Who would come into work tomorrow if they won the lottery?

Very few I’d imagine. Certainly not me – I doubt that you would either. Think about that when you are trudging along to the train station or the bus stop for your morning commute. A reluctant journey that you will make a million times to earn the ‘security of a pay check’. Only it’s not security, because you have that fear of losing your job, or being held back from advancement over differences on your performance. Typically many people have to do work that they don’t enjoy, but they work to live. What if there was an alternative? An alternative where you could earn a stream of passive income without having to work for it?

This is a common theme to which my Wise Owl will return to again and again. That is because it is a very important concept. Passive income is when you invest your money into something that generates returns on your investment, enabling you to earn an income without actually having to undergo the daily grind of working. What are the main sources of passive income that people can take advantage of?

I would list five main ones that ordinary people can take advantage of, with no specialist training whatsoever. These are real estate, stocks, bonds, gold/silver and bitcoin. They may take a bit of time and practise to become accustomed to, but as proficiency in each increases so does the level of income coming in from them.

Real estate is a big one. A significant number, if not a majority of millionaires from the US are believed to have come from the world of real estate investment. This can be anything from renting out a portfolio of property to selling land to industry. Even something as simple as renting out property can lead to a steady income that can supplement a paycheque. As the portfolio of investment properties and real estate grows, eventually the income coming from property can replace it. Good real estate investment can and often does make millionaires.

Stocks are the plural term for shares, which are issued by companies to raise finance from their shareholders. The strategic performance of a company is reflected in its share price. A very strong performing company will have a higher share price. Buying a set of stocks at low prices and selling them high is a great way to make a lot of money, often the amount of money that people winning the lottery would.

Bonds are typically issued by governments to raise money for running their countries as well as public authorities and companies. Bonds often yield a return on investment which is determined by the issuer. This yield is greatly influenced by factors such as interest rates, length of the bond’s term or holding period and the credit worthiness of the issuer. Reliable bonds are issued by authorities from the municipal councils to the highest levels of government. Holding a portfolio of stocks and bonds can yield an impressive passive income. Bonds are often less high risk than stocks.

Gold and silver can yield tremendous returns on investment because they are substantial assets which have objective universal value. Demand for them is high. You can buy gold and silver as an investment asset, hold it for anywhere between six months to a couple of years and sell those on as their values rise. They are possibly overlooked high value assets than can be a great help to investors.

Cryptocurrency, of which bitcoin is the most prominent currently, are a new generation of online currencies. These currencies can be bought, sold and converted into real world ‘fiat’ currencies which are maintained by governments. Bear in mind that cryptocurrency is now increasingly being watched by central banks, so the potential for taxation on investment in bitcoin exists. Nonetheless it is a substantial potential income.

Some of the above investments can make you a millionaire quickly once you get to grips with them. Others will give you a steady income that can let you live well. If you learn to understand and combine them wisely, you will do well. Don’t be like the 90% who struggle day in, day out to escape the daily rat race. Be the 10% who understand passive income – and often don’t need to work another day to be self-sufficient.

Disclaimer: The above is the view of the author only and is not intended as advice, financial or otherwise.


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