Passive Income and Wealth Creation

By: Camille Simpson, Client Support Officer Posted:

In the words of Robert Kiyosaki, the author of “Rich Dad, Poor Dad”, “a wealthy person is simply someone who has learned how to make money when they’re not working.”

Investing and creating passive income is the key component in financial independence.

Passive income is earnings received from sources other than an employment and is unlikely to be affected by your employment status. It is income that requires no effort to earn or maintain.

To generate passive income at the initial stage, will require a clear financial plan and discipline. As in some cases the capital outlay required may be of great significance. The objective is to create a portfolio of investments that consistently generates a revenue stream, that can be reinvested to create additional revenue. With discipline and patience, this portfolio can grow exponentially.

The passive portfolio for wealth creation may include the following asset class:

  • High dividend stock portfolio – High-yield dividend stocks are appealing because they can deliver significant income to investors through their pay-outs. Your portfolio advisors will help you achieve this.
  • Bond portfolio – Bonds are a vital component of a well-balanced portfolio. Bonds produce high returns, but risks remain relatively low for a diversified bond portfolio. It provides diversification to stock portfolios and reduce losses.

 

  • Rental Income from Real Estate – Rental income can be good bread-and-butter. The income you earn from renting a property that you own can be exciting. However, it is important to do detailed research before you dive in so you’re on top of all the pros and cons of real estate investing.
  • Business Income – Business income is a type of earned income, it is an entity’s net profit or loss, which is calculated as its revenue from all sources minus the costs of doing business.

Passive income is a success mindset, it is working smarter not harder, it’s a great supplementary source of income for many, and is especially valuable in time of recession or economic uncertainty. To create true wealth is to make money while you are sleeping.