Entries Tagged 'passive income' ↓
August 6th, 2008 — Diversification, Financial Security, Income Streams, Investing, Long Term, Money, Personal Finance, Standard of Living, passive income, retirement
One of the hottest concepts right now is the premise of creating multiple streams of income. While everyone wouldn’t mind making a little extra cash, there are even more benefits that can be reaped from having more than one source of income. Let’s go over just a few of them.
1. Help save for retirement.
The average person needs to have more than $500k put aside for their retirement in order to live in comfort and without worries. Unless you have a job that pays incredibly well, this is going to be a pretty daunting task. You cannot rely on social security payments to secure your future. Whether you’re 25 or 55, it is never too early or to late to put aside money for your retirement. Unless the thought of working until you drop dead appeals to you, you’re going to have to find ways to supplement your current income.
Multiple income streams can be incredibly beneficial not only for retirement planning, but later in life. Smart investments will continue to reap rewards for many years to come and you’ll have that nice supplemental income that will make your life easier far past the retirement age. A good concept to try to is put all of your multiple income streams into a high interest account to make even more money for your future.
2. Layoffs and downsizings happen every day.
No matter how secure you think your job is, there are still chances that you could get laid off. There are very few guaranteed jobs in this world that provide lifelong security. If you are relying solely on the income for your job to pay your bills and make ends meet, you are literally one paycheck away from financial ruin.
It’s a stark reality that all of us face. However, if you have multiple streams of income coming in, you won’t have to worry so much. You’ll have a cushion that will tide you over if you do get laid off or lose your job. In some cases, lucrative streams may even replace the need for your job entirely.
3. Accidents happen.
Even if you have insurance – what would happen if you were injured today and no longer able to work. Could you pay your bills? This happens to thousands of people every year and they risk losing their homes, bankruptcy proceedings and worse. By having that extra cushion with several different streams of income, you are reducing your reliance and making sure that no matter what happens, you’ll be ready to face it.
If you don’t have health insurance, it’s even more vital to have steady streams of income coming in each month. You may be the picture of health right now, but what if you get hit by a bus on the way to work tomorrow? Unless you have thousands of dollars in savings, the answer isn’t pretty. Even if you do have a savings account do you really want to use it for that? What will happen when it runs out? The best kind of insurance you can have is a steady stream of extra income.
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July 23rd, 2008 — Diversification, Income Streams, Leverage, Personal Finance, passive income
Right now, more than 80% of households in the United States live on a paycheck to paycheck basis. This means that a lost job could result in financial disaster for a large chunk of the population. Once you get into the trap of relying so heavily on one paycheck, it can be pretty hard to break free from that cycle. There are ways however to reduce your reliance on that paycheck and get other streams of income rolling in.
Whenever we get a job, we get excited about that paycheck and the temptation is there to get a nicer car, or a nicer house or just to spend more than we should. Before we know it, we’re stretching our limits. If you get a raise, the same thing usually happens. Instead of taking that money and using it to make more, we simply throw it out the door on things that we don’t really need.
We’re not saying that you have to live your life like a Spartan – far from it. However, you should never rely solely on one income to meet your needs. This is a recipe for disaster, and for thousands of Americans, this can be the risk of ending up homeless. So, how do you break free from this cycle and open up more streams of income?
The easiest answer is to get a second job so that you have more income coming in each month. The only problem is that most of us are spread so thin that it is just not feasible to try to work more. You can try starting your own little side business, but again, if you don’t have a lot of time, this can be more trouble than it is worth.
The second choice is to find a way to create passive streams of income. This is money that you don’t have to “work” for. In essence, you’re not doing anything, but you still have money coming in. Examples of passive income include investments, interest payments and dividends. You make that initial investment and then sit back to watch the money roll in.
This is the most ideal means of making more money to reduce your reliance on your paycheck. However, there are times when you may not have enough cash to create a new income stream. In this situation, you can try what is called leveraging debt. This means getting a loan that will be used for an investment to create more income.
Now, we do not recommend leveraging debt on risky investments, this is just a bad idea. It is best to start small, with something that you feel comfortable will have a good rate of return. This may mean a high interest bearing savings account or something similar that has less risk than a stock.
Whatever you decide to do, the important thing is to stop relying on that paycheck. Once you do get more income coming in, don’t fall into that same trap of overspending again. Put it aside, or use it to invest in new income streams.
