There are a lot of misconceptions about passive income. The general view is that passive income is making some quick money without doing any work or doing something very quickly on the side. There are lot of “Money gurus” promoting the next “become rich quick without doing anything” scheme. Please do yourself a favor and do not fall into this trap.

In reality passive income takes lot of thought and hard work. People might say otherwise but that is the honest truth. The good thing is once you have laid a solid foundation then things should start rolling and you should be able to make money on auto pilot or with some tweaks. But make no mistake there is lot of initial work that needs to be done before you can reach this stage.

I know this is all “general” talk , but in the near future I will put in some specific ideas on how to get started.

In the meantime please read this informative article on TheSimpleDollar.

The moral of the story here is that it is very important to keep looking for such opportunities. A lot of people would have recommnded their friends for jobs but very few would take the extra step of working with the companies for a referral fee. There are lot of such opportunities in everyday life that we come across , we just don’t pay attention to them. But people with an entrepreneurial spirit generally do.

There are people making decent amount of money selling stuff they no longer use on eBay. This is really not hard. It might not make you rich but definitely a good side income for you. I will be writing lots of posts on how to make money on ebay, by blogging , site flipping etc soon. So please stay tuned.

If you are looking for more information on referring friends to consulting companies and get paid please drop me a note , I will be more than happy to share with you. And if you are looking for someone to do any programming work for you ( website building, designing etc )  I have an excellent team that can help you out at prices you won’t believe.

Great opportunities to buy the next time they come around to take advantage of the security and neutrality of the distance of history with the review, it is easy to promise grand schemes. But talk is cheap. Who we are, patience, discipline, the urgency, says, in 1932 the shares have the courage? Or 1974? However, that is clear with hindsight Looking back, the time is right, it was. However, some discipline in them and other great moments to buy mustered. So far, such actions were brave – and always will be – an exception.

Whatever, it describes the present situation goes in times of crisis. The irony is that the financial gods and frustration when the only comprehensive financial and economic context is the worst feeling great bargains is the height of the increase. That the affairs of the State rotating analysis is easy, acting on it, at least to say is atypical.

All this as we look at subsequent dividend yield comes to mind. Equality of the global chart below graphically captures the drama in the market in late October is close to the special. The trend is not needed clarification. The question is whether the latest data points seductive’s going on? And if not, why not?

Before us, and dividend yields have discussed this post so that readers, including debate, to review is encouraged, and his predecessor here. No, subsequent dividends for easy profits are not a magic solution, because only then to a large extent with the last full clarity is open. Like, the dividend yield on time for us to go astray has been – sometimes it’s a trap. But not always. The other one tries to discriminate what is known as risk analysis. And risks, as always, including the ever – popular concerns is lurking:

* Dividend cuts coming, diminishing the allure of the subsequent production of about?
* Inflation is high, in nominal terms compared to appear to be the real dividend yield makes it less attractive under the chairmanship?
* Will capital deficit dividends going forward overwhelm?

And we go on and on. There’s always a clear question of the gift is a reason. A roaring bull market in action to missing in a surprise because of such concerns can be on everyone’s lips in a bear market, but do, but we’ll leave that for another day.

Meanwhile, it is one that we always comprehensive financial market and economic context in the absence of a metric of the suspects should be defined. Perspective comes in the work – always. But generally, we are what we pay to receive their equity investment, says the dividend and enjoy more like speaking, the better.

Alas, the full amount of the dividend we have no control over our equity allocation is done by the end. But Mr mercy of the market entirely on us are not. We’re still on schedule, is the executive authority and the amount of equity investment, and that the grass is not. This course is a power that is fraught with risk, is, but beggars can not be elections.

A dividend payment of the cost if we come to think of as – a variable value through time – as a shock that we are disposed to pay to learn it should come as a possible dividend Of a stream to use as not less. It is possible, this one on the planet are in disagreement with the overall concept. Details, in real time, something else, so why should it produce and then take advantage of the opportunities for infinitely more complicated and is difficult to understand.

If you bought stocks after the crash in ‘87, you would have experienced the biggest gains in your lifetime. This doesn’t mean we rush out to buy stocks right now. But there is no denying that if you’re a patient investor and don’t mind sailing in choppy waters, this is a once in a lifetime opportunity.  And what is Warren Buffett is doing? He’s investing in solid companies at bargain prices.

There are lot of solid companies that are paying very high dividends right now , a few examples, Pfizer ( PFE , 8% Yield ) , Altria Group ( MO , 7.50 % Yield ) , Eli Lily ( LLY, 6.0 %).

This week has been particularly nasty with 4-5 percantage moves in the dow becoming common. There are no safe havens , except yes…GOLD. As I watched the dow move up and down today and finally settle down 180 pts, the only comfort was gold going up.

The commentary I am following all suggests a very bullish trend for gold. People are lining up to buy gold , read here .

I don’t know what will happen going forward, whether this uptrend will continue, history has taught us again and again to be careful when everybody gets bullish and tries to get into the same thing. But I do feel that in the very near term this upside will continue and it is a good idea to put some of your money into gold. Please read my previous post on different ways to invest in gold.

Part 1

Part 2

Mortgage cycling is a program that advertises itself as a method to payoff your mortgage in 10 years or less without making biweekly mortgage payments or changing your current mortgage. Does mortgage cycling work as advertised? The answer is unequivocally yes – with a few caveats. I’m going to let you in on the secret to mortgage cycling.

Mortgage cycling is based on making huge lump sum principal payments every 6-10 months. What this means is mortgage cycling works well for those who have at least a few hundred dollars in extra cash at the end of each month. The problem is most people don’t have that kind of cash available.

