What is Passive Income?
Passive income is the building blocks of financial freedom. You usually have to make an initial investment (or do work) to create a source of passive income. Thereafter you earn money from that source, on a regular basis, without having to do any more work.
Building blocks of Financial Freedom
You’ll often hear financial freedom and passive income mentioned in the same sentence.
To become financially free, you need to create enough sources of passive income, so that the amount of money you earn passively (i.e. without having to do anything), is enough for you and your family to live from and maintain your desired living standard, for the rest of your life.
Some Examples
These are a few examples of passive income:
- Dividends earned from shares you own in companies.
- Rental income earned from properties.
- Interest earned on cash investments (over and above inflation).
- Income earned from a company you own that you don’t manage yourself.
Streams join up to form a River
Passive income usually come in small amounts.
The trick is to build up your sources of passive income over time, so that all the small amounts of passive income, added together, become enough for you live from.
September 16th, 2008 at 06:53 pm
sounds like a good deal to me! problem is most ppl aren’t patient enough to wait for it to build, or never even start investing in the first place because they are spending all their money on the wants. i’m hoping to overcome that age-old challenge