According to Warren Buffet, “if you don’t find a way to make money while you sleep, you will work until you die”.
He has a point that succinctly tells you, why you need passive income.
In a world that has become more economically volatile and unpredictable, it is important for everyone to have a good understanding of the basics of wealth creation and money management.
Even though the technological advancement of this digital age makes wealth more visible than it has ever been, financial independence is still quite elusive and most millennials can attest to this.
It is taking longer for young people to find their feet and gain financial momentum. They find it harder to reach life’s milestones as quickly as their parents did.
An example is how millennials stay home for longer and get married later than the generation before them.
The odds seem too high and achieving long-term financial stability appears to be a pipe dream.
Things are not so bleak, however. People must take charge of their own realities and make the most of less-than-ideal circumstances.
One of the surer ways to make the odds of financial independence more favourable, is to explore passive income.
What Passive Income Is
Passive income is a stream of income, sustained without any active demand on your time, or, other resources. It is often self-sustaining and continual.
While this may sound very attractive, there is a catch. It requires a significant investment of resources before a stream of income can become self-sustaining.
You must put in intentional work ahead of time, before you start seeing cash flow, without real-time effort.
Examples of passive income streams are capital gains, dividends, residual income from a business, rental income from real estate and royalties.
Lose the passivity, start a passive income stream
A pre-investor is someone who is not investing, typically lives pay check to pay check and considers lifestyle more important than financial security.
Pre-investors have minimal financial consciousness and are consequently passive about strategizing, to achieve long-term financial independence.
Most young, income earners, fall into this category.
Here are some things to do, to get out of that cycle:
The first thing to do is to start building your investment nest egg. While building your Startup capital, you should simultaneously build your knowledge base.
You should begin to think about what you intend to do with your capital and where you want to start your investment journey.
The result of your research will form your investment plan. After spending significant time, thinking and digging for information online and other relevant places, you will know, if you have enough skill to independently start a portfolio, or if you need some help.
Most new investors will find that they can do with some help. The help may come, in the form of professional funds managers, or, a simple digital investment/ savings platform.
Whatever your need, you are likely to find something, or, someone, who can meet the need.
When you have done your research and decided on the plan you want to follow, then, it is time to start the process of building your stream.
It, most often, starts as a trickle. Do not be alarmed. Consistency and persistence pay off in the end.
Remember that Chinese proverb that says “the best time to plant a tree was 20 years ago and the second best time is now?” Your financial independence is that tree.
The earlier you start the better. It does take time to grow wealth and the right investment can help secure your financial future.
Squirreling money away, in a savings account, is not likely to get you anywhere fast.
The way to go is to set up a system that puts your money to work on autopilot. That way, you are sure to keep earning.
About the Author
Mercy Faleyimu, is a creative writer, who enjoys discourses across several fields of engagement. She equally tries to remain an optimistic Nigerian.