Passive Income: Creating Streams of Financial Freedom
Passive income is one of the main tools for achieving FIRE. It allows you to live off your accumulated capital without having to actively work.
What is passive income?
This is money that you receive regularly without having to put in any constant effort. For example, income from renting out an apartment, dividends from stocks, or interest from investments.
Examples of passive income sources
Stock dividends
Many companies pay dividends to their shareholders, which can be used as a source of income or reinvested to increase capital.
Rental property
Buying a home to rent out is a popular way to create passive income. However, it is important to consider the costs of ownership and the risks associated with defaulting tenants.
Royalties and intellectual property
If you have a talent for writing books, creating music, or creating software, you can earn income from using them.
Mutual Funds
Investing in index funds or exchange-traded funds (ETFs) allows you to profit from stock market growth without having to actively manage your portfolio.