5) Determine What Income Level Will Make You Happy. Think back to when you made little to no income as a student. Now think back to the days when you just got started in your career. Were you happy then? Now go over every single year you got a raise or made more money doing something else. How did your happiness change at all, if any? Everybody has a different level of income that will bring maximum happiness due to different desires, needs, and living arrangements. It’s up to you to find out your optimum income level.

I read about early withdrawal penalties on IRAs/401Ks very often. Almost always with a statement of “locked up” or “can’t touch” until 59.5. I’m sure you and well informed readers as well know about SEPPs in regard to IRAs/401Ks. For those that don’t SEPPs aren’t perfect but they are a way to tap retirement funds penalty free and I will be using in the future as I have over half of my equity investments within retirement accounts. South of a mil, North of a half. Let me add that I think your blog is outstanding.
Residual income models of equity value have become widely recognized tools in both investment practice and research. Conceptually, residual income is net income less a charge (deduction) for common shareholders’ opportunity cost in generating net income. It is the residual or remaining income after considering the costs of all of a company’s capital. The appeal of residual income models stems from a shortcoming of traditional accounting. Specifically, although a company’s income statement includes a charge for the cost of debt capital in the form of interest expense, it does not include a charge for the cost of equity capital. A company can have positive net income but may still not be adding value for shareholders if it does not earn more than its cost of equity capital. Residual income models explicitly recognize the costs of all the capital used in generating income.
To explain the concept of what is residual income, we look to a recording artist Joseph Cartagena, aka Fat Joe, to define this principles of wealth creation. You may have had dreams of becoming an entertainer or rock star as a child in hopes of creating residual income before you even heard of the term itself. However, as Fat Joe explains, there is another way to create true residual income. This one and a half minute video will reveal a powerful example of what residual income really is.
Accretion/dilution analysis Adjusted present value Associate company Business valuation Conglomerate discount Cost of capital Weighted average Discounted cash flow Economic value added Enterprise value Fairness opinion Financial modeling Free cash flow Free cash flow to equity Market value added Minority interest Modigliani–Miller theorem Net present value Pure play Real options Residual income Stock valuation Sum-of-the-parts analysis Tax shield Terminal value Valuation using multiples
One of the most appealing options, particularly for millennials, would be #12 on your list (create a Blog/Youtube channel). The videos can be about anything that interests you, from your daily makeup routine (with affiliate links to the products you use), recipes (what you eat each day) or as you mention, instructional videos (again with affiliate links to the products you use). Once you gain a large following and viewership, you can earn via Adsense on YouTube.
I actually spent a year and a half working as an affiliate marketer (mostly selling drumming related products – lessons, kits ect). 5 years on and one of my one page sites (which I’ve not touched) still nets me about $150 a month. I won’t be retiring off that but only really now appreciate the reverse pyramid approach to entrepreneurship (working for nothing initially but later being paid without effort!)

Many people associate work with punching the clock, the 9-to-5 slog and saving for retirement. The trouble is, an hourly rate alone will never make you wealthy and drains your most precious resource: time. Fortunately, you have alternative strategies. Unfortunately, you’ve probably never heard about them, as they’re usually reserved for the super-rich.
I want to develop a passive income stream in the next 4 years, nothing grand, maybe an extra 500-1000 dollars a month, but I’m not sure how to go about it so I was wondering if you had any tips. I’m so-so as a writer, and am currently finishing up my second book (just write as a hobby), and in the past made about 30-50 dollars an hour as a free lance writer but that was a couple of years back, it was only for about 10-20 hours a month, and the gig just dried up. I just got particularly lucky with that. I’ve tried online poker as a means in the past, and which I learned A) was not passive income but hard work and B) I have an addictive personality which resulted in me losing the 4g I earned in 6 weeks over the span of 72 hours so that’s out of the picture. I also partook in some illegal selling of things when I was younger, but being a little older and wiser the risk-reward ratio for possibly ending up in Jail just doesn’t match up. I tried making three businesses (dog walking, house cleaning, and personal assistant) and while those all were succesful to varying degrees and earned me about 15-25 dollars an hour, they weren’t mobile and quiet honestly I don’t have the time to be a full time dog walker or run a house cleaning operation seeing as I’ll be in school, work, and athletics.

Passive income is attractive because it frees up your time so you can focus on the things you actually enjoy. If a doctor wants to earn the same amount of money and enjoy the same lifestyle year after year, they must continue to work the same number of hours at the same pay rate—or more, to keep up with inflation. Although such a career can provide a very comfortable lifestyle, it requires far too much sacrifice unless you truly enjoy the daily grind of your chosen profession. Additionally, once you decide to retire, or find yourself unable to work any longer, your income will cease to exist unless you have some form of passive income.
The underlying idea is that investors require a rate of return from their resources – i.e. equity – under the control of the firm's management, compensating them for their opportunity cost and accounting for the level of risk resulting. This rate of return is the cost of equity, and a formal equity cost must be subtracted from net income. Consequently, to create shareholder value, management must generate returns at least as great as this cost. Thus, although a company may report a profit on its income statement, it may actually be economically unprofitable; see Economic profit. It is thus possible that a value deemed positive using a traditional discounted cash flow (DCF) approach may be negative here. RI-based valuation is therefore a valuable complement to more traditional techniques.

