Have you ever heard of the term, “Stop Working Hard For Your Money And Let Your Money Work Hard For You!” If you did most likely that person is an investor. Many investors believe let your money work for you not the opposite. Usually, you work hard for your money because you trade hours for dollars slaving at some 9 to 5 job. Wouldn’t it be a perfect world and a very welcome change if your money worked hard for you instead? I believe so, Time to Invest.
One of the best ways to achieve this goal is through obtaining passive income also knows as residual income. Passive income is an ideal way to accomplish this goal. As passive income is when you receive income over a long period of time for only doing something once without any additional effort being placed back into that transaction. When you create a passive income stream, you move towards complete financial freedom.
Many successful people say this is what separates the rich from the poor. Successful people are also curious and are not afraid to experiment. However, in my opinion, the way we look at it; everyone should educate themselves on investing and creating a stream of passive income.
Here are a few ways to create passive income:
1) Real Estate Investment (REI)- Also know for building generational wealth, millionaires, and billionaires. At one point, did you know the more land you own the more powerful you were.
Cash Flow – Whether you buy with all cash or use today’s favorable financing with a low mortgage payment, positive monthly cash flow will occur when the monthly debt is subtracted from the monthly rent. Thus giving you a monthly income from your real estate investment
Appreciation – Appreciation is the increase in the property’s value, which generally occurs over time and can be increased by investors who add value to the property through repairs and enhancements.
Depreciation – Even with an increase in the property’s value the government allows owners a tax deduction of their property over its lifespan.
Tax Benefits - In addition to depreciation, an investor can usually claim the interest portion of his monthly mortgage payment as a tax deduction.
Leverage – Leverage is a powerful reason for investing in real estate. It’s the idea that you can buy a $100,000 property by investing only $20,000 of your own money. You are essentially “leveraging” somebody else capital to buy the property.
2) Private Equity Investing - Private equity investing can be a tremendous source of passive income with the right investments. If you find the next Uber, the returns will blow every single other passive income investment out of the water. Access to private investments is restricted to accredited investors.
Active Involvement - Private equity firms are much more hands on, and will help you re-evaluate every aspect of your business to see how you can maximize its value. This can lead to problems if their idea of maximizing value doesn’t match yours. But having experienced professionals intimately involved in your business can also result in major improvements.
Incentives - Private equity firms have a lot of skin in the game. They often borrow a lot of money to make their investments, and they have to pay that back and generate a return for their investors on top of that. In order to make a profit your business needs to succeed. Individual partners in the private equity firm often have their own money invested as well and make additional money from performance fees if they make a profit, so they have strong personal incentives to increase your company’s value.
High Returns - This combination of major funding, expertise and incentives can be very powerful.
3) Network Marketing (MLM) - Network marketing has been around since the 1920’s; the past couple of decades have seen an enormous rise in people joining the industry. This industry has created more millionaires than any other industry. Today, Direct Sales worldwide is an $182 Billion dollar industry, that's more than the NFL, Movies, and Music put together. Generally, when you join a network marketing company; you are provided all the tools and MLM training you need to start down the path towards network marketing success. As we talked about in The Perfect Business, the entry is low and potentially the risk allowing you the flexibility to own your own business without having to borrow money or hire employees. Additionally, you will have the opportunity to take various tax deductions, which may ultimately save you thousands of dollars per year.
Here is a video on Robert F. Smith, Chairman & CEO of Vista Equity Partners with Dr. Maya Rockeymoore, talks about Private Equity, Entrepreneurship, Mentorship, and Opportunity.
There are many ways to create passive income but these are a few on the top of our list. Whichever you choose, please do your research first and consult with people you may know that have experience.
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