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July 10th, 2008 — Income Streams, Money, P2P Lending, Personal Finance, passive income
In the past, creating multiple streams of income required a lot of footwork and there were few passive stream opportunities available. However, thanks to the Internet, it has never been easier to create multiple streams of income online and many are passive! Let’s go into a few ideas that you can use to start your own income streams right now.
1. Blogging –
This is far from passive, but if you’ve got something to say, you can make money at it. It has never been easier to create a solid stream of income that can bring in a few hundred dollars a month or even more. Programs like Google AdSense can easily bring in that much and you never have to lift a finger (other than writing and networking like a madman). While there will be some expense involved, especially for marketing your new blog, it is minimal and much less than you would pay for other opportunities.
And why stop at one blog? If you’ve got a lot of interests, you’re just full of untapped potential. Start a blog for each one and take the time to build up your audience. You can easily turn than few hundred dollars into a few thousand dollars a month. For some people, that may be more than they make at their full time jobs.
Your opportunities don’t stop with advertising. You can join affiliate programs, set up your own products or keep branching out. The sky really is the limit when it comes to this type of income stream; however, passive it is not.
2. Peer to Peer Lending –
This is an interesting and potentially great way to make money online. Depending on your particular lending strategy it can even be fairly passive. There are numerous peer to peer lending sites that are seeking lenders and investors. You don’t need to be a bank – all you need is some cash and the stomach to take a little risk. Be sure to follow my tips at Making extra money with peer-to-peer lending.
3. Informational Products -
If you’ve got an idea or expertise in an area that is popular, write an ebook and start selling it online. You’ll never really have to do much work after it’s written and marketing costs are usually quite low. Your book will just keep bringing in money month after month. What is more – you’ll be building up an audience for future books to make even more money.
If you don’t want to write your own, there are numerous pre-written ebooks on every subject under the sun. You can purchase the resale rights and start making money right away. This is perfect if you want a nice little stream of passive supplemental income. Just remember to keep offering new books so that your market doesn’t stagnate.
4. Bonus Tip -
Combine tips 1 and 3… By adding an eBook to your blog you can potentially super charge your readership growth. Here are 2 examples of blogs trying to do just that… SF Boater with the free eBook Fishing in California, and Handyman Fix Home Repair with the free eBook The DIY Handbook.
These are just four ideas that can start bringing in income right now. There are countless others that are just as easy to implement. If you want to start making more money, the web is the first place to start.
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July 2nd, 2008 — Banking, Income Streams, Investing, Personal Finance, Stocks, passive income
If you’re trying to make more money, chances are you’ve heard the phrase, multiple income streams. However, there are two main types of income streams that you can use, and they are quite different. The first is known as active – and as the name implies, this is a type of income that you actually have to work for. Examples of active streams of income include running a part time internet business in addition to your work, or something that requires you to actually DO something to earn that money.
Passive streams of income make up the second type. These are the most popular, simply because you don’t have to worry about investing your most important quality – time. If you are already working a full time job, you may not have the kind of time necessary to develop an active stream of income. However, there are numerous kinds of passive streams of income that will reap the same benefits with a lot less effort. Let’s cover just a few examples.
Investments –
This is probably the most common form of passive income. You invest a little money, the stock does well, you cash in. It’s easy, quick and requires no effort on your part. While there is some risk involved, with proper research you can lessen this risk and reap the rewards.
Rental Properties –
This is a bit of a hybrid between the two types and the degree that it trends towards passive will depend on whether or not you have a property management company assisting you. In this event, this is a great form of passive income that is usually quite reliable. If you’ve got someone handling the maintenance, rent collection and other landlord duties, you’ll just have to collect the check every month. While you will have to pay that management company, it’s well worth it since you won’t have to deal with these issues.
Interest Payments –
Whether it’s from a P2P loan, a certificate of deposit or a savings account, interest payments are the easiest form of passive income. They also have some of the lowest rates of return but are generally considered to be quite safe. This is the perfect place to start if you’re completely new to building multiple streams of income and you can pick up a lot of helpful knowledge along the way.
Variations on a Theme –
There are numerous types of non-traditional forms of passive income streams that are variations on the themes mentioned above. Basically, anything that makes you extra money without requiring any work on your part can be considered passive.
When managed correctly, passive income streams are a vital part of your future financial planning. Many will keep returning long after you are retired and can serve as a cushion to keep you living your life the way you want to. The best way to take advantage of the situation is to implement both active and passive income streams so that you can have the best of both worlds and keep building up your bank account.
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