International Workers' Day, also known as “Labour
Day” or “May Day”, is “a celebration of labourers and the working class;
it is promoted by the international labour movement.”
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Entrepreneurship is so widely
promoted and there is much focus on the
independent business, that the very concept of working in an office for
a monthly salary for your entire career can make one feel inadequate.
Entrepreneurship is not for everyone; we must be mindful of the fact
that for many people, a steady monthly income is a comfortable,
relatively “safe” place to be. This is their chosen path through
which they can thrive, excel and make a significant impact.
Do not leave your full time job if you are not ready. Most people
simply cannot afford to do this with the financial obligations that they
face. The right step or time is determined by your own unique
circumstances. Keep being your best, and keep learning every single day.
If you enjoy what you do, there is absolutely no reason why you
shouldn’t continue doing it.
You can build a great career by staying in one organization, or by
moving to various companies over time. Follow your own path and don't
feel intimidated or insecure by colleagues who resign to run their own
businesses. It is important to stay focused on your own goals and not
someone else’s.
Most people live in the cycle of active income, which ties their time
to their income. Active income can be earned only by investing time and
effort directly in return for money. The salary you get from work is as
a direct result of your efforts. With active income, if you don't work,
you don't earn.
The road to financial freedom
Are you living from pay-check to pay-check? Are you always agonizing
about not being able to pay your bills? Financial freedom is attained
when you can work because you want to and not because you have to. If
you are serious about financial freedom and security, then do embrace
the passive income machine.
Passive income generally includes income that is not directly related
to your daily activity and which you can generate without having to
actively work for it. In fact, your money is actually working for you
with no extra effort on your part, apart from the act of active
investing.
Creating a passive income stream does not come easily. It takes time,
effort, discipline, and consistency at the beginning of the cycle
before it becomes passive. It will involve disappointment, failures and
frustration, but if you invest your time and effort upfront, it can be
the most fruitful and worthwhile investment of your time, as it
continues to pay you long after the work has been completed.
Here are some reasons why Passive Income is so important:
Passive income gives you the freedom and flexibility that comes with
not struggling to make ends meet, particularly if the income outpaces
your monthly expenses. With this, you have more choices; you can engage
in work that you love, or even volunteer.
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| Photo Credit: Dreamstime |
It reduces anxiety and fear of the future
The inability to pay bills or debt can lead to fear, anxiety,
depression and a sense of hopelessness. Just knowing you have that
steady stream of income or emergency savings reduces stress.
You can do things that you love
We all have things that we’re passionate about but we often have to
put them off. Passive income builds that important financial momentum of
financial security and freedom that makes it possible for you to
support others, to do things. You can get involved in a project that you
care deeply about without worrying about a salary.
Passive income in retirement
If you are middle aged, and have been living solely on your salary,
your goal should be to use as much of your income as possible from your
remaining peak earning years to create sources of passive income, which
is often the only source of funds for most retirees.
The wealthy are able to detach the time spent from the money that
they earn. They earn passive income from various sources including
investment property, dividend income, interest income, business
interests, royalties, website advertisements and so on.
Interest Income
Interest is a most basic form of passive income. Interest earned on
savings account balances, fixed deposits, or bonds is a relatively risk
free source of passive income. However, interest rates hardly keep apace
with inflation, so while it is necessary, it will be difficult for you
to grow your capital in this way.
Investment Property
Residential or commercial property for investment purposes is a
time-tested way of enjoying passive income alongside capital
appreciation. The location and condition of the property is of
significant importance for you to realize stable income far into the
future.
Dividend yielding stocks
One of the most effective ways to earn passive income is to buy
shares in a publicly quoted company that regularly pays dividends to
shareholders. A reputable stock broking house will select stocks for you
but it is also important for you to develop your knowledge of investing
to understand how markets work.
Both stocks and real estate have the ability to grow in value over
time. Indeed, capital appreciation is one of the greatest benefits of
both of these passive income sources when you sell your asset. The
proceeds can then be used to create other assets.
Invest in a Business
Some of the greatest sources of passive income have come from people
taking a chance on a promising entrepreneur, after thorough due
diligence.
In discussing the advantages of investing, one should never ignore
the ensuing risk. There is always the very real risk of loss as markets
can be volatile and prices can go up and down. A diversified portfolio
will help to mitigate this.
It is rare to find people achieving their financial goals and dreams
from their salaries and subsequent pensions alone. True financial
freedom requires alternative sources of income; passive income. This is
the foundation for long term sustained wealth and future financial
security.
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