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INVESTING 101 EDUCATION

How to Transition From 9-5 to Full-Time Investing

Do you dream of kicking back on a beach and running your investments from your smartphone? Passive income looks a lot like that, but there’s not always a straight path to the beach. For many, passive income means earning effortlessly 24/7 but continuing to work 9-5 on the week days. It’s tricky to transition from 9-5 to full-time investing, but it’s definitely doable. Here are some tips to make it happen sooner rather than later.

Figure Out the Insurance Angle

For many, the sole reason to retain a full-time job is to keep those all-important insurance benefits. Talk to your insurance representative to find out what the minimum amount of hours is that you need to work in order to stay on the company policy. You may be able to work as few as 10 hours without losing benefits. A second option is to have your spouse keep their job for the insurance while you quit and transition to full-time investing. Yet a third option is to look into private insurance for entrepreneurs. You’ll pay more per month, but if your investments are successful, the extra cost may be worth it. An insurance broker will be able to provide several quotes for you. Whatever you do, don’t forego insurance altogether, and don’t let your current policy lapse. Despite what existing insurance mandates are, you don’t want to put yourself or your family in a position where you’re uninsurable in the future.

Look Into Working Part-Time

Fear of losing that steady paycheck is another big obstacle for many people who want to transition into full-time investing. Indeed, the steady paycheck keeps cash flow healthy, whereas investing can produce unpredictable income results. To wean yourself off a steady paycheck, talk to your boss about working part-time before you quit altogether. The reduced income will enable you to evaluate whether or not your investment income is enough to sustain you from month to month. Working part-time will also help you to see if you’re really comfortable earning less steady income and relying on your investment wits to earn money. Finally, working part-time will give you more free time to increase your investment activities so that when you do put in your notice, you’ll be prepared with a solid investment plan and/or income.

Save Up Cash

At least a year before you hand in your resignation, begin saving cash. If you’ve already been a saver, increase the percentage you put away each week. When that Monday rolls around that you don’t have to commute to work ever again, you’ll be relieved looking at your bank account balance. Cash on hand will also give you leverage to go after opportune investments without having to rely on financing. Also, cash will help put you in the game when you can no longer qualify in the future for conventional financing with W-2 income.

Leverage Retirement Savings

Put your retirement savings to work for you where it can earn you steady double-digit returns that are almost guaranteed. Private money lending allows you to act as the bank, lending to private developers. Your earnings will help pad your retirement account, typically with higher returns than you can realize in the stock or mutual fund markets. Plus, knowing that your retirement fund is still growing will add to your confidence that you’ve made a wise choice in transitioning from 9-5 to full-time investing.

Quitting your job to go full-time into investing is a bold move, but as along as you take care of the necessities – insurance, income, savings retirement account growth – there’s no reason to think that it can’t be a  possibility for you. Lots of other investors have made the leap. Maybe it’s time you considered a different kind of future for yourself besides commuting to work everyday for the next 20 or so years. If you’d like to learn more about the private money lending option mentioned here, please contact us. We’d be very happy to help you learn more.