No Such Thing as A Passive Investment - Ask Cardi B

 

Investing In Yourself – Using Pillars to Build Your Core	https://urbanomics.blogspot.com/2015/04/urbanomics-pillars-path-set-for.html
Setting Budgets + Saving for Black Swans	https://urbanomics.blogspot.com/2013/02/personal-finance-budget-101-free-credit.html
	https://urbanomics.blogspot.com/2019/11/hey-henry-high-earner-not-yet-rich.html
How to Open My First Brokerage Account	https://urbanomics.blogspot.com/2015/04/personal-finance-101-starting.html
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No Such Thing as Passive Investing

Hello Family. I wanted to share a quick post about investing, hell about life. There is no such thing as passive investing. If you've ever heard the phrase there is no free lunch, it is true and you should understand this concept. Everything - I repeat everything in life requires work to achieve the end goal. I can't think of a moment in life where I got something in return that did not require work, some elbow grease, or my blood, sweat or tears.

Quick Examples:

~ Getting a Job - Requires work, training, patience, principles

~ A friendship or relationship - Requires work, good listening, patience, principles

~ Investing - Requires research, training, and patience, principles

So when you hear the phrase "passive investing", realize you're being sold a myth. It's a very high likelihood whoever is preaching that passive investing is attempting to MAKE MONEY OFF YOU! I've always said...if it is free you're the product. Passive investing is a term that was created for tax purposes to describe how active you are in the day-to-day activities of the business. However, my definition of a passive investment is simple. I like to define a passive investment as a scenario where my goal is to earn income by handing over my money to someone else to grow in exchange for ownership in their asset -- such as stock, oil field, or real estate. Please pay attention to these key words -- handing money over in exchange for ownership in SOMEONE ELSE'S business. They do the work, and you get residual or passive income. Look into the DJ Envy debacle. People handed over money to a "business partner", Cesar Pena, who dealt in real estate, and they got swindled. Now DJ Envy is walking back his involvement as he promoted this business partner on his radio show, and they held real estate investment seminars. By my definition, these people that got swindled missed an opportunity to legally define their ownership in a way that protected their investment, performed stronger due diligence, and held this business partner honest by performing annual audits of their investment. In business, I support my cybersecurity client by ensuring their legal agreements are airtight, we prefer to do business with well-established players that can explain the processes in detail and allow us to audit their business independently. Further, we ask that they get audited annually by a reputable independent audit firm and we demand the right to see the report (and we're not just talking financial audits). We need proof about how the business works.

Any asset you purchase and receive income from IS NOT passive in my book. Let me tell you why --- because it requires WORK. What the fake advertisers of passive income investing don't tell you is owning a home requires big time work. When I list my property for rent, I must advertise it, receive calls about the listings, pre-screen tenants (some unrealistic), show the property, determine the price, conduct tenant checks, sign leases, clean the property, collect rent, answer questions, fix repairs, answer questions, and stress over unpaid rent.

Need proof - I just rent an article summarizing Cardi B's response to managing a real estate rental. In short, she said:

"We have tenants that have paid f&cking rent for like 9 months!"

"You know what? Don't even f&cking take them to court because we just be so f&cking tired"

In response to her Airbnb in the Dominican Republic:

"Always something! Please! I don't want properties as a gift"

Need more proof - I just spent a week in the Windy City, Chicago. Speaking with 2 people remind me of why you have to be on your A-Game. Here's what we discussed:

Person 1 -- "My tenant wasn't paying rent, further I later found out they were sub-leasing it out on Airbnb. I had to officially provide then a notice to vacate, changed the locked, and kicked them out."

Person 2 -- "I'm preparing to sell my rental. It's been tough lately and currently dealing with an eviction."

Now do these investments sound passive to you. Cardi just realized what we all understand has investors --it takes work. I spend most of my energy screening well, so I don't have to deal with bad tenants. But life happens, you need good legal documents, a lawyer who can handle evictions and you need to have good communication to keep tenants happy and so you stay compliant with local housing laws. 

I own real estate, businesses, and invest and trust me NOTHING about any of these investments is passive. So, I hope this episode of keepin' it real, helps you realize you have to work hard to reap the rewards.

***Remember to get my posts to your inbox by adding your e-mail address. I just found out my posts have stopped coming to my own inbox...so I've got to look into that.

