5 tips to obtain Passive Income

Passive Income (IP) is as desired as it is distant for many people who, having the possibility of adding it to their lives, do not know how to do it.

For this reason, today I am going to propose that you stop procrastinating; that is, stop postponing what you can do today and that you know will benefit you.

If by the time you finish reading this column, I can put your plan to generate IP into action, my goal will be fulfilled.

Let’s start with the tips!

I propose to implement a new axiom: your time does not have to be at the service of money.

The culture of work can be very useful to order a society, but we do not necessarily have to defend all its principles to the letter. From a very young age we incorporate the notion that time and money have an unbreakable bond: I get paid for what I do and, if I want to earn more money, I must do more things (work overtime) and in the best possible way (increase productivity by hour worked).

Yet things are changing. Instead of following the logic of income = work, where to get more of the first I must offer more of the second, the IP system proposes the formula work = income + income + income + income.

In this way, the traditional employment relationship is replaced by another one where we generate income through an investment of money or time that we make at a given time and that It enables us to receive income continuously, without new efforts.

It is important to highlight the word “continuous”, since it is not a payment that we receive in the future for a job that we carry out in the present, but rather income that we will receive with a certain frequency (monthly, quarterly, semi-annually or annually) based on to a single job done.

Dreams move mountains, we already know that. Therefore, one of the first steps you should take is to ask yourself what you would do with your free time. Cheer up. Release desires and fly with the imagination. What really motivates you, what makes you happy?

If you ever stopped to think about it, you must have immediately thought about all the time you dedicate to activities that don’t make you happy or to other people’s dreams that don’t fill your spirit. If there is free time, it is because there is also another time, the one where you feel imprisoned by other people’s interests: a slave to the system, a slave to work, a slave to obligations.

It is true that many people tend to repress that feeling so as not to be distressed, but it is certainly not the right thing to do.. A key element to break chains and free up time is to generate stimuli, have a cause. My theory is somewhat tragic, but that’s not why I’m going to hide it: after years and even decades of working most of the day on other people’s projects, true desires blur and we lose our compass: we know each other less and less and it’s hard for us to know Why would we want to work less?

The basic objectives cannot consist of “resting”, “doing nothing” or “traveling”: it is known that leisure is enjoyed only at the beginning. Then, boredom can put us in an even worse situation than the one we felt we were going through when our heads were busy with work issues.

Having something that you are passionate about will make everything easier. This, which seems easy for many, can be one of the most difficult steps for others.

Tip: Take some time to connect with the things you loved to do as a kid. What did you enjoy with your friends and/or your family when you were between 4 and 11 years old? No matter how distant that may seem to you, I assure you that within you you will find more than interesting and probably very inspiring answers.

Create a folder called “Passive Income” on your computer or cell phone. Then, generate an Excel spreadsheet with the same name and detail the four sources of passive income generation:

— Financial Passive Income: fixed terms, bonds, stablecoin staking, etc.

— Monitored Passive Income: own ventures that do not require too much time in the medium or long term, that can be automated and that you can monitor.

— Passive Income Owners: rental of properties, garages, machinery, etc.

— Patented Passive Income: royalties for the creation of franchises, book authorship, etc.

Once the form has been prepared, month by month you must record the income corresponding to each item. It doesn’t matter if they are literally zero at the beginning. The mere existence of this Excel will stimulate you to train, carry out tests and start generating your first IPs.

Investing in a bot that promises 10% monthly trading cryptocurrencies cannot be considered Passive Financial Income. In fact, it shouldn’t even be considered an investment. The day trading (trying to buy shares or cryptocurrencies at a price to sell them more expensive in the short term) will hardly lead you to a good conclusion, according to my arguments developed in previous columns. It is nothing more than falling into temptation without further arguments to try to earn a lot of money quickly.

Anxiety is the enemy of IPs, because a Diversified Passive Income portfolio like the one we saw in the previous point is not created overnight, but rather takes time.. In any case, the reward for knowing how to wait is important: it brings you closer to financial freedom gradually, but also in a real and tangible way.

The risk/return ratio is unshakable in finance: the return on rate investments (Financial Passive Income) is lower on average than that of variable income (stocks and cryptocurrencies) because the risk involved is also much lower. With stocks you know how much you invest, but never how much you will have when you want to terminate the investment.

The truth is that there is an often forgotten solution that can excite those who rule out the generation of Passive Financial Income with investments at a rate because they believe they have little capital. Which leads them to think that they will have to wait a lifetime for the investment to pay off.

We are talking about the magic of compound interest, which makes it possible for the amount originally invested to grow exponentially if the income generated by the first investments in a bond or other fixed-income asset is reinvested.

In this column, I mentioned the importance of assets with positive flows (bonds, fixed terms, apartment for rent, etc.) to the detriment of assets with negative or neutral flows (clothes, vehicles for own use, furniture, and more).

Understanding the importance of this classification and reviewing our annual spending budget to see what type of assets we are demanding the most is a fundamental step to replace consumption habits that harm our interests with others that will provide us with passive income.

In conclusion, I propose an exercise: quantify your current expenses and calculate the weighting in the total that the purchase of assets with negative, neutral and positive flows has.

With this I am not saying that you should not buy clothes or spend on entertainment. Simply, I recommend you to see if you are not allocating more than 90% (an outrageous!) of your expenses to assets without positive cash flows. The mere fact of realizing it will allow you to transform your personal finances, definitively betting on economic well-being and all the positive effects that this will bring to your life.

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