Not only that but in almost all other cases there is the illusion of influence, which is itself a psychological and emotional cost. If you invest in a business that your friend or family member is running, you can see how things can get messy. You have thoughts on how things should be done, they have competing thoughts, if things aren't going well… we know how this story goes.
This is a buzzword I heard about through a few career coaches. Slowly more awareness is spreading that we can escape the rat race and find alternative ways of working, and indeed, the days of having to choose one particular career path are becoming outdated. The recession is forcing us to think of more imaginative ways to make a living and I am determined to use every skill and talent I have to start generating multiple income streams. Before I was racking my brain for YEARS because I just couldn’t choose one career path! I am only just beginning on a small scale and am not making any real money as yet, but this year I will dig out the toolboxes I’m not currently using and set up various things that will hopefully bring in the pounds. Thumbs up to multiple income streams.
I don’t really know much about those…I should take a look from a diversification standpoint. If you don’t mind me asking, what do you target for your net effective tax rate on your passive income? Also, I’m sure you’ve probably covered this somewhere, but how do you deal with healthcare? One more dumb question…have you found that you spend more or less money than you anticipated once you retired?
This was a very inspirational article! I too spent 20+ years in a high-stress career selling a high-end product under a 100 percent commission plan; that is, no salary! I realized, after racking up millions of frequent flyer miles, that there had to be a better and less-stressful way of making a living. My goal was to design my own lifestyle free of corporate shackles, which required a pre-determined amount of passive income.
Question: You mention receiving $200k of passive income a year, but your chart shows half of that coming from real estate holdings, and reading between the lines it appears that you hold mortgages against those holdings. Then you conclude that $200k/yr of passive income should be enough to live comfortably anywhere in the world. So are you subtracting your real estate expenses (taxes, insurance, mortgage payments, maintenance, remote property management company fees, etc.) when you report your passive income from those properties? Really I think it’s the net (after taxes and everything) that tells us what is left over to “spend” on living, right? When I set up my spreadsheet to retire early at age 47, I calculated the after-tax income I would need to live. Then I compared that to my income streams (estimating tax on the taxable income streams) to measure the surplus/shortfall. Also some good advice from GoCurryCracker: If you can minimize your taxes so you’re in the 15% tax bracket, you can possibly receive tax-free long term capital gains. I agree with your philosophy that time is more important than money as we age. I am not sure I agree with a philosophy that is fixated on needing such a large income, and would rather minimize taxes if it’s all the same on the happiness meter. Furthermore, having 20 plus income sources in the name of diversification adds stress and requires more management (TIME!). I think this is fine for those of us while young, as we have the energy to work hard. But as time becomes more important, the extra headache of managing, planning, and buying/selling our assets becomes a resented hindrance on par with the resentment we felt when working for an employer and fighting traffic each day to go to a job we hated. Every thing we own in actuality owns us, by virtue of its demands on our time and affections, and that includes investments. It also includes our home, and is a good reason for downsizing. As long as we have food on our table, a roof over our heads, and clothes on our bodies, what more do we need? I think we need to consider freeing ourselves from the weight of the chains of managing too many ventures. Personally, I plan on investing in no more than 5 simultaneous ventures ever, with the exception of some IRAs that I just plan to let sit for the next 20 years (and therefore no thought or anxiety required).
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I also noticed that in your passive income chart at the bottom that you don’t include your internet income other than sales from your book. Is there a reason for that? Do you not consider is passive because you are actively blogging all the time to create it? Or do you just not want readers to know how much money you generate from blogging activities?
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But then figure out your unique selling proposition, what advantage you can offer that the market currently lacks. “My advantage in the passive income marketing space is that I’m not afraid to share my failures or where my income comes from,” says Flynn, who details his impressive income every month. “Transparency is huge,” he says. Referring to the personal bio on his LEED exam site, he says, “You might think I’m not benefitting from putting my story on there, but it helps me establish a relationship with people there. I’m someone who went through the same experience people went through on the site.”
