Make Money Work For You
What if you had thousands of employees pitching in to do their part, working in unison to create wealth for you whilst you slept? The concept of passive income is thrown around these days without much of a glance at what it truly entails. From a motivational Instagram post to a touching speech of freedom on YouTube, it is seldom discussed in mainstream society.
Why you may ask? In my opinion, it is probably a too good to be true idea for some and a long anticipation for others.
In any case, making money while you sleep is not a bad idea, so read on to discover the main concepts of such passive income and the psychological/financial perceptions of such cash flow.
Financial Freedom
Having financial freedom assumes a variety of meanings to a diverse amount of people. Some may look at it as not having to live paycheck to paycheck and maintaining a healthy amount of personal time, dedicated to philanthropic needs and family.
Personally, I view it as relinquishing your dependence on one particular income stream. Hence, this infers self sufficiency and the ability to fend for yourself without the explicit concern of a sudden decrease in proceeds.
Although such freedom does provide people with the privilege of extra time for them to explore more of the world and try new activities on their own terms, there are some drawbacks of not having the security of a 9–5 job. Such regular employment by a well established employer provides for a steady stream of income. However, if a person is fending for themselves, that income may materialise in intermittent time intervals.
Henceforth, starting your own business or going into any kind of venture that involves making a jump into the unknown will bring forth a whirlwind of emotions.
Entrepreneurship
Entrepreneurship. Infatuation with this term has grown over the past few years with social media aiding in its exposure. Having your own start up, whether that may be an actual business or a portfolio of investments that you intend to hold for many years to come, is not for the faint of heart.
There is alot of sacrifice that goes into finding your niche in the market. Despite your dedication to your project, there will always be someone on the other side trying to outsmart you and compete with your product. Therefore, differentiating yourself from the crowd is imperative to remain competitive and achieve consistent profits.
Persistence in setting up your own business is a necessity because without such mental aptitude, you cannot survive the rigors of entrepreneurship. There is no perfect time to start, just start somewhere and take it day by day since at no point in time will you have a common problem, all of them will continue to be uncommon.
Understanding the financial aspects of maintaining an enterprise of your own is imperative to its survival. Educating yourself on such facets of a business will greatly benefit your edge in the market.
Compound Interest
Although the traditional brick and mortar business is still invariably popular, we will be turning our attention to a specific financial concept. Such concept could be utilised even if you have a traditional business, by setting aside a portion of earnings to invest into various assets and generate passive income.
Income that is generated with very little time allocation is called passive income. This extra income can be earned via various means such as rental income, dividends, bond interest, so on and so forth. When you delve into the world of earning money with little expenditure of effort, the rewards will not be excessive, in fact, they will be mediocre.
However, if the income is consistently reinvested into the assets that have been acquired, the revenue will compound over time. As securities are compounded throughout your investment journey, the returns will increase exponentially. Such exponential growth is a powerful concept to understand due to the discouragement many people face at the beginning when they only see mediocre results.
By consistently adding extra capital and reinvesting dividends into your portfolio, it will decrease the time needed to take advantage of exponential growth. So do not expect results to appear in 1, 3 or even 6 months. It will most likely take a few years to witness such outcomes. However, when the results present themselves to you in your bank account, you will be thankful you maintained your trajectory and stayed focused.
Concluding Remarks
At the end of the day, if money is not employed to earn a return on the original sum, then it succumbs to inflation. Such disregard and misallocation of funds will result in a depletion of wealth. Hence, the benefits of deploying your money into the markets will far outweigh the drawbacks associated with the risks involved.
Make money work for you, instead of you having to work for your money. Have patience, the rewards will roll in, it is only a matter of time.
Written By: Nathan Mercieca
Disclaimer: The preceding article shall not be utilised as investment advice. The opinions and views of the writer are entirely his, and his alone. They are not an invitation to partake in such investment activities.
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