What Am I Reading (Mandela) | Watching (Fearless Funds) | Thinking (Equality)

     

Investing In Yourself – Using Pillars to Build Your Core	https://urbanomics.blogspot.com/2015/04/urbanomics-pillars-path-set-for.html
Setting Budgets + Saving for Black Swans	https://urbanomics.blogspot.com/2013/02/personal-finance-budget-101-free-credit.html
	https://urbanomics.blogspot.com/2019/11/hey-henry-high-earner-not-yet-rich.html
How to Open My First Brokerage Account	https://urbanomics.blogspot.com/2015/04/personal-finance-101-starting.html
Diversify your Life (Mind, Body, Soul, + Investments) HOW TO SEARCH MY BLOG:	Get Updates to Your Email When I Create A New Post:

Mandela - Long Walk to Freedom

What has made me "successful"? I like to share with my mentees, a passion for always learning. Strangely, I rarely have the time to read for pleasure and this is something I want to carve out more time for. I love reading but find myself reading and constantly brushing up on topics like economics, business, cybersecurity, and technology. Now that fall is upon us and leaves are falling from the trees, I am excited to sit in the corner of my comfy couch and just let my mind wander in a good book. The book I chose is about Nelson Mandela's life and called "Mandela's Way". I'm currently on a section that describes his inhumane and criminal imprisonment for 27 years because he was advocating for black South Africans. So, to racially intolerant and impatient people that often use cliche statements like "Slavery was 400 years ago, turn the page", I remind them that in the 1980s apartheid was alive and well and a man can be locked up for advocating for equality. I am still early into the book but some words of wisdom I'd like to share from Mandela is his how prison changed him. The book described how prison taught him discipline, focus, and self-control. These are basic characteristics I tell my mentees they need to lead, and the irony is prison was his teacher. So when I get asked what is it like to be a person of color in Corporate America, I often tell people I was molded into a disciplinarian. I am tough on my mentees because the march or should I say 'walk' through Corporate America is bumpy. I currently support many corporations and very happy to add value to their businesses and when I get described as successful -- I'd rather remind others that I'm simply focused, determined, self-controlled, self-aware, and disciplined. 

Fearless Funds

Next, I am keeping an eye on the developments surrounding the Fearless Funds. This story came to my attention because it's honestly in my wheelhouse, my backyard, my lane of economics -- investing, and equity. A few years ago, I was drawn into the establishment of this fund when I was listening to some phenomenal women describe how they wanted help scale companies that are run by women of color. These women are: Arian Simone, Ayana Parsons, and Keshia Knight Pulliam (yes Rudy from the Cosby show). To be honest, when I tuned it I came for Rudy but left impressed with the mission. I've then gone on to read stories or watch these ladies live on CNBC and somehow on one of the morning talk shows which I typically do not tune in to. I was shocked when I learned affirmative action was under assault and then gutted when I heard this fund was under attack as well. I've constantly listened to investment company after company pitch that they are targeted scaling business in nice or underserved areas. Heck there are funds that target companies in Europe, Middle East, and Africa known as the EMEA region, 

Asia Pacific, and Israel. I've listened to funds that are targeting women and veteran owned businesses, so I was in utter shock to hear that someone had an issue with a fund catering to African American women owned business. It's no secret that number of women in business is rising and definitely no secret that Corporate America is specially targeting women as men seem to be trailing academically. The numbers are the numbers. It no secret part of this marketing started with Sheryl Sandberg, a white woman, invoking the phrase "Lean In" to women in business. This entire movement of supporting ALL underrepresented groups was so empowering, I 'leaned in' by mentoring, training, and hiring persons from underrepresented groups in the technology field. So if investments can target LATAM, EMEA, APAC, and women owned businesses, why do we have an issue with leaning into affirmative action and more importantly the Fearless Funds?

I leave you with an article from AfroTech to learn more: Man Behind U.S. Supreme Court's Affirmative Action Decision Sues VC Fund Supporting Black-Women-Owned Businesses - AfroTech

No African American Women CEOs Running S&P 500 Companies

Finally, I'll end with my thoughts on Roz Brewer resigning from Walgreens Boots Alliance. She inherited a tough job and I was disappointed that she couldn't get a longer tenure to turn around the organization. This moment represents an interesting time in Corporate America. There were 8 African American CEOs running S&P 500 companies and this number was a record. I always tell people to celebrate good news! But this news should be celebrated with a caveat --- we can still do better. With the resignation of Brewer, this number is now down to 7 and also means there are no black women running our top 500 companies. On the heels of Fearless Funds being sued for investing and advocating for women learning how to grow their companies, I think there is a silver lining. We need to continue to move the culture, our culture to being accustomed to creating, growing, and investing in companies started by the African diaspora. An influx of investments is happening in Africa and tech companies are going there by increasing numbers to tap the economy and cheaper labor. That needs to happen here in the US as there are many communities that need uplifting. I've learned so much by running my own business and enjoy leaning into working with vendors from underrepresented groups. I'm a firm believer we need to build a pipeline of talent that comes from and grows the culture.