Passive Income

I've started going into stock trading and how to get started in Forex but let's go back to the basics. 

First we will get into what passive income means. Passive income is when money is generated from a rental property, a business in which you are not actively involved, royalties from intellectual property, and/or dividends/interest. As with non-passive income, passive income is usually taxable; however it is often treated differently by the Internal Revenue Service (IRS) and it is taxed at a lower rate. Below are some types of passive income and you can click on the links for additional details on each.

Dividends- A distribution of a portion of a company's earnings, decided by the board of directors, to its shareholders. Example you may own GE stock and receive a dividend of 3.22% (will vary) per share.

Interest- The charge for the privilege of borrowing money, typically expressed as an annual percentage rate. Such as that on a savings account, CD, or money market. Example you may earn 1.2% (varies) interest on a money market annually.

Royalties- A payment to an owner for the use of; copyrighted works such as books, music, e-books, patents, or franchises.

Capital gains- An increase in the value of a capital asset such as an stock investment , art work, real estate, or any other property that gives it a higher value than the original purchase price.

Passive income ideas:

Blogging is way to create passive income most bloggers provide targeted information or links to information for free and there is advertising on the website that helps the owner/blogger to maintain the site and/or create cash flow. 

Although it has it's risks in my opinion owning rental property is one of the best forms of passive income because not only will someone else pay for your asset through rent you can have monthly cash flow as well.

There are also many tax write-offs that benefit Corporation owners as well those that invest in real estate in which they can build businesses and profit without having the hands on aspect a sole proprietary does. In other words pay someone else to do the work and you collect on the profits as the business owner/shareholder. 

How to get started 

Step 1 Save money daily to purchase assets such as real estate, stocks, bonds, or to invest in your current or potential business.

Step 2 Think of which option moves you is it real estate, trading, writing, or starting a business. Then focus

Step 3 Read as much about business and investing you can in the area you are interested in. 

Step 4 Research the option. Example if you want to invest in real estate look at areas you want to buy and compare a number of properties looking for the best deal.

Step 5 Set goals and/or write a business plan so you know what steps you need to take and how much you will need to invest to accomplish your goal/plan.

Step 6 Look to see what you need in your area if you need a business license, rental license, or anything else to prevent any fines or legal actions. 

Step 7 Speak to a tax specialist and lawyer to ensure you have the correct legal entity set up (C-Corp, LLC and so on), speak to real estate specialist if you are buying real estate. Always seek professional advise when possible, you can't always do everything yourself.

*Once you master one thing move on to the next remember you are not limited to one business or investment at a time. You can own multiple businesses and all the real estate you are capable of managing. Keep reinvesting.

*  Remember there is no exact science to create passive income. People create new ideas everyday. If you fail once do not let that stop you without failure there isn't success.

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