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EARNING PASSIVE INCOME
When you earn enough extra income from passive income streams, you still have
time for other important things.
Creating a passive income stream will give you more money and the time to do the
things you want to do. But above all, it will radically improve your lifestyle without
having to work more hours.
What is Passive Income
A passive income is an income that is not related to your efforts. In other words,
earning money without having to directly work for it. With passive income, the
income keeps rolling in, whether you work or not.
In "Rich Dad Poor Dad", Robert Kiyosaki explains that if you want to be financially
secure you have to develop many passive income streams. As long as your income is dependent on your efforts, you are always at risk. If your company retrenches you,
you have no more income.
To have a passive income, you have to invest (time or money) in the
beginning and then you will be paid for it for the rest of your life.
Of course, you have to invest in something that will provide a continuous income. I
have learned from hard experience what is worth investing in and what is not. This
report will show you what kind of system is worth investing time in.
THE MOST COMMON WAYS TO CREATE PASSIVE INCOME
1. Bank Interest
Earning interest on money in the bank, in a fixed deposit, is the most basic form of
passive income.
For example:$1,000,000 on fixed deposit, at 12% interest per year, will give you
$120,000 per year. That is $10,000 per month.
Major Challenge:
You need huge capital saved in order to have a decent income - at least 200 times
as much money in the bank as you need every month. To have $5000/month, you
need to earn $60,000 per year. The best fixed deposit gives about 6% interest. To
earn $60,000 interest per year you need $1,000,000 invested.
When you save for your retirement, you hope to save enough so that at retirement
you have +-200 times more saved up than you need every month. Insurance
companies have calculated that you need to save 15% of your gross monthly
income for approximately 40 years.
But only 2% of people actually save this much. That is why 98% of people cannot
survive on the benefits of their retirement funds. They simply have not saved for
long enough.
Important Lesson
If you have not been saving 15% of your gross income for 40 years by the time you
retire, you will need another steady passive income. Now would be the time to start
one.
2. Rental Property
Owning rental property gives you a passive income stream. When you own property
that you let, you are earning an income without having to work to receive that
income. That income is passive. Tenants pay their rent every month, whether you do
anything or not. If you get someone else to manage and maintain the property, you
don't have to do anything.
Major Challenges:
✗ You need to earn enough to qualify for a second mortgage bond, so that you
can buy some rental property.
✗ Qualifying for a second mortgage bond is nearly impossible for the average
person.
Important Lesson
An extra passive income stream would help you qualify for another mortgage bond to
buy some rental property.
3. Royalty Income
Patenting a product that is produced and sold, recording hit music or writing a book
are some ways of generating royalty income. Every time the product, book or CD is
sold you earn a royalty.
Major Challenges:
✗ You have to design an original product.
✗ Then produce and market it.
✗ Or you have to write the book, or record the hit music.
It can be done, and I hope one day, as you release your potential, you will do it. But
you first need the idea and then funds to make it all happen. I hope that the songs or
books within you,will one day be heard and read throughout the world.
Important Lesson
There are great inventions, books, art and ideas within you that the world needs. But
for you to release your potential you need time and perhaps finances to market your
great idea. A passive income stream could provide both time and money.
4. Subscription Income
Another form of passive income is from regular subscriptions to services, such as
Internet Service Providers (ISP), telecommunications companies or television
networks like Cable TV.
These companies provide us with a service and receive an income from our
subscriptions every month. Whether there are 1,000 or 100,000 subscribers, there is
not much more work involved, except initial setup and regular maintenance.
If you can offer such a service which people subscribe to, then as soon as you have
enough subscribers, you can hire someone to manage everything. Now you can
earn a passive income.
Major Challenges:
✗ You need to be a service provider of this kind.
✗ You need to set up the company.
You need to do the marketing and sales to get thousands of subscribers.
Important Lesson
Subscription income is a key to enjoying a passive income. The money just comes in
every month.
5. Benefiting from the efforts of others
Another subtle form of passive income is by benefiting from the efforts of others.
We have all benefited from the efforts of other people. Every time we pick up the
phone we benefit from the work of Alexander Graham Bell. We also benefit
financially from the work of others.
When we get paid at the end of the month, it is because our company has provided a
service or product, which a sales person has sold. They made the sale and we
managed some part, or did some of the work or handled part of the admin. Other
people do the work and you benefit financially from it.
The way to create passive income is by building a company of 100 or more people,
each of their efforts contributes to the profits of the company and you benefit a little
bit financially, from each of their efforts.
When you get a manager to run the entire business for you, you can earn passive
income every month. As the company grows and makes more profit you can earn a
bigger passive income. Now you keep benefitting from the efforts of others.
John Paul Getty, one of the richest men in his time, said, "I would rather benefit 1 hr
from the efforts of 100 men, working 10 hours each, than have to work the 100 hours
myself".
Major Challenges:
✗ You need to start a company that provides a service or produces a product (or
sells them, like a retail store);
✗ You need to learn how to do all this; and
✗ Get the funds to make it all happen.
Important Lesson
If we can find a way of benefiting from the efforts of others, we won't need to do all
the work ourselves.
6. Network Marketing
Network Marketing or Multi-Level-Marketing (MLM) is moving products through a
network of consumers and/or sales people. You recruit others to use and sell the
products. These people will also recruit others who will use, sell and recruit.
You benefit from the sales or personal use of others in your network. If the network
is very big, you earn a good passive income based on the work of others in your
network.
Major Challenges:
✗ You need to be able to sell and most people can't sell.
✗ You need to recruit others who will sell and recruit (most people can't recruit).
✗ You need to continually motivate your team to sell and recruit.
✗ You have to attend many training and opportunity meetings.
7. Internet Sales
By setting up a website and selling high demand information products on the
Internet, you can also create a passive income.
Information products like e-books, courses and videos can be automatically sent
from your website with no personal involvement.
Everything is automated by technology. It runs on auto-pilot, 24/7. Once set up, you
don't have to do anything, except make sure you are advertising at the right places.
People keep visiting the website and buying your products while you are relaxing on
the beach or working.
Major Challenges:
✗ You need to have developed high demand products.
✗ You need the sales skills to develop a website that sells well,
✗ Or have enough money to pay someone to do it.
Important Lesson
The Internet has become a powerful way to reach many people effectively, 24/7.
8. Affiliate Marketing
Affiliate Marketing is referring your website visitors to other websites, where they
will buy products or services. As an Affiliate Member you could also refer people
through emails, text messages, social media or other forms of advertising.
Thousands of Internet companies will pay you when you refer business to them.
Companies such as Dial Direct Insurance, Amazon.com and others, which sell
books, CDs and more. Also companies providing services such as auto responders,
website hosting and audio hosting. The commission is between 10 and 50%. But
these are usually only once off sales.
Major Challenges:
✗ You have to have a website.
✗ You have to make hundreds of successful referrals to have a good passive
income unless you have a subscription service.
Important Lesson
Without having your own products or making sales you can earn passive income.
These are the main ways to create a passive income. They are all good ideas and
they all work, but each has some major challenges.
If you do a search on Google on any of the above, you will find a lot of information on
each.
These systems all work to some degree.
It is possible to combine the best of them and remove the major challenges, to
make a system that works exceptionally well and will create a passive income
for you.
Before we end this topic, notice something very important. Every time you want to
create a passive income, you need to have a large group of people.
It is people that keep selling, buying or subscribing to a monthly
service. You need people.
to be continued next week.....
Thanks
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