How to Generate Passive Income

You know it seems like with all things in life you hear about something for awhile and then maybe you don’t hear about it for awhile. Recently it seems like I’ve heard the term passive income quite a bit lately. And I think that’s because real estate has been fairly popular with rentals and stuff like that. So I wanted to talk a little bit about that because it seems like it’s very timely. So one, let’s understand what passive income actually is before we start giving examples and talking about it. And basically it’s income that you’re not actively involved in doing. So think of like a paycheck or something, right? You’re earning a living because you’re doing something whether that’s sitting behind a desk or working in a factory or you know something like that, right? You’re earning that because you’re physically involved and the labor to do that. Passive income is the opposite. You’re not involved. So think like you know if you’re a silent investor or bought a rental house. You know, that’s where I’m not doing anything. Another way to think of it that I’ve heard that I like, is making your money work for you. So you have financial commitments, but you’re not physically doing something to earn that. So some examples of what that is as I touched on it just a second ago. It’s like real estate, you know owning a rental home. There’s been some gain in popularity like in vacation rentals. So whatever type of rental you’re doing, whether it’s long-term, you know tenants are in there. You’re doing week by week vacation rentals or something else. Even if maybe you have farm land. You could be leasing that farm land or other land for access of that. Boy, I think there’s even things out there now I saw where people are like renting their campers out. And people are using that. The other day I came across somebody showed me an App where people are renting their swimming pools now. And you can literally go to somebody’s house and rent their swimming pool for the afternoon. So there’s different ways of having that passive income through like a rental type situation. The other way is think of licensing and royalty sort of stuff. That’s considered passive income. You’ve created a product or licensed it and now they have that. Royalties oftentimes maybe you’re fortunate enough to have property that has an oil well or mineral rights or something on it, then you get a royalty off from that. The other thin g is consideration of that is like your investing in a business, maybe one of your children or maybe you just were approached with an idea. They needed some financial help to get this business off the ground. So you invest and become a silent partner. That would be considered passive income. And the other way commonly is if you have after-tax money, non-IRA, 401K money and you buy dividend paying stocks. Those dividends that kick off from that non-qualified money, that would be deemed as a passive income as well. So people like having this passive income because again, you don’t really have to do something to have it. So like in retirement passive income can be a nice thing to have because you want to have that cash flow coming in to meet your budgetary needs in retirement. So if it’s something you’re interested in or want to talk more about how it could fit and how the consequences and advantages may be to you, give us a call at the number on the screen. We’d love to sit down and see how that may fit into your retirement plan.