The term Passive Income was initially sensationalised by the author of the book Rich Dad Poor Dad by Robert Kiyosaki. In his book, he talks about “Passive Income” which essentially is generating income without you actively working such as a 9 – 5 job.
Passive Income can range from various instruments. You can generate passive income through real estate, stocks, forex, internet businesses, traditional businesses and more.
The overall strategy behind passive income is to generate enough to cover your monthly expenses. When you have enough passive income that covers your monthly expenses, you are in fact financially free.
For example, let’s say in order to live your basic necessities, you need to have at least $2,000 per month to cover all your expenses. If you somehow generated enough passive income on the side that made you $2,000 per month, you would in fact, escape from the rat race.
If your 9-5 job is pulling in $2,500 per month and you figured out that you need $2,000 to survive, by earning $2,000 in passive income without you working, you are now retired. You no longer need a job and have all this extra time to do what you want to do regardless of whether it generates money or not.
This is the true form of passive income. You earn enough of it so you could escape your 9-5 and become financially free and can now choose what you want to do.
Earn Passive Income in Real Estate
Passive income can be found in many different types of asset classes. The most popular asset class of the rich is property. You can purchase a property that generates income from your tenants in rent. If you find the right property with the correct numbers, you could be earning an additional $50+ per week in passive income.
This may not sound that exciting, however as you continually buy more properties, your income streams would increase. You could possibly go from full time to part time in your job.
What’s also great about property is that you can sell it and generate a huge capital return on it. For example let’s say you held onto a property for several years and all of a sudden, the market goes up, you sell it. You could generate $100,000 in profit from the sale of the house.
What would you do with that $100,000? You go out and invest in another property. You keep doing this over and over again until you own properties free and clear and generating rental return 100% positive cashflow.
Sounds exciting isn’t it?
Real estate is a great form of generating passive income.
Earn Passive Income in Online Business
This asset class is my favourite. For you can seriously earn big money through building your online empire. Tools such as blogging, creating information products, selling affiliate products and more online is a great form of passive income.
Of course, there is some active work that is required when you’re starting up but you can generate lots of money through online businesses.
I won’t go too much into detail but one of my favourite types of passive income models online is blogging. When you build a blog site, you’re building a community. This community grows until you’re receiving thousands to millions of hits per month to your blog site.
When you have a high traffic website, you can do so many things with it. It’s so easy to monetise. You can put Google Adsense up and begin earning income. You can put your products up there and begin selling it. Traffic must come first before selling anything. You may have the best product out there but if you have no traffic, there is no point.
I also wrote a book on How To Increase Your Website Traffic, check out my book by going to Amazon here.
Earn Passive Income Through Forex
I love Forex. I must admit, it took me a few years to get through all the terminology, concepts and how to figure out the damn thing. However after 2 years, I was able to slowly calve out some income per month from Forex.
Forex is similar to stocks but you’re trading currencies. The currencies include Australian dollar, US Dollar, Japanese Yen, British Pound and more. If something happens in the market, the currency pair goes up or down.
When you buy low and sell high, you make a profit, this is called going long. If you place a sell order at a high point and the market goes down, you make a profit, this is called going short.
It takes time to learn how to trade in Forex but once you get it, you know this skill for the rest of your life. Forex isn’t going anywhere and it’s a platform that will never change. Unless Donald Trump decides to nuke the world, then I can’t help there.
This is the primary reason why I started learning Forex. It’s a worthy asset class to study and master over the course of 10 years and beyond.
If you’re starting out, don’t be alarmed that there is a ton of technical terms you need to learn. There’s support and resistance, candle sticks, patterns, going long and short etc. It can be incredibly frustrating at the start but once you start generating some profits, you become a degenerate gambler like me! Just kidding.
If you want to get started in Forex, open up a demo account where you don’t trade with real money. You’re trading with fake money and learning the ropes. It doesn’t matter if you lose money because it’s fake, so it’s a good idea to play with a demo account first before you’re consistently making profits on your demo to move onto live account.
There are many more different types of passive income asset classes but those are my top 3 passive income structures. Whenever I look at an asset class, I’m always looking at it like a mountain. There are so many things you have to learn about it, so many rules and regulations. You’ll fail, you’ll stumble and you may loose money at the start. However it is still a mountain to climb and with time, persistence, determination and courage, you’ll eventually make it to the top.
Stay Strong and Be Relentless.