Investing for Passive income is the easiest, least painful way to save your way to a wealthy early retirement.
Passive or automatic Income is income you earn by doing little or nothing at all. A real world example of this would be a sports star who lends his name to a product for promotion purposes. He hasn’t really done any work – but he’ll get paid usually on an ongoing basis for the use of his name.
Arrange your finances so that every month certain actions take place that automatically or passively grow your assets without any decisions or extra effort on your part. This creates an enforced discipline to keep you on track and leave comfortably during your retirement.
Below are a few examples:
1. Own Your Home: Purchasing your personal residence has several advantages. A portion of each monthly payment pays down debt which builds equity, automatically. Assuming you finance with a fixed interest rate, fully amortizing mortgage, you can expect appreciation from inflation over time; yet, you will repay a fixed amount of debt with depreciating currency. Again, that’s passive income. And you can set your mortgage payoff date to coincide with your expected early retirement date. Doing so lowers your cash flow needs when you retire.
2. Rental Real Estate: If owning your own home is a great idea, then owning even more homes where someone else makes the payments for you is an even greater idea. But be careful: make sure the property has a safety margin of positive cash flow and make sure you’re willing to deal with the potential headaches of being a landlord. It isn’t right for everyone, but owning a rental property can be a great automatic wealth building tool for some.
3. Tax Deferred Retirement Plans: Maximize your contributions to your tax-deferred retirement plans so that the money comes out of your paycheck automatically before you ever see it.
This is a relatively pain-free way to save because you seldom miss what you never had. Additionally, if your employer offers a savings match program make sure to save enough to maximize this free money. It is the easiest savings you will ever put away.
These savings cost far less than you might think because Uncle Sam gives you a tax break to boot. For example, let’s assume you earn $50,000 per year, and let’s also assume your company offers a 401(k) with 50 cents on the dollar matched savings up to 6% of your salary (a very common formula).
If you contributed just $250 per month ($3,000 per year) you would get an additional $1,500 paid by the company – absolutely free. Assuming a combined federal and state tax bracket of 30%, your take home pay would be reduced by a mere $175 per month; yet, you would be receiving $375 per month in benefits… yes, once again, translating into passive income. This is a no-brainer way to build assets.
4. Automatic Savings Plans: Another disciplined approach to savings that reduces the temptation to spend your entire paycheck is the automatic savings plan. If your tendency is to spend whatever you have then these programs are a must.
The money is deducted from your pay before you ever see it, making the whole process of saving a lot less painful. The key principle is the money is saved automatically. The only decision you have to make is to start the process. After that, it is on auto-pilot.
5. Join An Investment Club: While group decisions are probably not the smartest way to invest, the social support, regular learning, and forced savings will put your wealth building and financial intelligence on auto-pilot.
to Educational Investment Newsletters: The internet is a treasure trove of investment education, and
much of it is freely available. Newsletter issues come regularly causing you to
grow your financial literacy over time and automatically. Consider the free
retirement planning news letter from this web site as a good example of this
7. Network Marketing: This is one of the few industries that offers both Residual and Passive income. Both of these kinds of income are superior to the “time for money” type of incomes you might get with a job. How do they differ?
Residual income is income you get long after you already done the work for it. A real world example of this would be recording artist. They get paid long after they’ve done the actual work to make the recording – sometimes for decades after.
You might be saying: But I’m not a recording artist or a sports star! That’s ok because network marketing usually offers both of these advantageous income types. If your network marketing product is sold with an Autoship option, that means you get paid long into the future for one sale.
This is residual income because you do the work once and you keep getting paid long into the future. Passive income can be found in your network marketing team building. Presumably your team is doing work; bringing in customers and building their own team. You will be getting paid on their efforts for the rest of your life.
I found a system which has earned its self global awards for their great marketing plan which is convenient and ably turns ordinary people into millionaires.The investment is quite little and the returns are enormous. Its working great for me and i suggest you visit and read about it too
Passive and residual income can be far superior to active income or ‘paid by the hour’ income and are the best way to earn during your retirement. When you are paid by the hour, you are simply trading time for money.
And time is something that there never seems to be enough of. Often when you are working a low paying job, money is also in short supply. Trading time for money and not making enough money – that doesn’t sound good does it?
These are just seven ways through which you can put the growth of your savings and financial intelligence on auto-pilot. Many more exist.
John Lennon said it best when he sang, “life is what happens when you are busy making other plans” (although I doubt he intended it to be used for building wealth through earning passive income during retirement).
You must make growing your wealth a habitual part of your daily life so that it happens automatically while the rest of your life runs its normal course. You must build your wealth for early retirement while making other plans.
You can either choose to arrange your life so that growing your wealth and financial intelligence is an automatic habit, or you can let time slip away and allow procrastination to win the day.