privately owned or public stocks), loans (for the lender) and income real estate (for the owners). Some of the main assets that generate passive income are businesses (e.g. Strategy #2 – Understand the Main Assets That Generate Passive Income This may be particularly important when you get closer to or ready to retire. At some point, especially if you generate income from two or three different streams, your passive income may enable you to partially defray or even fully cover your living costs. Over time, with the infusion of new cash and reinvestment of ongoing income, you will find that the total income produced by your passive investment assets keeps going up. Of course, while you are working and saving, making the effort to add additional money from your periodic employment or business income on a regular basis, such as monthly or quarterly, can significantly accelerate your progress towards a nice retirement income stream that you don’t have to work for in your later years. Once you have one or more passive income streams, you can accumulate even more income generating assets by reinvesting the income you produce from those you already own. Just as a seedling grows into a large tree by routine watering and fertilizing, you need to look for and routinely add to your portfolio of passive-income producing assets.
In order to begin the process toward creating passive income, you will need to accumulate some assets whose specific purpose is to generate income. Strategy #1: Focus on Assets that Generate Income Read on below as we reveal some key strategies and insights on adding passive income to your own portfolio. The key to successfully creating passive income is to have a solid plan, have savings to work with, and to intelligently pick up the right investments especially when they are available at bargain prices. Even by starting small and regularly adding to your assets with investments that produce passive income streams you can eventually accumulate a very significant passive income stream for your own golden years.
#Creating passive income how to#
Generating passive income is an opportunity available to everyone if you are focused on the goal and know how to intelligently go about it. Indeed, you can make it even while you sleep. This quote sums up a key attribute of passive income: You don’t have to labor to receive it. According to some sources, sixty-five percent of multi-millionaires have at least three income streams and about one-third of them have five or more income streams, some of which are passive.Īs billionaire investor Warren Buffett quipped, “If you don’t find a way to make money while you sleep, you will work until you die”. Indeed, many of them eventually have the ability to live very comfortably on just their passive income alone. Unlike many working people, the wealthy tend to have created multiple streams of income. The key to being able to enjoy freedom and comfort in retirement is to have a strategy to develop passive streams of income and then implement this strategy intelligently. Of course, after a lifetime of working hard, the majority of people also hope to enjoy some time in their retirement “golden years” to travel and have time to enjoy life. Some even live paycheck to paycheck which causes stress and leaves no margin of error in case of an unexpected disruption to their employment or paycheck (like a recession or other economic disruption). Most people work continuously to earn income.
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