What is passive income exactly? Passive income is simply money that is made passively! And what does that mean?! Well…basically, it is money that’s earned by doing as little work or the most minimum amount of work possible. Unlike a job where we have to work in order to earn an income, passive income comes from goods you own that generate earnings on their own. There are many people that believe passive income is a bunch of B.S. That, the only way to earn money is to work for it! A days work for a days pay! Although there is some truth to that, it’s not the whole truth and they’re actually wrong. Then, there are those who believe that you have to have a ton of money to create passive income. And of course…they’re wrong too! Now, I’m not suggesting that we don’t have to work hard or that it doesn’t take money to create passive income. But what I am suggesting is that we need to have a better understanding of what it is, where it comes from and how important it is for achieving true financial independence.
Passive income can be created from a number of different places. The most common places include, but are not limited to, the stock market, business, real estate and intellectual properties. In the stock market we can invest in securities that generate monthly dividend payments. We can create, purchase or invest in a business that is fully operated by employees. In real estate we can purchase a rental property in which the tenants pay rental income each month. Intellectual properties are creations that can be protected by a copyright, patent, trademark, etc. such as music, books, e-books and branding for which royalties are paid for their use. Regardless of where or how the income is generated, the key is making a conscious decision to put in the effort to create it. The simplest way to start is by saving and investing the money earned from a primary job. No matter how small or little the amounts saved may seem, it will be the accumulation over time that will make the difference, like a snowball effect. Start with any amount, be disciplined, be consistent, be patient and one investment will lead to another.
Generating passive income is by no means out of reach for anyone, no matter where we are on our financial journey. The sooner we create and start to generate passive income the quicker we will get ourselves to financial independence. As a matter of fact, the most important part of our journey to financial freedom is creating and generating passive income. It’s the ONLY way to achieve it! Passive income still takes some work, particularly in the beginning, but once it’s up and running full force, it should take minimal upkeep to keep it going. That’s the difference between our money working for us instead of us working for our money!
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