5 Reasons to consider passive investing as a beginner.
As a child, we were told a story. It was the story of the Great American Dream. It went something like this:
We were told to go to school and get an education so that when we grew up we could get a good job, put money in our 401K’s, maybe receive a pension (not many of those around anymore) get married, have kids, buy that nice house and then someday retire and enjoy our golden years.
That’s what we were all lead to believe would happen.
Once you become an adult, reality tells you a completely different story. It might go something like this:
The expenses of daily living are drowning you… the rent/mortgage is how much??? Kids, car, phone bills, insurance… umm… Taxes, utilities, braces, college tuition, holy moly! Out of pocket medical expenses. You don’t make enough money to stay on top of it. You are living paycheck to paycheck. You might be downsized and out of work. You might even have to get a second job just to pay the bills and stay above water. At this rate, you will never retire.
Sound familiar?
That is the reality for many people in 2021.
There is some good news. Perhaps with all that hard work, you were somehow able to put a little money away. Hopefully, your 401K or IRA is building.
But here’s a reality check – Is it building fast enough for you to retire before you’re too old to enjoy it?
The sad part is school never taught us about the really important things like how to truly get ahead. That was only taught by the wealthy to their children, and they keep it a secret!
I know their secret. I’m about to share it with you.
Do you know what wealthy people do that most people don’t?
Here it is. Ready?
They INVEST.
They don’t just invest in any old thing, they Passively Invest! People who are wealthy got that way because they know how to create multiple streams of income. Most of which are passive. (Money that makes money without a lot of work)
So how do I do that? And invest in what?
Well, here are three ideas to generate passive income streams.
#1: Buy a Home and use it to buy another!
Buying that first home was a great starter investment, but utilizing its increasing equity to purchase that second home, where someone else is paying your mortgage payment, as the value is increasing and your mortgage balance is reducing, now that’s passive income!
If the cost of housing is too expensive in your area, consider buying in a less expensive up-and-coming area out of state. You might even find you have enough to buy two houses and double your income.
Most people know that almost all wealthy people hold quite a bit of real estate in their diverse portfolios because simply, it is one of the strongest most stable high performing assets you can invest in.
#2: Buy Apartments
Yes I said apartments.
Did you know that you can own shares in apartment complexes without having a ton of money? And without having all the pains of being a landlord like fixing leaky pipes and dealing with bad tenants. You can do that by investing in something called “an apartment syndication.” An apartment syndication is a group that invests in apartment buildings with outside savvy investors.
This is called multi-family investing. The huge benefits are that it typically outperforms the stock market by at least 2 to 1 in annual returns. It is one of the safest, least volatile asset classes, and has huge tax benefits.
#3: Invest in Index Funds
When most people think of investing, what they usually think of first is, of course, the stock market. But the stock market can be tricky. It takes a lot of time and knowledge to find lucrative options in the stock market. There is a way to invest passively in the stock market without all that research.
That is by investing in index funds.
Index funds invest in a specific list of securities (such as stocks of S&P 500-listed companies only), while active mutual funds invest in a changing list of securities, chosen by an investment manager.
- Active mutual funds typically have higher fees than index funds.
- Index fund performance is relatively predictable over time; active mutual fund performance tends to be much less predictable.
Overall, investors may have a better shot at achieving higher returns with an index fund.
The bottom line, there are lots of ways to invest passively and create multiple sources of income. This is a really smart way to make your money grow and also get your head above water. You will also end up retiring to a life that you enjoy. Pick a source of passive income and invest as quickly as you can and as much as you can and watch your wealth grow.
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