Creating a “passive” income, one that comes to you without requiring your own physical labor to earn, is the key to creating true wealth, and rarely understood by most Americans today who have been living the large life of over-spending and too much debt for so long they can’t imagine having a passive income. Rather than thinking of yourself as a typical W-2 employee who earns an “active” income that requires putting your own time and money into making more money, you need to start thinking seriously about what it means to create a cash surplus where your money goes to work for you to create a perpetual “passive” source of income that you cannot outlive.
When people finally begin to see the importance of creating a passive income stream, they get passionate about contributing to qualified investment retirement plans often believing the notion perpetuated by the mainstream financial industry that this is THE way to build a retirement income. While qualified plans such as IRAs and 401(k)s can be ONE way to create income, they certainly shouldn’t be viewed as the only way.
Unfortunately, the popularity of qualified investment programs often outshines other methods for building passive income that can be much more potent and long-lasting. The problem with qualified plans is threefold:
- There is a limited amount of money you are allowed to contribute to such plans.
- There is a limited amount of money you can withdraw from these plans depending on age and other factors.
- There is a limited amount of time to build up the money in these programs.
In addition to these three problems, the taxes and fund manager fees assessed on these programs can often greatly limit wealth. What this means is that it’s unlikely you will ever be able to build to an adequate retirement on 401(k)s, IRAs, and other such lump sum accounts alone, especially if you have started later in life to prepare for retirement.
So what is needed? The first step is to think outside the “qualified retirement plan” box by looking at perpetual money making methods. One of the most powerful of these methods is to create your own business.
At first blush this may not seem like a very passive method for making money, since initially you will be very “actively” involved in building it using your own labor. But over time, and by the way, usually over a much shorter time than will be needed to build up a lump retirement sum in qualified plans, you can create something that has the potential to provide a perpetual income stream and that does not limit how much you can take out of it. In addition, such an income stream doesn’t take decades to build in order to reap its rewards. Plus you can take advantage of the very liberal tax laws that apply to businesses, which can save you thousands in taxes.
For more ideas and information on creating perpetual income streams independent of qualified retirement plans, contact me: firstname.lastname@example.org, (801) 292-1099.