Slaves to Money (Part 2 - Passive Income)

In Part 1, I have written about Active Income, which means exchanging time for money.
For those who have forgotten, the day you lose your ability to work, there goes the Active Income.

Passive Income on the other hand, means working alot upfront, and get regular income without working much later. It is a very common source of income for the rich or to-be-rich. Bill Gates is earning money even while he is sleeping or busy working on his charity foundation.



Passive income is something emphasized much in school. And it doesn't help that most parents have been educating us not to take short cut, don't take risk, just go for a high-paying job! <= Active Income

Active Income = Have fun working till 62 for most of us.

So what are some examples of passive income?

(1) Investment Income (Bonds / dividend paying stocks / mutual funds)
(2) Rental Income
(3) Patenting an idea (3M / new drugs /designs etc...)
(4) Writing books (e-books / collect royalties)
(5) Coaching people to give talks.
(6) Jobs that generate residual income (insurance agent /network marketer / directors / consultant)
(7) Websites (advertisements / pay-per-use for Street directory maps etc...)
(8) Franchising (think founders of Katong Laksa, Ya Kun, McDonalds etc...)

Obviously, some of the above come with risk (notably #1 and #8). So do your own homework.
Calculated Risk beats Senseless Risk.

Here's a suggested way to build a leveraged passive income, stolen from the Characterandwealth website.
(1) Develop a skill in an area where you can deliver direct value to one or more individuals
(2) Craft a means of delivering this value to a large group (classes, conferences)
(3) Establish yourself as an expert through marketing and the delivery of real value
(4) Write a book or develop a video on it and set it up as a source of passive income
(5) As your business expands, train other individuals to take your place. Institute profit sharing or have them as employees.
(6) Develop your business processes such that this business is now a source for passive income for you!

Active Income is an exchange of time for money
Passive income is an investment of time for money

So what are your sources of passive income when you are unable to work one day?
CPF?

[To be continued]