When you think of money, what would you say that it’s primary function is? If you are anything like the vast majority of people, you would likely say that money is used to buy things, essentially saying that money is meant to be spent. But ask a group of wealthy, prosperous, financially free individuals what the function of money is and you will get a much different response. Sure, rich people spend money, in fact they have more of it to spend. But the reason they have more is because they do not see money as a spending device but rather a tool that can be used to make more and more money. Wealthy people are good at investing for passive income, and therefore their net worth is always growing, and they can retire and live abundantly because they use their money to generate automatic income for them around the clock.
There are many arenas of investing that can be used to generate passive income. Stocks, bonds, money markets, mutual funds, and other financial investments can be used to generate income. Usually individuals who have the best fortune when it comes to investing are those who take the time to learn, masters, and utilize a specific area of investments. Financially successful people do not view financial investments as a gamble, but rather they made educated decisions that work out for them. So before you start investing for passive income, take the time to fully prepare yourself so that you can make wise decisions that utilize your money to earn more money in the future.
Another route to go when investing for passive income is to generate automatic income through rental real estate. Owning rental properties can be a great way to put your money into something that will pay you regularly for many years. Unfortunately many people attempt to get into rental real estate and they are never able to generate any passive income. They end up spending all of their time managing, maintaining, and overlooking their properties. This is not passive income because passive income must be automatic income, and if you are working around the clock to maintain your rental properties, you may be earning money but it is requiring your time, and that is what we are trying to get away fro here, right?
The other common pitfall that needs to be avoided when you begin to invest in rental properties is overextended oneself and begin forced to sell in a down market. Know your capabilities, know your limits, and do not get in so deep that your rental income does not exceed your expenditures. Many fortunes have been wiped out because people got a little too greedy and tried to handle more than they were able to. And as a final tip, keep in mind that 3 bedroom, 2 bath homes are the most ideal for rental properties, as they are statistically the easiest to rent out.