Some scholars have come to the conclusion that material progress and prosperity, as manifested in continuous income growth at both the individual and the national level, provide the indispensable foundation for sustaining any kind of morality. This argument was explicitly given by Adam Smith in his Theory of Moral Sentiments, and has more recently been developed by Harvard economist Benjamin Friedman in his book The Moral Consequences of Economic Growth.
“I don’t believe the overnight success exists. There’s a lot of hard work and time involved beforehand,” say Flynn. Angry Birds may have seemed like an overnight success but it was the 52nd game that Rovio created. Flynn says it took him a year or year and a half to build audiences for his most successful sites. (Read these time management expert's tips on the work habits of successful people.)
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There are many success stories you’ll run into of what it takes to generate multiple streams of income. However, one of the most important tips is to take on multiple clients. One client being your income source is bad news. They could voluntarily or involuntarily leave you high and dry. For instance, their business may begin to suffer and they no longer have the funds to pay you. Well, that is your income stream; gone without warning.
Very enlightening. I like that you have a number of discreet passive income streams working for you. I”m not sure about such a large CD/ bank holding though, though it looks as though its giving you a fairly healthy income. How do you feel about a rising inflation rate on your effective real cash return? I’m looking to diversify beyond my current dividend passive income. Rental income is what I expect we’ll be harvesting next. P2P lending is a little too out of my comfort zone. I had a lot of exposure to consumer credit risk models at a prior role, and it scared me the heck away from consumer lending!
Joe started Retire by 40 in 2010 to figure out how to retire early. He spent 16 years working in computer design and enjoyed the technical work immensely. However, he hated the corporate BS. He left his engineering career behind to become a stay-at-home dad/blogger at 38. At Retire by 40, Joe focuses on financial independence, early retirement, investing, saving, and passive income.
Index funds provide you with a way to invest in the stock market that is completely passive. For example, if you invest money in an index fund that is based on the S&P 500 Index, you will be invested in the general market, without having to concern yourself with choosing investments, rebalancing your portfolio, or knowing when to sell or buy individual companies. All that will be handled by the fund which will base the fund portfolio on the makeup of the underlying index.
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However, this comes back to the old discussion of pain versus pleasure. We will always do more to avoid pain than we will to gain pleasure. When our backs are against the wall, we act. When they're not, we relax. The truth is that the pain-versus-pleasure paradigm only operates in the short term. We'll only avoid pain in the here and now. Often not in the long term.
Build a list in a particular niche and tell them stories. Create a bond. Build a relationship with them. It's important. Then, when you've created a bit of culture, start marketing affiliate products or services to them that you think they might like. Just be sure that you personally vet out whatever it is that you're selling to avoid complaints if the product or service falls short.
Learn how to become a savvy and successful Ebay seller from Lynn Dralle. She has many tips and tricks to share that are easy to understand and can help anyone save time and money when selling on Ebay! This video will teach you what kind of items will be sure to have a high bid and what items to keep an eye out for when garage selling, thrifting and antiquing!
I have to agree. Our Duplex cost us 200k initially in 1998. Over time and completely refurbishing the property with historically appropriate sensitivity, we invested another 200k or so. We just had a realtor advise us we could ask 700k for it today. It nets us 30k annually after taxes, insurance and maintenance. We still have a loan on it which I have not taken into account, that will be paid off within 5 years if we keep it. My mental drama now is, while I am quite giddy over the prospect of earning a tidy sum of profit if I sell, what then would I do to equal the ROI and monthly income this thing generates? Rents are low, they should be 4k a month and will only go up. Tempted to keep it and not sell. And while I do have some stocks, I basically suck at them. I am much better at doing properties.
Real Estate Income – Since we moved up to Newport Beach, I started renting out my condo in San Diego. My monthly cash on cash return is $300(I charge $1,900 for rent and my total payments including mortgage, HOA, property tax and insurance are $1,600) but I also get back around $350 every month in principal and about a $150 tax savings per month. But even this income is inconsistent, since sometimes expenses will pop up like last month when I had to buy a new A/C for $3,000!
