When it comes to Passive Income even the term brings great divides…
If you Google, the term Passive Income there is literally hundreds of different forms of passive income on one side and then on the other side there are literally hundreds of posts de-bunking them of even being passive.
So, What is the real skinny on Passive Income and why is it important enough to write a blog post about it…
Defining Passive Income
Those of you who are regular readers of my posts will know only too well that I don’t go for the who’s right and who’s wrong. As it is a complete waste of energy. It all depends on our very own perspective, what is right for me may well be wrong for you. Makes me right for me and you right for you.
Meaning I’m not going to sit here and tell you who to believe or who’s right and who’s wrong. Quite simply I don’t care…
I like my life SIMPLE.
Therefore, I work on the principle “Is it useful to me?”
When somebody defines something to you, they are giving you their belief on the subject matter. You then need to decide for yourself if their definition is useful to you. Because really that is all that matters. And if don’t like all the definitions being bandied about by so called experts… create your own definition.
That’s what I did, and it suits me fine. And if you like it, you can use it too.
“Passive Income is income generated by sources other than myself or Income that I generate using less than 4hrs of my time each week”
Please don’t quote Wikipedia or other reputable sources telling me I’m wrong… because I won’t argue with you. It’s my definition and I find it very useful to me.
Why Passive Income?
Where to start… because although it seems fairly obvious to me now. I also remember a time when my only thought of passive income was a pension. And that seemed so far away there seemed little point in worrying about it, so I never did.
I do believe that passive income is definitely underplayed by those that could use it the most…
To me passive income is a game that at present is mainly being played by the smart people of this world. Because it is only those smart people that understand the many benefits that passive income brings. And it doesn’t just have to be about our future i.e. the Pension. But the earlier you start the bigger the platform you can build upon. I’ll go further into that a little later. For now, let’s just take a quick look at the benefits of passive income in the realms of investing…
The Benefits
- Money has no time constraints – I come from a very blue-collar back ground were being a tradesman was a sign of achievement. By becoming an Electrician, I made my parents proud. There are however limitations to being a tradesman as with most employee jobs, TIME. If you are paid by the hour and you can only work so many hours a day, then there is a limit to the amount of money you can earn. This in my mind is no different than being a slave, our new master being money. Money tells us when to wake, go to work, when to have lunch and when we go home…
- Take the pressure off yourself – When striving out on your own to be a trader and you need your profits to pay the bills. That is an added pressure that can play havoc with our emotions and in turn your trading. Trading with your own money is stressful we’ve covered that in previous posts. But now you add to that pressure with the thoughts in your head about paying the bills and putting food on the table. It can and does break many traders. Stressed out traders are one mistake from either going broke or quitting.
- More time for you – If your passive income exceeds your expenses… which by the way is my definition of Financial Freedom… Than you have more time for you and your family.
- Enjoy the finer things in life – You may really enjoy your job although you may not earn enough to be able to indulge yourself. Passive Income as an additional income can make all the difference to your happiness in life.
- More Assets less Liabilities – As described by Robert Kiyosaki the core difference between the rich and the poor is their purchases. The poor tend to buy liabilities when they get money, where-as the rich buy assets. Liabilities continue to cost you money unlike assets that can earn you money as passive income. Assets can be passed on to loved one’s as well. Added bonus.
- Secondary Income – Some people like to live on the limit, well maybe not like but they always seem to find themselves on the limits of their income. Even after several pay rises. But if they spend more money on assets rather than the next shiny new object. They will have a secondary income that perhaps keeps them away from the precipice of disaster.
Assets
Remember I like things easy not correct in everyone else’s eyes. So, if you buy into an Investment it is an asset. If you buy gold and hide it under the floor boards it is an asset. If you trade the market your Capital in my opinion is an asset. A house you rent is an asset where-as the house you live in is a liability until it is fully paid for. Art is an asset as to are sculptures and antiques which can be used for passive income in the future.
Write a book or a score of music and your royalties can be classed as passive as long as you spend less than 4 hours a week promoting them. These are assets, they make you money.
Liabilities
And let’s not ignore the liabilities for this is most people s downfall. It is why they will never be rich. Even some people you presume to be rich because they have the big house and the flash cars are not because of liabilities. That house and those cars for starters… are liabilities. The latest gadget, the newest phone, the up to date PC, gaming console, running shoes, designer clothes are all liabilities.
Yes, I know real rich people own all of this stuff. The difference, assets paid for it all…let that sink in. They pay for liabilities with their passive income because it doesn’t cost them any of their time…
And time my friends is the most important commodity of them all. Because we all have the same amount. Every day. Doesn’t matter how rich or how poor you are every day you have 24hrs, 1440 minutes. The difference between people is how you spend them.
How To Look At Passive Income Differently
A rich Property Tycoon aged 30 from a blue-collar background… How?
He buys his first house but doesn’t move in. He rents it out and after a year remortgages it, enabling him to buy another house. Which he rents out. He has saved up a deposit for another house and rents that by now he can remortgage the first two properties and buy another two…
You get the picture it pretty much works the same as compound interest works for us traders. The more houses he has the more he can remortgage and buy more. So, it starts off slowly the beginning takes time. His friends thinks he’s crazy and should be having parties and inviting girls back to his little 2up 2 down first house.
But who’s crazy now?
He’s 30 years old living in a beautiful six-bedroom house throwing better parties with more beautiful women. With a Ferrari on his drive and income coming in daily regardless of whether he goes to work or not.
Of course, things have changed a little in the UK, to get that first house it would take at least 5 blue-collar earners clubbing together to even have a chance of affording that first house… probably the same in your country.
But there are quite a few passive income vehicles that are easier to get into…
The Vehicle
Most passive income investments pretty much offer the same standard rubbish returns if you want guaranteed income. If you are little more risk averse, then you can get 10-12% per annum. And some mutual funds are reporting 20-30% If you have a bigger Capital, then there are better funds to choose from.
But nothing really comes close to what we can achieve as traders. Some of you crazy traders aim for 20-40% a month, which can be done by exceptional trades. But do you realise that by just earning 6% a month compounded… doubles your account…
Our Copy Trader currently averages 11% a month…
I’ve already spoken to a few traders who’s reply was “that at present they are doing better than that. Why pay someone else for not as good results…”
Passive Income you fool…
This 11% you don’t have to earn yourself. If something happens to you your income stops. But our Copy Trader keeps on paying, month after month.
I have even heard these immortal words…
“That’s not something I’m interested in right now.”
I can just see that guys kids struggling in the future. Exactly the same as what most of us have gone through because we were never taught the benefits of passive income and compound interest properly.
The Risks
And we are not stupid either. There are risks involved and past results do not guarantee future results. We do however have a completely open policy. The copier is copying the trades from our Trading Room which you will have access to as a paid up member of the Copy Trader for FREE. You just won’t miss a trade because you will be copying them. Oh and did I mention this is a live account with our real money trading the same system that has produced stellar results for Andres over the last few years.
As traders yourselves you must all realise that this is the trade worth taking. Because if it pays off like it is even if you start with just $3,000. In 10 years you’ll have your first million…
No effort, no stress, no sleepless nights and a pocket full of cash…
And until midnight 5th July we are offering a 50% discount to those decisive winners…
So find out all you need to know here…
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Callum McLean
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