The best money to invest is money that you didn’t have to work very hard to earn. That’s why using money you created through passive income for investing is like investing free money.
Types of Income
There are two types of ways to make money, passive income and earned income. Earned income is the money that you work for. Earned income is the money that you get for going to your job every day. This is the money that pays your bills, puts a roof over your head, and keeps food on the table. Most people have their earned income allocated to specific things and living expenses, which can include investing or savings.
Passive income comes from sources that don’t require very much, if any work at all on your part. Most often people with passive income have real estate investments, popular websites they run, or several other side businesses where they make extra income that require little work on their part. With passive income streams the money works for you, instead of you working for the money. Since passive income took so little for you to earn it is easier to invest it and not worry about the outcome of your investment.
Investing Passive Income
When investing passive income, there is less pressure from the possibility of losing that money. This makes you freer to invest in ways that are slightly more risky, without really losing any sleep over it. Investing in riskier investments also means that you make more room for growth and potential returns. The money didn’t take a lot of work for you to earn, so you are less worried about losing it.
Overall the best way to bring money into your life is to have more and more of your income coming from passive income. After the initial investment of money or time, passive income should require very little work or upkeep on your part. With money earning itself and coming into your pocket you can put your energy towards doing the things you want to be doing and not have to be doing to earn money.
There are actually two forms of passive income, those that require an investment to get started and those that don’t. It’s a good idea to have passive income streams from both investments that require money and those that don’t.
One great way to work with passive income is to start with some of the money making opportunities that don’t require a financial investment and as the money starts to come in from those streams, you can put that money towards passive income streams that do require an initial investment. These streams will often bring you a higher return and using passive income to create more passive income is just being smart with your money.
Some of the ways to start passive income without an investment is to do things like write and sell an ebook, blog, or popular website. Take up a side sales job that earns residual income. Get involved with an ecommerce drop-ship retailing program. These types of businesses require no investment and are simple to create. You can also get a patent or trademark.
Once the money starts to come in from some of these simpler income streams you can take that money and invest in higher yielding passive income opportunities. These investment can include opportunities like purchasing real estate properties with the goal of renting them, investing in dividends from stocks, investing in bonds, CD’s or other cash equivalents, or you can expand you stock portfolio.
2 thoughts on “Invest Passive Income; Treat yourself with Earned Income”
thx for another solid post Kolton. you discussed some classic examples of how money starts to work for you and compound interests, as you are familiar, was touted by Einstein as the greatest force in human history. many people at this point in our short history are probably scared of the markets and volatility that stocks bring. this is probably why Mark Cuban suggests to use cash to purchase things (and by not paying interest, realize an immediate return). his words definitely go with the times but i thought it would be worthwhile to post a link to a video on his advice.
again, always a pleasure to read.
Thanks for sharing that video! Mark Cuban is totally right. It would be a wise choice to first invest into your personal skill set, rather than the stock market.
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