Sunday, 12 May 2013

Why Passive Income is the Best!

One of the subjects closest to our hearts here at Midas is the subject of getting your money working for you and not the other way round. We have been given mental programmes by our parents, our schools, the banks and the government which say "Go to school, get good qualifications, get a good job, work til you are 65 and then retire on your savings."

Think about it for a second - who benefits from this model?

The Banks? Yes! Because they can charge you interest on your mortgage for 25+years and you don't question this.

The Corporations? Yes! - Because they get to grow loyal employees who give them their labour for the best years of their lives.

The Schools? - Yes - because they are funded by governments to create loyal employees.

The Government? - Yes - because employers and employees taxes create funds

But how do you benefit really in this deal? Most people work in jobs they don't particularly like. Most of us would do something different if we could. Most of us pay our mortgages thinking we have no other alternative. Most of us spend our entire working life giving up the best part of our days to a job. Most of us don't question this model at all thinking it is normal and are unaware of an alternative.

Well let me tell you about a secret that a small minority of people have come to learn and that is passive income

This is income that is earned by an asset and pays you over and over again , a bit like a royalty.
Let me give you a few examples of a passive income producing asset and see if this gets you thinking.

1. Licensed software - created once and sold over and over again
2. Digital images - taken once and sold online or by print
3. Music - sold online or by CD
4. Books
5. Subscription business models - e.g. broadband, line rental, sports club memberships where value is given at fractional costs.
6. Investments - Equities - shares, funds, bonds, trusts etc etc - where a lump sum returns regular dividends
7. Investments - Property - where rental income is earned monthly
8. Network Marketing Businesses - where the efforts of your team as well as your own build a monthly income.
9. Online Information Businesses - selling your intellectual property or expertise over an over again via ebooks, webinars, audios, DVDs

The recurring theme with all of these ideas is that they pay you while you sleep - literally your money is working for you and not you swapping time for money.

Thinking about number 6 for a moment - Property Investment is often done without even considering it an investment - your home. Think about the equity in your property and ask yourself - did you work hard to earn that money? Unless you have changed the property since you bought it I suspect the answer is no. Could you have saved this money any other way? Well this is your money working for you and one of the best ways of growing a passive income in your life.

I recommend the following 2 books to read which will expand these ideas and give you inspiration - it certainly did for me in my life.
Robert Kiyosaki

Rich Dad Poor Dad - Robert Kiyosaki - in this book Robert explores the concepts behind wealth creation and compares mindsets of the employee, the employer and the investor and teaches you how powerful passive income is.

Property Investment

Start Late Finish Rich - David Bach - in this book David shows you how to tailor your life where it is today and start changing your finances whatever your age to increase wealth and become financially free.

In my next blog we are going to cover the subject of "Financial Freedom" and what it means , especially when you have a property portfolio to create the life you choose, instead of the life you are forced to live.

Thank you for reading this blog.
Wishing you every success

Robin Campbell, Director Midas Estates

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