Introduction to Generate Passive Income
Times have been tough and they’re not getting any better. Many day jobs are not paying enough money to support a family. If investments are available, they are being used to educate children and to provide the daily needs of the family. There is nothing left for retirement.
This is a very serious situation. Some folks who are living on only Social Security are actually in poverty. You see them welcoming folks into Walmart.
Breadwinners who have to leave home to work a part-time job to supplement their income, are losing precious time with her family and working themselves to death. They need to be working in a situation that they control’s so that they can work from home if they like and earn enough money for the present and future.
Have you read Rich Man Poor Man? You probably have. That book gives the key to putting your energies into your own businesses and investing.
What Is Passive Income?
From Wikipedia we learn:
“Passive income is an income received on a regular basis, with little effort required to maintain it. It is closely related to the concept of “unearned income”.
“The American Internal Revenue Service categorizes income into three broad types, active (earned) income, passive (unearned) income, and portfolio income.
“It defines passive income as only coming from two sources: rental activity or “trade or business activities in which you do not materially participate.
“Other financial and government institutions also recognize it as an income obtained as a result of capital growth or in relation to negative gearing. Passive income is usually taxable.”
Examples of Passive Income
My friend, Paul, purchased single-family homes, then with sweat equity he remodeled these homes and converted them to multifamily homes and rented them out.
Doing this over and over again, he generated a large monthly income. Then he create multi-family structures from scratch which generated even more income. He hired a manager to handle his real estate investments. He moved on to other things. This income was generated from assets, rather than from the active participation in a business.
As you can see it may take a lot of time and energy to generate passive income, but once you have accomplished this, you can invest in other instruments that pay you continually but do not require your active participation.
In the first case, the passive income is coming from a business that you no longer have an active part in.
In the second case, passive income is coming from investments which require no effort from you.
Well, I Think I’ve Driven That into the Ground.
I have either confuse the heck out of you, are you know the difference between active and passive income. No matter what it is, the IRS will try to take part of it away from you.
Over the years, I used employer investment plans. We mainly live on the passive income from these plans. We also have Social Security, with my wife and I contributed to. That sounds passive to me.
Read Rich Dad Poor Dad
You probably have read this book. It explains the differences in working at a day job and building a business with later contributions to an investment portfolio. Oh, did I mention this before? Well, I am old and senile and often repeat myself.
How to Generate Passive Income
1. Build a business. You should generated a business plan first do
this at SBA.gov. If your business is an Internet-based, can do most of your work from home. There are educational institutions and business organizations that will also help you get up and going. Call your local Chamber of Commerce and local institutions to learn more.
2. Invest money that you earned into bonds, dividend paying stocks, retirement funds and annuities. My stocks were converted into annuities to preserve the capital.
3. Invest in real estate for rental income.
4. Consider network marketing which requires much toil to get started and to keep it going. It’s not for me!
You can generate passive income if you first generate active income so that you have the resources to acquire assets that will then pay you passive income.
Although passive income is hands-off, to get started is hands-on. To generate passive income for retirement or because your day job is not generating enough income to support your family in a way that you want to support, then consider Internet marketing.
In Internet marketing, you can sell your own products or you can promote other people’s products and let them do the selling. Either way works.
In my family, we have always preferred to sell products of our own creation. My children and grandchildren and a number of very successful business. I once sold products but now I’m 84 years old and I prefer to promote other people’s products which is called affiliate marketing.
To learn to do affiliate marketing you have to watch out for the many scam artists who are there to take your money and teach you nothing. I have been a member of Wealthy Affiliate since 2008. It is the premier training site for affiliate marketers and there is no scams in operation there, no gurus to pick you up by the heals and shake the coins out of your pockets.
There are two membership levels of Wealthy Affiliate. I suggest that you start with the free membership which will give you two websites to practice on.
Later you can join is a premium member which costs $47 a month. That is active a lot cheaper than going to college (where you can learn affiliate marketing anyway) and the cost drops to about one-half if you pay annually. Wealthy Affiliate has two affiliate programs that you can join. One is to promote memberships and the other one is to promote the JAAXY keyword tool. I have never had to pay one red cent for membership because of these two programs.
If you have a number of websites, and if you’re a premium member of Wealthy Affiliate, you can host up to 30 websites and as many free sites as you like.
Quite a deal! (P.S. I’m tjbooks at Wealthy Affiliate.)
Here is a summary of membership levels at Wealthy Affiliate:
Let’s generate passive income!
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