What is passive income?
The salary you get from work comes as a direct result of your efforts at work. Passive income, on the other hand, generally includes income that is not directly related to your daily activity.
Passive income in retirement
If you are middle aged, your goal should be to use as much of your income as possible from your remaining peak-earning years to create a source of passive income, which is often the only source of funds for most people during retirement.
Common sources of passive income:
BUY TO LET
You can buy residential or commercial property for investment purposes and rent it out to create rental income. This can be a great investment for the long term but usually requires significant capital.
One of the easiest ways to earn passive income is to buy shares in a publicly quoted company – one whose shares are listed on the official Stock Exchange – that regularly pays dividends to its shareholders. In discussing the advantages, bear in mind that there is the very real risk of loss, as markets can be volatile and prices can fluctuate.
Interest is a most basic form of passive income. This recurring income stream can help finance some of your current needs or be saved for other goals. Interest earned on your savings account balance, fixed deposits, or bonds is a risk-free source of passive income.
INVEST IN A BUSINESS
There are many interesting business ventures that struggle and fail to attract adequate funding. If you are approached by a well-regarded entrepreneur to lend money or to invest in his or her business, and are interested in providing some support, have the proposal properly analysed by a professional before you consider lending some of those much-needed funds.
Try to envision your desired lifestyle for the future. What do you want to spend your time doing? What type of house do you want to live in? It is important to ask yourself these questions. Many of us, as we enjoy one primary source of income from our jobs and occupations, become somewhat complacent. Start building passive income today!
By Opunimi Akinkugbe