5 Reasons To Look For A Passive Income Stream

Ever thought of earning money while sleeping? For many, this vision is the holy grail of success, and is the reason they wake up early every morning to head to work. Let’s face it, though: this dream is a far cry from reality if you’re just going to be an employee.

So, what can you do to have a chance at this dream? Generate a passive income! What is passive income, though? According to Investopedia.com, passive income is “earnings an individual derives from rental property, limited partnership or other enterprise in which he or she is not actively involved.” In short, it’s money you get from renting out your property, making sound investments, or engaging in a business. 

Right now, some of you might be thinking “nah. I’m okay with my job; it pays well. Heck, it pays great!” If this is you, that’s good. But try to consider the five reasons I listed below. It might change your mind about getting a second income stream.

5 Reasons To Look For A Passive Income Stream

5. Financial independence

I’m sure many of you have heard of this term. For those of you who haven’t, though, now is a good time to learn about it. First off, this is my concept of financial independence: you work because you LOVE the work, not because you HAVE to.  Financial independence simply means that you’re not hounded by money problems, no matter what happens and even if things start to go down the drain (like getting fired from work), you won’t have to worry about how to pay for your daily needs.

4. Reduced loan burden

One of these days, you’re definitely going to get a loan. Maybe it’s to pay for your new house or maybe for your first car. One way or another, you’ll end up with a loan. Without any form of passive income, your loan will be sucking your salary dry. Imagine getting a loan for 1,000,000 pesos payable for 10 years: that’s ranging around 9,500-10,000 (including interest) pesos a month for ten years! For some, this is already the bulk of their salary. Having a passive income will help reduce the amount you have to shell out from your salary to pay off the loan.

Photo grabbed from: archive.indianexpress.com

Photo grabbed from: archive.indianexpress.com

3. Better chance of early retirement

Retirement: a time when you have done everything you can in your life, and you just want to rest and have memorable moments with love ones. But, unfortunately, bank loans still hound you and your savings aren’t enough to bring you to paradise at the age of 61. So much for retirement, huh?

Having a passive income can get you a better chance at an early retirement. Plus, if you have a passive income that generates high returns, the opportunity for early retirement can come even earlier than 60.

photo grabbed from www.learnvest.com

photo grabbed from www.learnvest.com

2.  More time to do things you love

Have you had time to just sit down and play the guitar or piano? Or maybe travel to Paris for a week? Often times, work keeps us way too busy that we don’t get the time to do what we love; we spend 9-10 hours at work, go home, sleep, eat, prepare to go to work, repeat. There’s just no space in our timetable to pick up that instrument, paintbrush, or what ever it is we love to do.

With a good source of passive income, you won’t have to worry about quitting your full-time job for a part-time one. You’ll be getting less money in a part-time job, but you’d have more time for the things you love. Let your passive income do the full-time work for you.

1. Better security against inflation

When was the last time you had a salary increase? Did it beat the rising inflation? Every year, inflation rates average at around 3-4 percent. That means your 1 peso gets reduced to 97 centavos every year. It may not look much, but here’s the trend: at 3 percent inflation, your 1 peso is 97 centavos, your 5 pesos is 4 pesos 85 centavos, your 10 pesos is 9 pesos 7 centavos, and your 1,000 pesos is just 970 pesos. If you’re getting a net salary of 15,000 pesos, your money’s value is only worth 14,550. You already lost 450 pesos before you can even spend your salary.

Passive incomes will play along with inflation: the value of your product (rent, business, etc.) has the freedom to increase or decrease depending on the rate of inflation. This gives you a little more edge against it, and you won’t be forced to work for undervalued money.

There you go! Five reasons why you should think of looking for a passive income stream. do you have more to add in the list, We’d love to hear from you in the comments below!


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