Your most important income is what is called “passive income.” The only required element for income to be considered passive is that you would receive it whether or not you do any significant work for it.
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Everyone will face the day when they can no longer earn actively. Passive income is the only answer to this problem.
Everyone will face the day when they can no longer earn actively. Passive income is the only answer to this problem.
But more important, the only way most people can ever hope to acquire significant wealth is to create passive income.
Where to Find Passive Income Ideas
Mention passive income and most people's eyes glaze over. Their minds go blank and they seem incapable of thinking of any way to do it. But in reality, there are many options.
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Savings Accounts: in its simplest form, passive income would be something like interest on a savings account. In reality you can create passive income from any of a multitude of possibilities.
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Retirement Funds: the most important form of passive income for most people is a retirement fund. If you do not have this set up I recommend doing so immediately, no matter how old (or young) you are.
If you are employed by a company that offers a matching type of 401k plan that is usually good. Otherwise a Roth IRA is best for most people. Regular investment in your retirement fund, over time, can lead to a large amount of capital producing quite significant passive income.
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Real Estate: many people have done well investing in real estate. Even in this time of economic upheaval real estate can produce good income—if you know what you are doing. For it to become “passive” income it must ultimately be managed by a management firm.
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Collectibles: investing can take many forms. While some folks try to profit from coins, stamps, paintings and other esoteric investments, these are problematic for most people. Antiques, books, and more traditional items are better (you still need expertise to be successful).
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Mutual Funds: total stock market and Standard and Poors 500 index funds are my favorite mutual fund investments. These can be one of the best passive income ideas but it is clearly a long term strategy.
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Internet: a modern form of passive income for many is that associated with internet marketing. Many sites could go on for years generating income with little or no maintenance from their owners. But this is no easy thing to do—you will need to work very hard for several years to build a worthwhile site.
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Other: passive income can take a lot of other forms. You could:
- Develop a product that others market and sell with you getting a profit from the patent.
- Sell advertising space on your property.
- Partnership in a business someone else operates.
- Residual income, that is ongoing income from renewals of services you originally market as a business activity.
You can create passive income in any way you can conceive and execute productively.
Why Look for Passive Income Ideas?
Whatever form it takes, passive income, including but not exclusively investing, has such great potential that it is worthy of everyone’s consideration. In the end it can generate massive amounts of money, more than active income sources such as employment or even business.
One of the most important long term goals for anyone wanting to be fully successful with money is to create enough passive income to live on. This is really what financial freedom is about.
For most people retirement is forced when they are no longer able to work. Then they have to make drastic changes in lifestyle in order to get by.
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It is easy to see how much better it is to create passive income from investments or other sources that will adequately support you long before being forced to retire for reasons beyond your control.
It is easy to see how much better it is to create passive income from investments or other sources that will adequately support you long before being forced to retire for reasons beyond your control.
Sadly, many people in America retire with nothing more than a Social Security check from the government. And, even worse, mismanagement of the national economy and the social security system in particular is close to destroying that program. Individuals need to re-evaluate their prospects and act responsibly to avoid a devastating future.
Commitment to Create Passive Income
Learning how to create passive income is not easy for most folks. Nevertheless, passive income ideas are so beneficial that it is worth our best effort to seek them out and implement them effectively.
