Is Passive Income a Myth?Formerly, we didn’t understand how important passive income was in order to become financially free. It was when we attended T. Harv Eker’s “Millionaire Mind Intensive” weekend seminar a number of years ago, that we really “got it” for the first time. Passive income is income that you earn without having to work for it. It comes in whether you work or spend the day at the beach with your family, play a few rounds of golf or decide to take off early for a weekend get-away. The formula is very simple: Financial Freedom = Passive Income > Lifestyle Expenses You’ve won the money game when your income from passive sources is greater than your lifestyle expenses - when you earn enough to live the lifestyle you desire without having to work or rely on anyone else for money. Let me ask you this: If you were suddenly unable to work and no longer had the income from your job or business coming in, how long would you be able to survive? Would it be a year? Or perhaps, only a month or two? The truth of the matter is that most people are living from paycheck to paycheck and would not be able to survive longer than a month. Your wealth is measured by the number of days you can survive without physically working and still maintain your standard of living. For example, if your monthly expenses are $3000 and you have $9000 in savings, your wealth is approximately 3 months or 90 days. Wealth is measured in time, not dollars. We've learned that there really is no income that is truly passive. One way or the other, you must work in the beginning in order to create passive income streams that continue even when you stop working. There are two ways:
Money Working For You Typically, this entails saving and investing your money. This method requires the least amount of work, however, there are two things you must do first:
We have found that getting your money to work for you is harder than it seems if you`re investing in the vehicles (such as stocks, bonds or mutual funds) that are traditionally utilized by the majority of the population. With these income streams it is difficult to earn 10% per year consistently. Even with a return of 10% per year, you would need a large lump sum of $360,000 just to generate a modest income of $3000 per month. There are other passive streams of income that generate better returns and require less capital. Some examples are the Foreign Currency Exchange (FOREX) Market, income-generating real estate, established businesses that operate without you, and mortgages/loans/notes/IOU’s. Just like the stock market, some of these income-generating vehicles can be risky, so it is important to have a clear understanding of how they work and the varying risks involved. Business Working For You Creating a passive business that works for you will usually require some “sweat equity” in the beginning. Some examples of passive businesses are:
While most network marketing and many Internet businesses may not always be completely passive, they are still highly leveraged and will provide ongoing residual income if established properly. For example, the income from a network marketing business will eventually dissipate and taper off if no ongoing effort is made to continually manage and build your downline, (which is also known as attrition) . While passive income for financial freedom isn’t a myth, it is not always as easy as it may seem. It does require some effort - either to earn money to invest or choose sound investments, or to build a passive business. It takes some time but it is achievable. Go back to multiply money
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