If you really want to achieve financial independence or to retire from the rat race, you must have some type of income to sustain your lifestyle. This is were you transition from active income from employment to passive income from investments.  The idea behind passive income is that it is income earned repetitively from a one-time project or it takes little time to acquire on a regular basis. The sooner you start building passive income sources the sooner you will become financial independent.
The most common passive income sources include:
- Investments in stocks and bond that pay dividends such as the ETFs listed in the monthly residual income program. You can literally create any unlimited number of monthly paychecks through this process of investing.
- One of the more popular passive income today is selling options to collect the premium as a source of income. This includes covered call, credit spread, butterflys and condor option strategies.
- You can buy and rent real estate such as single family dwellings, apartments and so forth. This can be a great strategy if you like the real estate industry.
- You can earn royalty payments from published books, music and other types of intellectual property. This can include passive income from blogs, affiliate income, etc.
- Residual income from companies you have an ownership in but do not participate in the daily management of the business.
- The most obvious is pensions and retirement accounts such as 401K’s. Of course, these items usually require 30-40 years of employment before they come to fruition.
In general, there is two types of passive income: income generated from nearly no capital and income requiring significant amount of capital. If you write a book or create music it doesn’t require a lot of startup capital. If you want to invest in a business then you must have access to a significant amount of cash.
The most common path is to begin building passive income assets while being primarily employed at a job. This approach allows you to save cash for passive income investing without struggling to make your life standard.  This approach allows for time to grow and compound your passive income into a larger source of income.
My preferred method is discussed in the Get Rich – Stay Rich program. Here I split my investments into two buckets. One bucket consists of 60% of my portfolio that I call the Stay Rich bucket. I include safe investments such as monthly dividend payers in this low-risk portion of my portfolio. The second bucket is called Get Rich as I take on a little more risk to earn a higher return. this strategy includes covered calls, spread trading and condor trades. All of these strategies pay me a premium or credit as a form of passive income. Over time, I transfer my Get Rich money into more secure Stay Rich passive income sources.
