Passive Income: The Secret to Extreme Wealth
Ever heard the phrase, “Money never sleeps”? Well its true, and if your a human reading this, I’m going to assume that you do.
Let’s be honest, aside from the few masochists out there who legitimately enjoy working 40, 60, or 80 hour weeks, no one enjoys working for money.
Passive income is a powerful tool used by the rich to literally make money in their sleep, and in this article I’m going to give you a breakdown of how it works and the incredible power that it has.
What Is Passive Income?
While the IRS has a more strict definition of passive income, the one I will be discussing is a broader one that incompasses “passive income” as a whole. The loose definition of passive income (according to Wikipedia) is income resulting from cash flow received on a regular basis, requiring minimal to no effort by the recipient to maintain it.
In easier to understand terms, it’s money you earn on autopilot. It of course takes some effort and/or capital to set up, but once the proper infrastructure is in place, passive income can literally make you money while you sleep.
Why Does it Matter?
You may be thinking, “I don’t want to be rich, so why should I care about passive income?” Well first off, I would argue that you’re in the wrong place if you strive for mediocrity, and second I would tell you that passive income has more to offer than just making you rich.
Passive income is a tool that can be used by anyone, young or old, that wants financial freedom.
The freedom from living paycheck to paycheck, freedom to pursue your passions, or to just kick back and relax on a beach somewhere.
What Are Some Examples?
Passive income can come in the form of many different investment vehicles. The most infamous of these is real estate, but passive income isn’t limited to a few select investments.
Although there are some passive investments that seem to be the most popular and most common. These include the previously mentioned real estate, dividend paying stocks, interest collection, and royalties.
The simplest way to turn an “active” investment into a passive one is to hire someone to manage it for you.
The vague definition lends itself to the concept’s endless possibilities. Almost every type of business or investment could be passive if truly desired.
I’m a 23 year old founder/blogger at The Young Money Club – A blog that provides young, motivated individuals with personal finance tip on earning, saving, and investing.
