Financial Independence with Passive Income Streams
Saturday, July 11, 2015
The key to understanding passive income streams is to know what the word "passive" means. To be passive is to be inactive while remaining accessible to being acted upon through interaction with other elements. Passive income, sometimes referred to as passive residual income, is income that's acquired with little involvement and active maintenance. Any income received that required little or no input of time and energy on the part of the participant is passive income. Passive income streams are the countless businesses or trades that generate passive income.
Some of the benefits of passive income are as follows:
Over time, varying or unlimited amounts of money can be generated on a residual basis; this means owners are paid for an indefinite period of time whether or not they regularly work on or in their business;
Once fully operative, owners have more free time and money enabling them to focus on the enjoyable things in life while pursuing other ventures that interest them;
If operated properly, the conventional 9 to 5 job can be eliminated;
While formulating their passive income streams, people can set their own schedules while working in the comfort of their own homes; and
Having passive income is an assurance that no matter what trials or life changes may occur, people will have the necessary income to adequately manage their lives.
For the most part, people are accustomed to working a 40-hour work week for their income, typically described as earned income. However, there are limits to how far the average person can progress financially with income earned on the customary job because they only receive what their salaries pay them. Also, working a standard job can be a redundant process that in time can slowly drain a person of all their creative and physical energies making it harder and harder to produce earned income as effectively and sufficiently as it might've been at an earlier time.
Passive income can be the key to financial success because it gives people the opportunity to make an unspecified amount of money without having to put an abundance of time and effort into the money-making process. Also, there's a greater possibility of creating and sustaining wealth with this method. Examples of well-established and enduring sources of passive income are in real estate where property owners receive monthly rent payments, financial investments that generate interest, dividends and other profits for its investors, and network marketing.
Most people are aware of the process involving rental properties and financial investments but network marketing is a relatively new method of making money. Network marketing is about businesses that use and pay independent sales representatives to advertise and sell their products or services. In doing so, the businesses seek to obtain those customers who aren't reached through mainstream marketing methods. Independent sales representatives can be more successful at tuning into select groups of people with word-of-mouth advertising that has been proven to be the most effective method of advertising.
Keep in mind that although the income is described as passive, in order to run a successful business, there is work to be done. In order to produce passive income, one must choose a profitable service or product that can be easily managed and they must partner with the appropriate groups of people who will assist with the facilitation of income generation. Initially, it will be necessary to engage in the set up and management of the business and in order to ensure the business continues to run as smoothly as possible, there has to be regular intervention. Also keep in mind that depending on the business venture chosen, capital may be required. However, once the business is established, the income will be generated with little effort on the owner's part, thereby producing passive income. Building a network of people and using their resources, also known as developing relationships, plays a tremendous part in creating a system that works well. This network should consist of people who are in businesses that are related or similar to the owner's business.
There's no disputing the fact that the conventional way of earning a living by obtaining a steady job has served a vital purpose. Indeed, it's through maintaining this daily routine that many generations have acquired invaluable experience, significantly enhanced their skills, and learned the essentials of good money management that is crucial to the production of responsible citizens. However, in recent years, the traditional job market has shifted to an increasingly unsteady position that has left many people stranded financially. Because of the introduction of new elements like advancing technology, job losses, life changes and illnesses, it has now become necessary to find other ways to survive financially. Passive income will not only help people to survive, it's a fundamental key to financial freedom!