With almost 100% certainty, many of us as children are taught the same thing...go to school, get a good education so you can get a good job. As a pharmacist I can say that getting an education is the parmount thing one can do and provide to others. However, its WHAT we are taught that makes a lasting impact. How many of us were ever taught about leveraging? What is it? What does it do to me or you? Will it cost me money or make me money? These I am sure most families and for certain schools, dont teach.
If you work you are certainly aware of one form of income...LINEAR. Trade your time for dollars. The obvious problem is this...when you stop working you stop making money. Well, your bills dont stop coming do they? The question everyone asks is how do I make more money? There is always getting a 2nd job. However, working even harder is not going to allow you to have what we all need...TIME. No time for yourself, family or those closest to you. The ticket here is obtaining the other 2 types of income, Passive and Residual Income.
The definition of Passive Income is "income that does not come from active participation in a business" according to the US Tax Code. These are investments such as stocks (I know not right now!!!), rental from a property, and dividend payments from stocks. Essentially, you are not actively doing anything to obtain these income streams. Essentially, this is leveraging. In other words, using the efforts of others to obtain an income. When you pay the bank a mortgage, unless your house is brand new, how many other banks have made money off of that SAME house. Think about interest rates over time. When the markets were REALLY good during the housing boom what would the interest rates be like...8, 9 maybe 10%. So if you paid in 20 years of a 30 year mortgage...how much money have you REALLY paid for that house....LEVERAGING!!! So why cant you do this?
Residual Income is defined as income that is generated after the initial effort has been expended. Hey, anyone out there like Jerry Seinfeld? Is he still making episodes to make money? Or did he do it once? Once and he keeps getting paid through syndication. Elvis Presley made his songs ONCE. He has been dead for some years now...his estate made over 40 million last year.
These 2 streams of income are the goal for many of us. There will still be those that prefer a 9-5 job and that is ok. I believe everyone has a calling in life. The goal in life is to find and do what brings joy, happiness and fulfillment to YOU. However, my goal is to teach others about these concepts and help bring about financial literacy and opportunity. I have pursued these income streams and am now learning mechanisms to earn this type of income. I have become more in touch with the financial world. With that said I will tell you what someone once told me..."Money is NOT everything in this world...but its up there with oxygen." I welcome you to reach out to me. I hope to help as many as I can. Thank you.
