Earn More & Work Less With Passive Income Streams

Do you love your free time? Do you wish you could work less, but still earn enough money to maintain a comfortable lifestyle?  Do you wish you could earn more money to top up your current income?

Yes! - good, so now is the time to learn about passive income.

Passive income is money earned without any direct effort from the benefactor – put simply it is money you earn for doing nothing!

Some common sources of passive income are:

• Interest earned from our savings
• Returns from stock & share investments
• Rent from buy-to-let properties

However there are many other sources of passive income, such as:

• Royalty rights from a book that you have published or an invention that you have patented - so for every time the book or product is sold, you earn a percentage of the retail price
• A business that you own, but is managed on your behalf by other people
• A website that carries advertising or collects paid referrals to other businesses - Your website operates 24 hours a day, so even when you are not managing it, there are still people using it

Why Are Passive Incomes so Important to Building Wealth?

In each of these examples, it is possible to earn money without having to sacrifice the most valuable resource of all - time.

There are only 24 hours in a day, during which you need to fit in working, sleeping, commuting, relaxing, socialising, eating, etc.

This places a limit on the amount of hours you are able to work and earn money.  Naturally getting a better job is the first step to achieve more money for the hours you work, but at some point we all reach a limit on what we can earn.

So to further grow your wealth, you need to find sources of income that don’t require your time.

Creating Passive Income

Probably the easiest way to start creating passive income is to begin making regular payments into a savings account or stocks & shares fund.  With each penny you save or invest earning interest or a return, you have effectively generated a source of passive income.
Unfortunately at the start, this won’t amount to much (so don’t go quitting the day job just yet!), but with regular monthly investments and the positive effect of compound interest, your money will soon build up.

The aim is to have saved and invested enough money, so that you can begin taking the interest or returns as an income.  Whilst this will take a number of years, the sooner you start, the greater the savings pot and the sooner you can skim the cream!

But don’t just stop at one income stream.  Look at ways to build up other sources of passive income.  Not only will it act as an insurance in case your main income suddenly stops (i.e. redundancy), but it will also help you to hedge different income streams and protect yourself from the bad times (for example, share prices may have dropped, but this is balanced out by growing property rental income).

The Greater the Risk the Greater the Reward

It is true to say that there is no such thing as a free lunch and the more time and investment that you put into creating your passive income, the more value it will return.

For instance, investing £1,000 a month to build up a share portfolio, will in most cases create better returns than saving £50 a month in a low-interest account.  Investing the money requires more risk than saving, but the returns will generally be significantly higher.

Remember there is no such thing as a 100% passive income and you will always need to devote some time to managing it.

In addition to this, setting up passive incomes generally requires a lot of time and investment at the initial stages, whether you are writing a book, setting up the business or promoting your website - unfortunately the income will not just magically appear, so be aware of the various internet scams that exist to tempt people into an easy life.

Passive Income Strategy

Create your own strategy for setting up multiple streams of passive income.  Look at savings and investments first, these are the easiest to set up and then think about your personal skills and how you can use them to create additional value.

Remember to focus your strategy towards a specific goal, such as retiring early, protecting yourself from redundancy or just spending more quality time doing the things you enjoy.

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