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Why Creating Passive Income Is An Essential Part of a Good Financial Plan

Why You Should Start Creating Passive Income Today

Creating passive income is an important part of any sound financial strategy because it offers income security and greatly multiplies the potential of your income generating efforts. By creating passive income, you don’t have to trade your time for money, which means you can earn no matter what you’re up to, whether it’s working your day job, sleeping, or on vacation. Even better, creating passive income can lead to greater income security because you earn it even if you lose your job.

Just about every one of us wants to make as much money as we can, right? The problem is that there are only so many hours in the day and high-paying jobs available. Even if you happen to find a job that pays you a high wage, your income potential will still always be limited by your available energy, the number of hours in the day, and your company’s desire to give you raises. Your income potential is capped by factors that are completely beyond your control. The beauty of creating passive income is that it is not limited by time, energy, or your company’s financial statement.

Imagine if you were generating enough passive income to cover all your monthly expenses. How stressed would you need to be about losing your job? Would it really be that big of a deal? You could take your sweet time to find the job you really like because you don’t need to worry about money. And once you find the job you like, wouldn’t the combination of your salary and passive income make it really easy to put away money for retirement?

Everybody should have creating passive income as a priority in their investment strategy. The following are a few great strategies for creating passive income:

1) Invest in Real Estate

Real estate has probably created more millionaires in the United States than just about any other investment strategy. The way you create passive income with real estate is by investing in rental properties that generate enough cash flow to cover carrying costs while still generating a profit for you. Rental properties can be great passive income sources because you don’t necessarily need to be directly involved in the day-to-day management of your properties. You can hire a property manager to handle that for you, which frees you to find more great real estate investments.

Though real estate is a great strategy for creating passive income, there is a significant learning curve for getting starting and plenty of pitfalls to trip you up. Before you start investing, take the time to do your homework. Get your education first, invest second. And once you start investing, take care not to overleverage yourself by taking on too much debt. While debt can be a great tool for multiplying investment returns, it also can be a nasty double-edged sword that can ruin you. Use it carefully and you can do well. If you accumulate a large portfolio of paid-off investment properties, it can generate all the passive income you could ever need.

A great resource for beginning your real estate investing education is the book Rich Dad Poor Dad, by Robert Kiyosaki.

Upside: The potential to make you a millionaire or multi-millionaire.
Downside: Significant learning curve to get started and it often takes a good amount of capital to invest safely.

2) Invest in Stocks That Pay Dividends

Another strategy for creating passive income is investing in dividend stocks. If you’re not familiar with dividends, they are payments made by a corporation out of its profits to stockholders, usually as a fixed dollar amount per share owned. The more shares you own, the more dividend you receive – and you don’t have to lift a finger to earn it.

The problem with dividends is that it usually takes a significant amount of capital invested in a given stock to make a lot of passive income. Additionally, by investing a large dollar amount into one company you are taking on the risk of something bad happening to the company that can either cost you your dividend or your entire investment (think Enron!).

Upside: Piece of cake to do (once you have the capital). All you do is log into your brokerage account and buy the stock you want.
Downside: Takes a lot of capital to generate enough passive income to live on and carries the risk of bad financial results and/or bankruptcy.

3) Affiliate Marketing

Another great strategy for creating passive income is affiliate marketing. The great thing about affiliate marketing is that it carries zero risk because you don’t need to invest a single penny to get started.

You make money with affiliate marketing by promoting products and services offered online in exchange for a commission when they sell. If you can write articles, create websites, or blog from the comfort of your home office, you can be an affiliate marketer. Once your content is generating a significant amount of traffic, you can start racking up sales that can generate a nice passive income on the side for you.

Though there are plenty of affiliate marketers making tremendous amounts of money, it’s better to think of affiliate marketing as an extra-cash-on-the-side type of business in the beginning. Over time, as you master how to do affiliate marketing, it very well may start generating full-time income. There are plenty of people out there that are making hundreds of dollars per day in their spare time through affiliate marketing. And once you’ve done the work to get the system set up, it can continue to generate income whether you’re actively working on your marketing or not.

Upside: Easy and free (or at least very low cost) to get started.
Downside: Probably won’t make you a millionaire, but can potentially make you enough cash to live on and reinvest in things that will make you a millionaire (like real estate!).

Conclusion
Hopefully you’ve made creating a passive income stream a core component of your financial plan. Passive income offers income security in the event you lose your job, plus it greatly increases your income generating potential because it is not limited by your time, energy, or your company’s desire to continue to give you raises.

If you would like to find out more about creating passive income with affiliate marketing, check out the link below.

– M. Robert

Learn the secrets of making money online that one marketer calls “dead simple”. No get-rich-quick garbage, no gimmicks, just solid information about how you can start creating passive income with your own online business. Find out more at How to Make Cash Online [http://www.howtomakecashonline.info/creatingpassiveincome.html].

Feel free to check out my other article about how to make ends meet with six online money-making strategies.

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