Passive Income
Passive income is how wealth is created over time. How does it all work?
Passive income is how wealth is created over time. How does it all work?
(1) Save a portion of your earned income. Strive to make it 20%, but do what is possible and then gradually increase that amount each year until you hit 20% of your gross monthly income. This is your capital. It is a requirement to getting started and expanding your wealth over time.
(2) Invest that capital consistently over time in appreciating assets that produce income (dividends, interest, and rent) on a yearly basis. This would include the big three for most people (income producing land is available to a limited few people). Stocks, bonds, and Real estate (publicly traded REITs and rental property) are your ticket to growing your capital.
(3) Diversify, diversify, diversify. Focus on owning all of those asset classes over broad sections of the U.S. economy and international economies. This means avoiding putting all your eggs in one basket (owning a few individual stocks) and instead own thousands of securities over all markets (mutual funds).
(4) Do it at a very low cost and with the greatest efficiency. This will take you to no-load index mutual funds at a place like Vanguard. This eliminates loads (commissions), “helpers,” and high expense ratios (the cost that goes with a mutual fund). You end up with most of the return instead of giving it to the financial services industry. It’s that simple.
(5) Stay the course. Tolerate the ups and downs of markets that are full of speculative bets on the future (ignore the daily frenzy of markets, in the end it means absolutely nothing). Keep saving, keep investing, and watch compound interest do its amazing thing. Wealth to follow!
(1) Save a portion of your earned income. Strive to make it 20%, but do what is possible and then gradually increase that amount each year until you hit 20% of your gross monthly income. This is your capital. It is a requirement to getting started and expanding your wealth over time.
(2) Invest that capital consistently over time in appreciating assets that produce income (dividends, interest, and rent) on a yearly basis. This would include the big three for most people (income producing land is available to a limited few people). Stocks, bonds, and Real estate (publicly traded REITs and rental property) are your ticket to growing your capital.
(3) Diversify, diversify, diversify. Focus on owning all of those asset classes over broad sections of the U.S. economy and international economies. This means avoiding putting all your eggs in one basket (owning a few individual stocks) and instead own thousands of securities over all markets (mutual funds).
(4) Do it at a very low cost and with the greatest efficiency. This will take you to no-load index mutual funds at a place like Vanguard. This eliminates loads (commissions), “helpers,” and high expense ratios (the cost that goes with a mutual fund). You end up with most of the return instead of giving it to the financial services industry. It’s that simple.
(5) Stay the course. Tolerate the ups and downs of markets that are full of speculative bets on the future (ignore the daily frenzy of markets, in the end it means absolutely nothing). Keep saving, keep investing, harness your emotions and watch compound interest do its amazing thing. Wealth to follow!