’s text it’s obvious that we cannot understand how societies work without understanding of how technologies shape our everyday life, effect on our decisions and habits and routines. I fully agree, since how it would be possible to solve societal problems if you don’t understand the environment you’re living in.  

This reminds me of some things I read in social psychologist Jonathan Haidt’s book, Happiness Hypothesis, that certain amount of restrictions, limits and automated actions make people happier than unlimited range of alternatives, complete freedom and constant change. Unorganized world without any structures with full of happy people is something that seems quite improbable.

After all, happiness is often something related to tranquility, peace and harmony. And the same tendency can be discovered in nature when observing all the beautiful patterns and harmonious forms which can be found from larger scale to the microscopic level. It’s natural for us to aim for finding structures and creating habits that are repeated in similar ways day after day. They create an illusion of safety when life itself is so uncertain.

The essence of our everyday life is constantly changing

Another notion I focused on is the change in the nature of work, but it’s not just work, that kind of changes have reflections to our everyday life, too. The invention of personal computer brought new possibilities to process and archive information. “Maurizio Lazzarato’s essay Immaterial Labor (1996) theorizes the shift from traditional industry to the production of the informational and cultural content of commodity. Separating intellectual and manual work, both which are subject to rationalization and automation, is not so simple.”

The dualism of technological determinism and social construction which Latour mentions is still prevalent, and I cannot help but think of AI and all the dimensions (and the worst-case scenarios) it has brought to this discussion. There’s now existing potential to change our societies in profound level by turning multiple manual tasks, routines and to automated ones, to create invisible layers leaving empty slots which need to be filled. Latour mentions that attribution of roles and action is also a choice – but are they really? We’re most likely affected by our environment and common attitudes, at least on individual level the generally accepted choices might not be very substantial.

All these standards are created by human mind, and it is extremely difficult for us to see the big picture or operate without our emotions effecting to our judgement. Are we able to see the consequences of our designs on a larger scale (before it’s too late)? Look what happened with doors (or paper sizes).

Conclusion (or at least a try)

What kind of life would be without design? To some extent, design is connected to innovation. In the best scenario human life can be made easier by good design, and good design is problem-solving and problem-solving seems to come naturally for humans.  

Morality and ethics are fascinating themes to think of, but in no way easy ones. On the individual level it might still be comprehendible but stepping up to strategic levels the same rules might not apply anymore. On societal level the change becomes visible slower, and the consequences of different kind of actions might not be so easily detected. Do we, as designers, need to start considering the consequences of our designs more carefully?