Financial Samurai Founder’s Advice on Making Money While Sleeping—Invest in Treasury Bonds

In a world where financial freedom is increasingly sought after, the concept of earning money while you sleep holds a unique allure. Sam Dogen, the founder of Financial Samurai and author of “Buy This, Not That” is a prime example of someone who has mastered the art of passive income, per CNBC Make It. Dogen left his investment banking career in 2012 with $80,000 in annual passive income, a sum that he augmented over the years to meet the demands of a growing family and an evolving lifestyle.

Dogen's strategy revolves around a diversified portfolio of passive income streams, including stocks, bonds, and real estate investments. His journey exemplifies the potential for anyone to achieve financial independence through strategic planning and disciplined investing. For those looking to emulate Dogen's success, the path to passive income begins with understanding the available options.

According to Dogen, one of the most accessible routes to passive income is through treasury bonds, particularly given their current favorable yields. Treasury bonds, backed by the U.S. government, offer a secure investment option with guaranteed returns, making them an attractive choice for risk-averse investors.

Investors can easily access Treasury bonds through brokerage accounts, allowing them to start earning passive income with minimal effort. Short-dated treasury bonds, or T-bills, offer particularly appealing yields in the current market environment, making them a preferred choice for those seeking immediate returns on their investments.

Beyond bonds, stocks also present an opportunity for passive income generation. Dogen recommends investing in dividend-focused mutual funds or exchange-traded funds (ETFs), which provide regular income through dividend payments. By selecting funds that track established companies with a history of dividend growth, investors can secure a steady stream of passive income while benefiting from potential capital appreciation.

However, Dogen cautions against romanticizing real estate as a purely passive income source. While rental properties contribute to his overall passive income, he acknowledges the time and effort required to manage them effectively. Unlike stocks and bonds, real estate investments often entail active involvement, making them less suitable for those seeking truly hands-off income streams.

Instead, Dogen advises aspiring investors to prioritize homeownership as a means to achieve "neutral" real estate exposure. By owning their primary residence, individuals can leverage the long-term appreciation of property values while stabilizing their housing costs. Unlike renters, homeowners benefit from fixed mortgage payments that remain unaffected by rising housing expenses, thereby providing a sense of financial security and predictability.

Dogen's approach to passive income underscores the importance of diversification and pragmatism. While stocks, bonds, and real estate each offer unique opportunities for wealth accumulation, a balanced portfolio that encompasses various asset classes is essential for long-term financial stability. Aspiring investors can learn valuable lessons from Dogen's journey toward financial independence. By starting small, staying informed, and remaining disciplined in their investment strategies, individuals can pave the way for a future where earning money while they sleep becomes a reality. Ultimately, the path to passive income is within reach for those willing to take the necessary steps toward financial empowerment.