Passive Income

I don’t know if I ever said this in any of the blogs before, but this next fact is so mind-blowing, it’s worth repeating a couple of times.

If you had a fixed income of 5000 dollars per day for the next 500 years, and you could save every penny of it, you still will not be a billionaire. Don’t believe me? let me do the math for you.

365 days a year times 500 years times 5000 dollars a day, that gives you 912,500,000. Still about 100 million less than a billionaire!

I saw this factoid in a Reddit post last year, which was aptly titled — “No one works to become a millionaire”.

But doesn’t that go against everything that we have been taught so far? Study well to get a good job, then work hard to get a promotion or a raise. If you want to make more money, then just do more work. While that may be technically true, but if getting rich is what you are after, then that is probably the slowest way to do it.

Rich people don’t work for money, they make their money work for them

When you are working to earn money, that is your active income. You put in time and effort, and you get paid for it. If you stop putting in your time and effort, the income would stop as well.

Then there is the other form of income, the passive income. This is the money that you can make without putting in any effort. Creating a passive income source might require some initial money and effort, but once that is done, it will keep generating money for you without any additional efforts.

For instance, if you put some money in a savings account, the bank would pay interest to you every year. This money is passive income, as it doesn’t require any effort from your part.

A savings account is technically a source of passive income, but it is not the best one. There are several other options available. For instance, ad revenue from a youtube video, or a blog. Or writing a book. Or if you don’t have any talents but you do have money there are lots of investment options that you can consider that could give you 10–20% returns.