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Passive Income                                                 Posted: Jan 2009     

What is the passive income stream? How can you build passive income streams? Choose your own passive income streams.

If you make a breakdown of your life you can try to make a highlights of your life priorities. Probably for most of the people main life goals can be education, socializing, profession, family, health maintenance and hobbies. For every of these life making factors you need some kind of preference. To be occupied with some activity you need to find something that attract you to that area. But for every activity in your life you need the money. Wherever you go you need to have cash or positive balance on your credit cards.

Without money, you cannot socialize, since you cannot afford time with friends in cafe or dinner out. If you do not have money you can not have hobby, since most of them cost money ( music, movies, books, ... ). If you do not have enough money you will have difficult way to establish family, or your kids could be turned to the street. If you do not have sufficient amount of money, you cannot think about your health, since sport, fitness, healthy food cost the money. Without money you cannot afford proper education neither to yourself nor to your kids. So at the end if you want more money in your life you need to focus to remaining factor of your life that really brings you the money – your profession.

So, what is the solution to dilemma between more free time and less money, or more money with less private time? The answer is neither of these two. The answer is that you need more money and more private time with not more work. So how this is possible?

The answer to this is a concept called passive income. The passive income is a way of earning money without direct effort. Still you need some effort as the initial investment, but when you establish sustainable passive income, you will need a little or no supervision. So, the passive income is not perfectly passive, but as a concept it gives you more freedom and more money as the time pass. Finally, fully established passive income will give you healthy, stabile, even growing income, without your work.

There are many example of passive income. They are absolutely possible and proven, since they exist in reality.

Creating intellectual property that you can sell and license to third party for re-sale. This can be the book, manual, patent, design, ...
Build a web site with the topic you are familiar with. Web site does not require to much knowledge and money for beginning. Though, it will take some time to develop the value adding content that will bring visitors. Web site can be monetized through advertisements that will bring you money even when you are on vacation.
Cut unnecessary spending. This is virtual type of income stream. Conditionally it can be seen as an income stream. But if you think consciously about your money spending habits, you will see that some of your spending is not wise and really necessary. If you do not need those spending, why you do not turn the process and keep this money and consider it as an extra income.
Forex money exchange. Forex is the foreign exchange trade market where you can trade currencies. Spend some time familiarizing with the system and trend following, prior to start with trade
Stock market investment. Start with small amount divided on stocks from different branches. As you developed sense for market trends in different industries, focus on your favorite.
Bank interest rates, brings you passive income that is not the highest, but is the most steady. It is very good from perspective of minimal investment, since you can invest any amount.
Real estate renting. You can invest your saving into real estate and rent it. You can even rent your weekend house that you bought for your leisure, while you are not there. Real estates investments are indeed the most demanding from perspective of initial investment, but they give the high return on investment capital. You can rent your real estate for years, and even sell it later for more money than you paid initially, since real estates on average have trend of value increase.

Probably you noticed that these examples are ranked counter proportional to the initial work involved. As you going down to this list the passive income becomes more passive.

Do not underestimate the initial amount of your income. Simply, it takes time for building a passive income system. But when you build it, it is there for you. After you have one passive income established you could start with establishment with another passive income system.

If this approach is too theoretical and difficult, remember that everything is difficult at the beginning. Take an example of person successful in some area, for example in sport. Every sportsman has a very difficult start an initial years. But with persistent training, the sportsman becomes successful in his sport. The same is with earning money. At the beginning it is very difficult. You earn a little and you do not have idea how to improve your income. But as the time passes you learn how to earn more. If you try hard at the beginning of your passive income systems establishment, it will be easier later.

Simply, you need to train your skill of building your passive incomes. As time goes, you will have more and more ideas, experience and success in building passive incomes.

Finally do not forget two very important rules.

Firstly, diversify your passive income system. It is better to build a multiple passive income streams with low to medium income, than one passive income with high income. Diversification will help you to reduce a potential risk of loosing all your income in case of loosing a source for some reason. On the other side, diversification will give you more opportunities for further expansion.

Secondly, do not forget the magnificent power of synergy that says that 1+1=3 and that 2+2=7. As you establish your multiple passive income streams they will increase your fortune cumulatively. More you earn much more you have.

Rich gets rich, poor gets poor. Choose your own path. Choose path of building passive income streams.