Master The Keys to Wealth Creation and Financial Freedom
Passive Income Streams:
There are said to be essentially three main types of income. Portfolio income, earned income, and passive/ residual income. One of the keys to becoming rich and creating wealth is to understand how to generate income from these three main sources of income at different points in time while you are on on your journey to becoming wealthy.
I am using Passive Residual Income Streams
To Ultimately, get to a position where I will have multiple streams of income; feeding my ability to invest and reinvest and thereby diversify my cash-flows. And here is one of those key requirement to becoming wealthy and creating lasting wealth or so I believe. Here we will be examining passive income streams.
The golden keys to which I believe is the way to build wealth and financial freedom. Portfolios I would say are the Platinum keys and Earned income the silver keys. So we are right here in the middle of these other two. Always find the middle ground if you can until you are able to handle more. For most of us are use to handling less.
Passive income: is income generated from the works of a trade or business, which does not require the earner to participate. It is often investment income. Income that is not obtained through repetitive or continual efforts on your part.
The key Idea of passive income is that it can be expected to continue whether you continue working or not.
As you near the age of retirement and what is that today 75 ? You are most definitely seeking to replace earned income with passive, unearned income. A good 20 years before this if you are smart. As many of us are living longer today well into our 80’s.
The secret to wealth creation is to do it earlier on in life and with several passive income streams; which maintains that positive cash-flow generated by assets; that you alone control or own.
One of the reasons people find it difficult to make the leap from earned income to more passive sources of income is that our entire education system is actually pretty much designed to teach us to rely on government,and others; and the Jobs that they generate.
Hence the general populace’s rely largely and heavily on earned income. This works for Governmental Bodies as this kind of income generates large volumes of taxes. But it will no longer in this day or age work for you.
If your focus is on becoming rich and/or wealthy. However, to become rich and well on your way to becoming wealthy you will need to cross many burning bridges, overflowing rivers and dried up streams.
Along with fields of doubt and walls of obstructions to create your income streams into generating sources of stable residual income which is passive.
Passive income is not dependent on your constant attentions. It is dependent on the asset and the management of that asset. Passive income requires leveraging of other people’s time and money not yours.
For example, you could purchase a property for 80,000.00 turn around and flip it for $100,000.00 netting you a 20,000.00 profit once. Or buy it at 80,000.00 put 20,000.00 into It. Turning It into a quad rental unit and rent it for 850.00 a unit per month.
Times this by four units you earn 3,400.00 monthly which is a positive cash flow minus expenses and/or Ins. and maintenance cost.
Assuming this property generates without any major setbacks at 40,800.00 a year minus operating fees. In less than 2.5 years you will have regained your initial investment. Giving you a positive residual passive income of 3,400.00 monthly Minus the monthly maintenance and operating expenses.
Now this is an ideal situation which rarely happens, but very well could happen. With the right Management procedures and staff. So what is the monthly net? I say what does it matter it is free and clear of the initial investment after that 2.5 years. Be it only a dollar. Wouldn’t you spend 500.00 to make a dollar free and clear over the 500.00 ?
Yes every day of my life. I would because I am still making money. I might have to do this same thing 3,000 times to make 3,000 dollars a month, but hey that’s the cost of making that dollar. It takes money to make money don’t get hung up on what the cost is to make the profit.
Would I do this for an earned income model? No not me I wouldn’t I don’t like to work that hard. The profit margin would need to be greater because, I only have enough Time and physical capabilities and for a certain amount of time.
Business can be a source of passive income. Many entrepreneurs start out in business with the idea of starting a business so as to sell their stake for millions in say 5 years time.
This dream will only become a reality if you, are the entrepreneur, and can make yourself a portfolio or a passive income stream(s) from the Profit of the selling of that Dream.
If you can do this than in a way you have created a source of passive income. For a business, to become a true source of passive income it requires the right kind of systems and the right kind of people (other than you) operating those systems.
Finally, since passive income generating are usually assets which are actively controlled by you the owner (ie. rental properties or a business), you have a say in the day-to-day operations of the asset which can positively impact the level of income generated. Where as with passive you would need to create another stream to increase your income.
Passive Income is Not Exactly Residual Income
Residual Income is a form of passive income. The terms Passive Income and Residual Income are often times used interchangeably; however, there is a subtle yet important difference between the two.
Residual is income that is generated from passive income and/ or time to time from work done once that requires recurring payments that you receive long after the initial product and/or service contract is made. A Mortgage is residual for forty years or until default or full payment.
Residual income is usually in specific amounts and paid at regular intervals. Some examples of residual income include: Royalties/earnings from the publishing of a book, a movie, a song.
Renewal commissions or dividends from stocks and/or bonds. Revenues from rental property.
Revenue generated from (usury) the use of Other People’s Resources and Money.
The use of Other People’s Resources and Money is a key ingredient required to generate passive income. But it comes with risk to your investors and many responsibilities from you. Other People’s Money can buy you time (a key, but limited factor of earned income in wealth creation is the Risk is all the earner’s ).
In a sense, the use of other people’s resources gives you back your time. When it comes to raising capital. Businesses that generate passive income usually attract the largest amount of Other People’s Money. Banks lend out to do this every day. If you have a proving track record IF.
Your Dreams can Come True by Setting up Multiple Passive Income Streams!
If you have arrived on this page it is because you are looking for a way to set up some passive income streams to supplement your income.
With Little to nothing down. It is important to point out upfront, that this type of passive income stream building involves work! And lots of It at first. You need to set them up properly and then maintain them. Or these income streams will never take off or simply dry up.
The good news is that after the initial Hard Work and allotment of Time it becomes very easy to maintain multiple passive income streams. And they do indeed become mostly residual with just minimal input needed.
Thank you for your time and comments Donnie/Sinbad the Sailor Man I have some passive income streams set up on my website at:
Check them out to see passive residual streams in action.
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Donnie/ Sinbad the Sailor Man