One of the big goals of planning for retirement is to save enough money that you won’t have to work after you retire. Many people achieve this goal, and when they retire, they begin drawing directly from their savings. This often works fine, but sometimes there’s a problem. If you live long enough, this money will eventually run out. Passive income works differently.
Passive income comes to you, usually as a small percentage of the original investment, but it doesn’t draw from the investment itself at all. The best part of passive income is that once the system is set up, it takes little to no work to maintain. Here are a few legitimate forms of passive income.
If set up properly, a real estate investment can actually provide a relatively large passive income. Of course, it also takes a significant investment. The trick is to rent out any property that you buy. This will help you to pay off the property, and once it is paid off, you’ll receive checks of hundreds to thousands of dollars every month. Most of that money will be profit. Even if you employ a management company, you’ll still be required to do a couple of things, such as paying taxes and making repairs every once in a while, but it’s more than worth it.
If you still have enough time to start a business before you retire, this can become a strong source of income. It becomes passive when you find someone you trust to take over your responsibilities. By retaining ownership, you keep the right to make decisions if you want, and you get a check from the profits every so often, but you don’t have to do any work unless you want to.
Although the stock market will earn a smaller percentage than the other two options listed, it’s still a good investment to consider. All it takes is a few clicks, and maybe a phone call to get invested, and basically no work at all to maintain the account. The trick is to buy enough stock so that you can collect the dividends from the stock without having to sell any directly.
Are you in the process of planning or investing for retirement? Contact us for additional information.