The Master Key to Wealth Creation and Financial Freedom
There is a couple of old savings that I am sure you have heard before, but have a lot of truth to them. They are
1. Work Smarter, Not Harder
2. Let the money work for you, Not you work for the money
These two basic statements have allowed people to realize their dreams once they have understood that working for money is not the key to success. But, allowing money to work for you is the key to success.
Passive income earned, is the income that is generated automatically with little or no intervention from you. This type of income comes in many different forms, and it takes a little effort to help it create its own flow. So, no matter if you ignore it, and just let it flow or you work on it to generate even more income. You need to get that positive cash flow flowing before it can lead to lifelong earnings for you.
This is the secret to passive income, making the money work for you instead of you working for the money. It is a hard transition to wrap your mind around because you have always been told that you need to learn a skill and earn money. Which is true, but, the idea on how you take that skill, and apply it in such a way that you are not earning money by doing it. The skill is earning money while you direct the skill.
Real Estate & Business - Sources of Passive Income
Passive income can be earned in many ways. But passive income is not dependent on the time you take to earn it. Passive income is dependent on the type of asset and how you manage that asset. You have to leverage other people’s time and money to your benefit.
Renting is an excellent example of leveraging money and assets let’s take a look at an example. You purchase a property for 100,000 dollars. Rent to another individual or family. Let’s say you decide to take 20 percent of our own money and invest it in that property. Then you borrow the other 80 percent from the bank.
Now we have an asset (Rental Property)
Now we have other people’s money (Bank Loan)
Now we have other peoples time (Renters)
Now, here is where we have to do a little bit of math stay with me though. Say the property generates a minimum of 6 percent in total. This is minus all insurance, taxes, maintenance, management fees, etc. So, the income years 6000 annually this works out to about 500 dollars a month. So, no you pay the bank your mortgage for the money borrowed. And you have 200 dollars left over. This left over 200 dollars is money is the passive income that you generated. So, you followed the concepts leveraged other people’s money and time and earned a passive income and all you did was mange it. Hopefully, that simplifies it enough for you. But, realize that this is an example of real-estate but the same idea can be used for thousands of ideas.
Passive income may seem a little bit out of place here. Because, what is truly passive about you taking the time to mange a group of assets whether it is real estate, a business, a portfolio or any other type of passive income generation. The answer to that is that you are always going to have to be involved at some level. But, it’s the fact that it does not need your day to day oversight that makes it passive.
- Royalties/earnings from the publishing of a book.
- Renewal commissions on financial products paid to a financial advisor.
- Rentals from a property letting.
- Revenue generated in multi level marketing networks.
These are all forms of passive income that can come from multiple sources. So, take your time do your research, find the perfect opportunity to invest your time in so you can make the most of the passive income stream you are going for.