I’ve built several businesses since 2008 using one or more of these models. I’ve been featured in magazines and articles across the globe, and since I started my journey I’ve generated over $5M in earnings from these businesses. All of my income and expenses for those businesses dating back to October 2008 have been tracked publicly on SPI.com. You can see 10 years of income reports here.
It is our duty now to begin to lay the plans and determine the strategy for the winning of a lasting peace and the establishment of an American standard of living higher than ever before known. We cannot be content, no matter how high that general standard of living may be, if some fraction of our people—whether it be one-third or one-fifth or one-tenth—is ill-fed, ill-clothed, ill-housed, and insecure.
Sell Digital Files on Etsy – I’ve been into home décor lately and I had to turn to Etsy to find exactly what I wanted. I ended up purchasing digital files of the artwork I wanted printed out! The seller had made a bunch of wall art, digitized, and listed it on Etsy for instant download. There are other popular digital files on Etsy as well such as monthly planners. If you’re into graphic design this could be an amazing passive income idea for you.
I was so excited when I opened a higher interest savings account and I started getting ‘real’ passive income. Instead of 5 cents from my bad savings account, now I get $10 a month in interest for just keeping my emergency fund full! If I saw a nickel on the street, I’d pick it up but it’s not too exciting. If I saw $10 laying on the street and picked it up, it would make my week! The account is like finding that $10 on the ground every month 😉
OK, I know what you're thinking — maybe you're not a writer. However, as Tamez says above, chances are, you're an expert sy ~something~. Also, chances are that other people want to know what you know. So whether you write an eBook on dating or tips on how to fix your car, once you write, self-publish the book, and let it go, it can sit on a site like Amazon and sell itself. Of course, you can market it, too, but that's another story! Some sites let you keep most of the earnings, while others do not.
Today I sent my Annual Message to the Congress, as required by the Constitution. It has been my custom to deliver these Annual Messages in person, and they have been broadcast to the Nation. I intended to follow this same custom this year. But like a great many other people, I have had the "flu", and although I am practically recovered, my doctor simply would not let me leave the White House to go up to the Capitol. Only a few of the newspapers of the United States can print the Message in full, and I am anxious that the American people be given an opportunity to hear what I have recommended to the Congress for this very fateful year in our history — and the reasons for those recommendations. Here is what I said …
Now, all that said, if capital (savings) grows faster than the growth of the economy, those with savings will see their wealth grow at a faster rate than those who rely on the growth of their income. While this is not an extension of Piketty's argument (you can't take an idea that applies to a population and a whole economy and boil it down to the individual like this), it's not an unreasonable conclusion to take and apply to your own life. (Piketty does talk about this on an individual level, but says it's more impactful for billionaires vs. millionaires – though we have limited data into individuals)
We currently have 4 sources that are sustainable. W2 income, interest income, dividend income and blogging. Of course only 2 of those are passive and aren’t enough to support our lifestyle, yet. One day! My wife is also working on building up a side job and I’m looking for ways to boost up my own side hustle too. The next big income source I’d like to add to the mix would be a couple rental properties but #1 is likely still several years away from being joined into the mix.
“Where a lot of people mess up is they try to build a business or create a product that serves everybody, and by trying to serve everybody, you serve nobody. You have to specialize and niche down and find a market with a pain point that you, based on your experience, based on your education and based on your passion, can help,” he says. Your earnings will directly reflect how well you serve that particular audience, and the more your message resonates with them, the more opportunities you’ll have to sell to them.
Investing in a business: Another good way to generate passive income is to invest in a business --even a small one -- in return for a percentage of the profits - just like Shark Tank, only smaller. Lending $10,000 to a local business that, for example, is working on a mobile app for Apple phones could lead to a passive income-generated share of the profits when that mobile app starts selling like hot cakes.
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The key thing to note in those various streams is how few of them rely on my active participation on a daily basis and how they are fueled from savings. My active participation is in the blogs and $5 Meal Plan. Everything is passive, outside of routine maintenance like updating my net worth record, and none of them would be possible if I didn't have the savings to invest it.