By far, from my experience, the easiest source of passive income for anybody comes in the form of interest earned from investments or dividends... You don't need a lot to get started. Let's say you have $1000 to invest. All you have to do is invest it in a relatively safe place where your odds of getting a decent return are safe.
Best case scenario, let's say you'll be making 10% a year from that $1000 investment alone. Sure, your interest will only amount to $100 a year to start... but think of it this way, that's nearly $10 a month in 100% passive/residual income! Imagine if you could save up more money and have $10,000 invested at 10%... That would be nearly $100 dollars a month in 100% passive/residual income. $100,000 invested at 10%? $1,000/month in passive/residual income! $400,000 invested at 10%? That's $4,000/month every single month 100% automated! You would not have to work anymore! Who really needs more than $4,000/month in income to live comfortably?
If you dream big and you want to be earning a lot more than that every month, you could extend this idea to millions of dollars invested at 10% or who knows, if you're lucky... maybe even billions of dollars!
Now, here's the tricky part? With interest rates at the bank so low, where can you find safe investments that will likely earn you that much interest? Before I get into that, I want to share with you a little tip I learned on a show on CNBC called American Greed. One of the participants on this episode I saw said that if anyone in life promises you a return over 10%, that should immediately raise a red flag for you because it's probably not a legitimate opportunity. That's why I kept our discussion at a healthy 10% return. Now, let's get back to the main question: Where can you get returns of 10%? That's a whole other discussion for another article and I am in no way qualified to answer that. My best advice would be for you to discuss this issue with a certified financial planner. They'll be able to set you up with a sound portfolio that aims to earn 10% a year.
Remember though, that this kind of return doesn't have to come from mutual funds or equities alone... you could be earning a healthy 10% return from other investments like real estate rental properties or your own business or a combination of both. Let your imagination run wild with this one and recognize that the possibilities are endless.
I just want to go back on something I had said. I said that if someone promises you returns of over 10%, it's probably a scam... this is not always the case however. If you look at the best investors like Warren Buffett... you'll see that higher returns are in fact very possible if you know what you're doing.
One piece of advice I got from watching CNBC again came from one of the shareholders of Berkshire Hathaway. Berkshire Hathaway is the business run by the famous investor Warren Buffett. The shareholder explained that he had all his money invested in Berkshire Hathaway because he reasoned there was no better place to put it. In his opinion, his money was safe because it was in the hands of the biggest investing genius of our time - Warren Buffett. Now, I've considered this strategy myself... but I have decided not to follow through with it just yet for 1 main reason. I'm afraid of what will happen to the stock if anything ever happens to Mr. Buffett. Will it plummet? Who knows... I'm sure I'm not the only one worried about this... if it does plummet though, it's probably going to be a perfect opportunity to invest in it because I'm sure Mr. Warren Buffett will leave Berkshire Hathaway in the right hands.....
If you're interested in learning more about Warren Buffett, I highly recommend you read one of the biographies about him called Buffett: The Making of an American Capitalist. I really really enjoyed reading this book because it takes you through his whole life... How he bought his first stock at a really young age and worked his tail off at many odd jobs to earn his first dollars as a youngster. And how he invested some of that money he worked so hard to earn in pinball machines. It takes you all the way through the different stages of his life and it's really an entertaining read.
If you're a fan of Warren Buffett, this is the only biography of his that you should ever consider reading. Sure, I haven't read the others, but I got my fix with this complete biography.
Talking about biographies, I read on Forbes' website that if you aspire to be super rich, one of the best ways to get a head start is to read autobiographies and biographies of the super rich. If you look up billionaire autobiographies on Google, you should see a link to the Forbes' website that has a pretty good list of billionaire autobiographies. It's really good to read these kinds of books because you really get to peak into billionaires heads and lives. You get a sneak peek at the real deal, you know? Also, I remember what a philosopher once said(the philosopher featured in The Secret): he said that when you read books like that, it's like sticking your hand in a pot of honey, there's no way you can get your hand out without some of the honey actually sticking to your hand. I hope you understand the analogy. Just in case you don't, here's my interpretation. There are lots of gems of wisdom in these books and there is no way you can read this kind of book without some of that wisdom sticking to you in your head! So, all in all, in my honest opinion, it's a great investment of your time.
I have a goal of reading 1 hour a day autobiographies/biographies of the super rich because I aspire to be great like them. I don't know why. It's irrational like Felix Dennis says. It's a silly game(the pursuit of wealth) but it's really fun. Haha... It keeps me busy and it'll keep you very busy too if you get serious about amassing serious wealth.
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