Monday, July 19, 2010

Passive Income

Financial independence is not about having more money, it's about having more time. More time to do the things that you want to do.

You only get a finite amount of time to spend in this life and with each passing moment, your time runs out. When you understand this fact of life, you realize that time is actually more valuable than money.

So, what do you want to do with your time?

I for one, want to do many things and travel the world, and one way to achieve this time and location independence would be with Passive Income, an income received on a regular basis, with little or no effort required to maintain it, i.e., money received with a non-linear investment of time.

Passive Income is the opposite of Active Income, an income that is received with a linear investment of time, e.g., charging by the hour like in consulting, working for a monthly salary or selling stuff (handicraft, food) you create by hand. Since your directly trading time for money, if you stop investing the time, you stop making money.

From the above, it should be obvious that focusing on Passive Income is a better investment of the finite time you have.

Here are some examples of Passive Income generators:
  • Information Products (e-books, audio/video tutorials)
  • Software Products
  • Royalties  (Books, Photographs, Music, Patents)
  • Rental property

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