Passive Income

The idea of passive income is pretty fascinating. Imagine having income directly fed to your account without you having to work day-to-day, week-to-week. This idea is precisely what enabled the new rise of millionaires around the globe. Elon Musk did not become the wealthiest man exclusively due to his current company. He supplanted his wealth, essentially developing multiple channels and streames for it, and over time it multiplied and paid enormous dividends.

Robert Kiyosaki, in his famous book “Rich Dad Poor Dad”, talks about two ways to earn money. One is by being a specialist in any particular niche. This path requires studying hard, earning some degrees, maybe grabbing a PHD, and establishing yourself as a specialist in a very narrow field. You get a salaried income, that will be sufficient in getting through the month but offers little to nothing in terms of efficient savings. Such people are bound by a monthly paycheck. The 9 to 5 tumultuous routine becomes chains as one is constrained enormously.

The second path, mentioned in his book, is one of passive income. Essentially it means working hard in your 20s, doing powerful projects, that last a long time, and provide continuous income to the person. This income becomes guaranteed and will act as a powerful supplement to your income if you are earning one via a job. Increasing such money-generating projects would provide additional sources of income, until these supplementary means surpass the primary salary that the job provides, essentially eclipsing its worth and value.

Passive income enables one to break free of the shackles of a 9-5 job and provides a favourable avenue for the rich. Those who earn passive income do not work for money. Instead, they make money work for them.

There are many ways to earn a passive income. One of the most popular ways is via real estate. Suppose you do a job and use those funds on basic utilities alone. The rest of the money is redirected into buying, say… a flat. Once one has ownership of the flat, he rents it out. This ensures a steady stream of money every month that is almost guaranteed. This money will be used as a supplement to the primary salary. Now, let us take it a step further. Suppose one opts to buy another 4 flats and rents them all out. Now, the individual has 5 flats to his name, all of which give a guaranteed cash flow that supplements the job salary itself. Eventually, with enough flats, there might not be any need for a job as your capital needs are filled via an alternate cash-flow.

There are many ways to achieve passive income. Some artists publish books, music, photography etc. online to guarantee a certain amount of cash-flow every month. Several narrators on ACX (Amazon’s audiobook site) use Royalty-Plus options to ensure a cut of every sale the book makes. If the book sells well, it guarantees an enormous amount of money monthly for the narrator.