Passive income as we know is income derived from you not working directly to generate it. It does not mean you wont initially need to put some work in, but it is the ‘set and forget’ strategy, where once you set it up, on the whole you can forget about it and the best type of passive income is property. Not only do you have someone (tenant) paying your debt (mortgage) you also have surplus income (rent) coming in monthly and over the long term you are holding onto an appreciating asset.
Savings – always have some money stashed away in a long term savings account for any emergencies or that deal of a lifetime where you need to move fast.
Investment income this is derived form the capital gains you make when selling property, dividends from shares, etc. I, like the next person, want to enjoy my life now, so passive income is good, but you cant enjoy its benefits immediately when you are starting out. Therefore I always advocate selling a few properties instead of keeping them all, so you can get the money out and either reinvest it or enjoy it.
Simplify – when you are starting out on the road to wealth creation, you need to cut down any unnecessary expenses and invest as much money as possible early on. With the power of compounding, small regular contributions early are much better than big lump contributions in alter life. Do not live beyond your means..you can do later when you have reached financial independence.
“I’ve found that the less stuff I own, the less my stuff owns me.”- Nathan W Morris