Mortgage Cycling relies on using a revolving Home Equity Line of Credit to make huge lump sum payments against their original mortgage principal balance. When you take out a home equity line of credit, you pay for many of the same expenses as when you financed your original mortgage such as an application fee, title search, appraisal, attorney fees, and points. You also may find most loans have large one-time upfront fees, others have closing costs, and some have continuing costs, such as annual fees. You could find yourself paying hundreds of dollars to establish a home equity line of credit. Most home equity lines of credit also carry what is known as interest rate risk.

Home equity line of credit interest rates are typically variable. The Federal Reserve is currently in the process of raising the overnight federal funds rate. As the Fed continues to raise rates, it is all but inevitable that variable interest rates for mortgages will also rise. Your savings may not be as great as anticipated.

While Mortgage Cycling does have some additional costs for most people, that is not what makes this mortgage reduction strategy risky. If you use a Home Equity Line of Credit and money gets tight, you could lose your home and the equity you have built up. Home equity lines of credit require you to use your home as collateral for the loan. This may put your home at risk if you are late or cannot make your monthly payments. And if you sell your home, most lines of credit require you to pay off your credit line at that time.

Mortgage Cycling requires you to make mortgage payments and Home Equity Line of Credit payments for up to 10 years. For most people mortgage cycling is an extremely risky way to payoff a mortgage. Mortgage cycling should be used only after a careful assessment of the risks and benefits. Prepaying your mortgage is smart. You should explore all of the mortgage reduction alternatives before choosing Mortgage Cycling as a mortgage reduction strategy.

Please take a look at this video for more information.

Not too long ago, the only method I had for earning money was my job. I’d get up, go into work, come home, and collect my paycheck – and I believed that was good enough for me.

When I had children, though, I began to realize that my life was not all that different than an investment portfolio where I had all my money in one particular stock. All of my income was reliant upon one job, and if that job went away, my family and I would be hurting.

But how could I solve this problem carrying a big debt load, a full time job, and the needs of a family? I realized what I needed to do was create more sources of revenue, even if they weren’t as much as my full time job, so that if something happened there it would not be nearly as disastrous. Here’s what I did.

I started a computer consulting side business. Nothing complicated, mostly just helping computer-phobic people select systems that match their needs, doing some tune-ups, and a few minor repair jobs. It doesn’t take much time at all and earns a bit of regular money.

I started a blog. You’re reading it, actually. I earn some income from the advertisements and the writing can be done pretty much whenever, filling in gaps in my time.

I built up a big emergency fund. I used the money from these sources to build up a large emergency fund. While the income stream here is rather small (5% interest on several months’ salary), the fact that the income is based on my own capital that I could use very quickly if needed makes it very nice.

Later, after I eliminate some debt, I hope to look at investments that will earn a better income for me, but for now these will suffice.

Obviously, these sources all require work, with the exception of the emergency fund. These are usually called active income streams. The emergency fund, which requires no active work, is a passive income stream. Obviously, passive income streams are better over the long haul because they provide income without additional work contribution. Active income streams generally involve a trade of work for money, which means that your time is consumed. However, passive income streams almost always require some significant money to start with, something many people don’t have.

What’s the real benefit here? Why put out a lot of effort for multiple active streams? The reason is the same one you’ll find for why you should have a diversified investment portfolio – if one of those streams dries up (I lose my job, the blog starts to dry up, people stop calling for consulting), I’m still doing all right because the other ones keep going. And when they’re all going, I make significantly more than I spend, so I can pay off debts and eventually build up more sources of passive income.

It all comes back to spending less than you earn; multiple active income streams just ensure that the earnings are pretty stable and that there’s a big gap between earnings and spending. Then, when you’re debt free, you can start taking those earnings and look for ways to build up passive income through investments.

How do I get started? The first step for the average American is to make a serious commitment to spend less than you earn. Without that commitment, none of this will work. Focus on paying down debts with the difference between your earning and your spending after you build up a small emergency fund.

The next step is to figure out something you’re good at. Perhaps you have a knack for making your grass look amazing, or maybe you know how to frame pictures so that they make exquisite wall hangings. Maybe you can write solidly very quickly. Almost any strong trait you have leads directly to some sort of profit-making venture that you can do in your spare time. Spend some time figuring out your talent, then think about how that could make money.

Once you’ve got something figured out, commit some regular time to it. Give up an hour of television each day to bake bread or matte finish photographs, then find places to sell them. Once you get the kinks of whatever your little business is worked out, it’ll become a steady small source of income for you – another income stream.

Then, use that income stream for something financially positive. Don’t spend it immediately. Instead, contribute that money to debt repayment or use it to invest in something – stocks or otherwise.

The real goal here is financial independence. By making yourself less dependent on a specific revenue stream (i.e., your primary job), you’re giving yourself independence and the flexibility to make choices that you never had before.

]]> http://somepassiveincome.com/?feed=rss2&p=74 1 http://somepassiveincome.com/?p=62 http://somepassiveincome.com/?p=62#comments Mon, 08 Sep 2008 23:26:10 +0000 parvez http://somepassiveincome.com/?p=62 Roger Federer just defeated Andy Murray to win his fifth consecutive US open championship, a record.

This is an amazing, amazing feat and very well deserved. This guy is truly a remarkable sportsman and we can all take away a few lessons from him in whatever we do. Congratulations Roger .

Get a Brother(R) HL-2170W  Wireless Monochrome Laser Printer for $99.99 After $50 Mail-in Savings at OfficeDepot.com!
(Online price $149.99)

Here is a fascinating look back in fortune magazine – check it out.