Passive income can be the unsung superhero of your finances. But what exactly is it?

Essentially, passive income is money that still comes to you when you’re not working for it. In the property investment world, it’s the earnings that an individual can gain from investing in rental properties. Passive income differs to active income, which refers to the money that you work to receive, and it is a clever way of ensuring you’re setting up for your future while working to support your present.

There are two main benefits to passive income. First, if it’s done correctly, it can provide you with enough income to retire and continue to live very comfortably. Second, you will have a substantial legacy to leave to your children and family members. Passive income is income that takes care of itself, and there’s really no reason not to do it.

Passive income doesn’t include things like payments received from an inheritance or through sale of assets, because they’re just lump sum payments that occur as a once-off. Passive income will continue to generate more and more over time as the equity and rental prices of your property increase, and it essentially begins to take care of itself. While you do need to put effort into it at the beginning and conduct a little maintenance here and there, the results you can get are worth it.

When you invest in a rental property and introduce passive income into your life, you begin a snowball effect on your finances. What starts off small can gain more and more until you’ve got a very substantial nest egg that you’ve created through doing not much at all. Investing in a rental property enables you to set and forget, and reap the rewards later. When passive income is paired with active income (like your wages or salary), you can achieve financial freedom and free up your time, allowing you to focus on the things you love instead.

But if you’re looking to get rich quick, get ready to be disappointed. Passive income is a sensible way to enable your future self to be better taken care of, but it requires a lot of patience. Often, people think there’s no reason to invest in property because they’re unable to see the big picture. Putting more money towards investing might mean you have less cash to throw around at the time, but you’ll save yourself a lot of financial stress, anxiety and concern in your future.

Summary

 

  • Passive income is income you don’t need to work continuously for
  • Passive income is easy to achieve through rental properties
  • It is ever-increasing. As rental prices and equity goes up, so too does your passive income
  • Passive income doesn’t refer to things like inheritance payments or money from the sale of an asset
  • Passive income is not for those who want to get rich quick, but for those who want to achieve financial freedom in their life