Consistent, automatic, and recurring cash flow is the holy grail of financial independence because it enables you to do pretty much anything you want, wherever you want, with minimal effort and without having to worry about your next paycheck.
While it is true that some people manage to reach a level of financial independence where money “magically” lands in their bank account each month, almost none of these folks got there without a ton of hard work. Forget the trust fund kids, the lotto winners, or the gamblers. We’re here to talk about people who generate cash flow through hard work for years, and then can retire early and “rest on their laurels”.
In this article, we’ll cover the 3 most crucial components of consistent cash flow. I can guarantee you that if you make sure you have those 3 things in your life, you’ll make money passively in 90% of cases. I’m not saying you’ll make $10,000 per month without lifting a finger, or even $1,000. But generating consistent, passive income is easier than most people think, all it takes is hard work and dedication.
Nischa Shah believes that having just one income stream is "too close to none." She identifies three income "pillars": active income, business income, and investing. Her advice is to take some of your active income and use it to create new, passive income streams.
Passive income is a money stream that requires little or no continuous effort. As a business model, it's largely self-sustaining; often, passive income involves some kind of upfront or initial investment that generates long-term steady gains.
You can think of these as three legs of a stool. These three pillars of Marketing, Sales and Service; they don't just stand by themselves. They lead to something. They stand to serve a greater purpose.
I believe that businesses, and life in general, become more purposeful when they are built around the three main pillars of: Your Core Values, Your Goals and Your Mission, which I will go into more detail around in a just a moment.
By keeping assets in tax-deferred accounts like IRAs and 401(k) plans, you won't have to pay tax on your income and gains until you withdraw the money from the account. In the case of a Roth IRA, you may never have to pay tax on your distributions at all.
What is passive income? Passive income is a type of regular income earned without working for an employer or job. It doesn't require any active work where you're receiving money in exchange for a service performed. Another way to think about passive income vs. active income is as rent vs. wages.
A stock portfolio focused on dividends can generate $1,000 per month or more in perpetual passive income, Mircea Iosif wrote on Medium. “For example, at a 4% dividend yield, you would need a portfolio worth $300,000.
Investing a lump sum in stocks that pay high dividends can generate $500+ passive income per month. Do thorough research before investing. Reinvest dividends to compound earnings.
Introduction: My name is Francesca Jacobs Ret, I am a innocent, super, beautiful, charming, lucky, gentle, clever person who loves writing and wants to share my knowledge and understanding with you.
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