A study conducted a few years ago said 80% of millionaires are self-made. Simply they didn’t inherit massive wealth or won a lottery. They began with the desire to be a millionaire and carved a way for themselves.
Common skill with them was ability to create passive income.
One of the keys to achieving financial freedom is to start building a source of passive income early in life. Passive income is the one which does not require your direct involvement to earn it. The question arises, why does one need passive income? The reason differs from people to people. A simple way to know the answer is by following this easy exercise. Consider that you have won a lottery today and you are awarded the price that will help you achieve all your financial goals. The question now is what will you do in life knowing that you don’t need to work for an earning? The answer you get is the kind of life you want to live given a choice.
Passive income gives you the life that you want to live.
- Be with Family
- Go out on vacation
- Social Contribution
- Peruse hobby and so on
Financial freedom is creating such sources of income, which is enough to fund your present and future living expenses, without compromising the desired standard of living.
It frees you from 9 to 5 job.
Creating such a source of income is a real asset for you and your future generations. Create multiple source of passive income, which will increase your total income, without working for it. You can be in any profession, or job or business, find a way to generate passive income that suits your job title.Replace yourself, there is always a limit to how much you can earn. Create a source of income, which requires little efforts to maintain it.
Few ways to generate passive income are
1. Fixed deposits/ recurring deposits
2. Investments in mutual fund and earning dividends
3. Invest in others business being partner or owning part of equity shares
4. Rental Income
5. Franchise business
6. Being author
If you are a restaurant owner, you can look forward to appointing a manager to run the restaurant, or open a chain of restaurants by creating the brand. If you have professional experience on any subject, you can look at writing a book and earning royalties by publishing the book or creating an e-book, and also creating a flow of passive income through membership subscription on the e-book.
Power of Compounding:
Ramesh Dholakia started saving soon after he received his first salary at the age of 25 years.He kept Rs.3000 every months. Today he is 55 and planning to retire. The accumulated balance in his account at the rate of 8% interest is Rs.4500000. By keeping this money in fixed deposit, he will be able to bet Rs.30000 every months. That’s the power of generating passive income, without working for it.
If you want to have a decent retirement, start earning and create a stream of passive income. The earlier you start building a portfolio of passive income, sooner you will achieve financial freedom. Why wait for 50s when you can do it in 20s? The rewards are extraordinary if you start now.
Your Financial Strategist