PASSIVE INCOME FOR NOW AND THE FUTURE
- Written by Melanie Toye, April 21, 2014
What is passive income?
Passive income is earned from investments that add to your income earned.
Passive income sourced from property
One aspect to earning passive income is through property. Having investments in property will grow the asset value over time. In the interim, the property's positive cash flow will go towards the mortgage held for it. Then in say 25 to 30 years, when the investment is fully paid out (thank you renters), you can then use the income to whatever you choose.
Now if you have your own mortgage, plus an investment property with 30 years term on both. When 30 years come to pass and both properties are paid out. You no longer have a mortgage to pay for and you have passive income from an investment property that is bringing you in an income. This can cover day to day expenses, holidays and fun adventures.
This is why planning for the long term and looking at a thirty year outlook could really benefit your future. If you start in your twenties or thirties, you can look at having both mortgages paid out when you are in your fifties or sixties. Not to mention if you add more payments and refinance your mortgages at key times in your mortgage term, to bring your mortgage term down.
Do you see the possibilities of passive income and how it can work for you?
Now imagine if you had a property to cover every major expense. The passive income from one could be used for holidays, adventures and outings throughout the year. The second property could be used to purchase new cars, clothing etc. Passive income from the third property could be used to purchase another asset. Then once equity is built within a property, you could use it for other expenses such as your child's education from school into university. Or leisure activities like a personal yacht for the weekends.
The best part about earning passive income from investment properties rather than from a wage. Is you get to really live the lifestyle you want without working day and night for it. Plus you are taxed less from what you earn through your investments, than the income received from working.
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