Passive Income Requires Minimal Time and Effort!Passive income is one of the most important types of income when it comes to building wealth. The income you make passively is what is going to set you free financially so you no longer have to work for your money. Unlike Linear Income, residual types of income come from very little effort and show up consistently over time with no further effort. This type of income is great because it is something that you do not have to continue to work for the rest of your life. Income made passively through royalties, rents, and other residual sources is what is truly going to set you free financially in life. Since you use earnings to apply more leverage to whatever it is you are using as your wealth building vehicle, the more money you receive, the more leverage you can add back into your system of making money. The effect is known as compounding and is exponential in nature, meaning it grows larger and larger each time it compounds. Let's say you have a diversified portfolio set up. You own a business, invest in the stock market, and have a job. Your investment makes you $100 per month, your business income after expenses is $3,000 per month, and your job income is $4,000. You are in a serious accident and can no longer perform the functions at your job. Since the accident wasn't work related, they don't compensate you for your time lost. Your total income goes down by $4,000 per month. If you were playing your cards right, you were reinvesting all of your money made passively back into the passive income sources. Now that your job income stopped, you can simply stop leveraging your extra money and use that to live off of until you are able to function properly again. Sure, you are $900 short, but at least you have an income and don't have to work for it. That's why passive types of income are very important in your portfolio. Learn more about passive income and how you can make money without working for it. |
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