Hello from the UK! Fundrise and Wealthfront are only available to US residents it seems :(. Any other readers from the UK here? The only thing I have managed to do from Sam’s list is getting a fixed rate bond (CBS is having a 5-year fixed rate at 2.01% – not great but the best I could find ). Don’t know if the FIRE movement will ever take off here but would love to trade tips/ideas on how to reach FI and have the freedom to consider alternative rythms to living.
Lenders may be willing to remove family members from the residual calculations if a non-purchasing spouse or a working-age child has sufficient income to cover their monthly debts. This can include children who receive Social Security or disability income, child support and other forms of income, provided it’s likely to continue for at least three years.
Many bloggers and social media influencers build significant residual income through affiliate partnerships. If a blogger promotes or mentions a product on their site, and readers purchase the product through the link provided, the blogger earns a percentage of the revenue. The same goes for social media influencers. If someone promotes a product on Instagram and their followers purchase it through their link, the Instagrammer would receive a portion of that revenue.

5) Determine What Income Level Will Make You Happy. Think back to when you made little to no income as a student. Now think back to the days when you just got started in your career. Were you happy then? Now go over every single year you got a raise or made more money doing something else. How did your happiness change at all, if any? Everybody has a different level of income that will bring maximum happiness due to different desires, needs, and living arrangements. It’s up to you to find out your optimum income level.

6. Network Marketing: Network marketing is a unique business model and has made more millionaires than any other business. The industry as a whole is growing and more companies are trying to leverage referrals or direct sales to increase revenue and market products. However, the industry as a whole is confusing to most and requires a tremendous amount of mental and emotional fortitude to make residual income possible. Furthermore, the sustainability of that income vs. the effort you must put in is important to consider.
As doctors, we most likely fall into the first category. We may be rich in the sense that our salaries are in the higher economic range, however, because of our expenses (houses, cars, student loan debt, private school tuition, practice overhead, etc.) and sometimes poor decisions, we have a tough time accumulating any real wealth. We’re also handicapped by the fact that we start along this financial journey relatively later in life.

That income is considered residual income because as long as the apartment is rented and the rent is collected, the income is earned without additional effort. The effort came when the property was purchased and a tenant was found. Each month after that, the money automatically is paid without buying the apartment again or finding the same tenant each month.


Another way to generate passive income is to invest and be a silent partner in a business. This is very risky, but with risk comes the potential for high returns. For example, several years ago both Lyft and Uber were looking for private investors to invest in their companies. Today, they are worth billions - but you as an investor would only reap that benefit if they go public via an IPO, or get acquired. So, it's risky.
I am still working on my passive income, however I like multiple income streams even more. My favorite is capital gains because it is one of the lowest rates. One of the best passive income streams is a pension/Social Security. As I near retirement, I like the concept of it supporting my needs and my 401k supporting my wants. In addition, my brokerage accounts are all at capital gains rates. Don’t misunderstand, I am still working on adding more because I like multiple income streams!
Some people feel fatigued and lack energy, but they're not sure why. Odds are the water you drink from the tap is at least somewhat to blame. There are often additives and contaminants people aren't aware of which can lead to ongoing health problems. Change the water you drink! One of these devices will purge water of impurities, but it’ll retain the naturally-occurring nutrients you need. I’m happy to answer the questions you’ve got about the process, and you’ll soon see the same results for yourself.
I prefer assets that make me a high return for the lowest amount of work possible (semi-passive involvement). And assets that pay me in several unique ways. Cash flow is only one way RE makes money for me. I also get principal reductions, appreciation, tax advantages (depreciation), and I control the rental increases on a yearly basis. Plus a majority of the capital is provided by the secondary market on 30 year fixed low interest rate debt.
I enjoy how you lay out real numbers. A lot of people wouldn’t do that. While you admit that you are somewhat conservative, I think the $1M in CD’s is just too conservative. Assuming you don’t need the cash flow now (which you say you just save anyways) then all that could be invested for potentially higher returns. For example, what if you bought San Francisco real estate along the way instead of CD’s. Or, an SP500 Index fund. I bet your average return would have been higher than 3.75%. Sure you could lose it, but the point is if you don’t need the cash flow now, you should try to increase that nut as high as possible until the day you actually need it. Your nut could be $5M right now if you had invested in asset classes other than CD’s for the last 14 years. Don’t get me wrong, you have done far better than me, but I guess I would take a little more risk if you don’t rely on that cash flow.
One great way to generate a passive income is through affiliate marketing. Now, this does depend on the size of your list. Yes, size matters when it comes to your list. Especially if you're looking to make some serious money and do it on autopilot. But, list-building takes time. It doesn't happen overnight. And you need to add value to your list or you become obsolete.
Your income is your greatest wealth-building tool—a tool that typically requires your active participation in the form of a full-time job. You know what I’m talking about! Even if you love your job, I’m willing to bet you wouldn’t mind earning some extra income without the blood, sweat, tears, and time commitment of another job. In fact, there are several benefits. Building a passive income:
Many people associate work with punching the clock, the 9-to-5 slog and saving for retirement. The trouble is, an hourly rate alone will never make you wealthy and drains your most precious resource: time. Fortunately, you have alternative strategies. Unfortunately, you’ve probably never heard about them, as they’re usually reserved for the super-rich.
Passive income differs from active income which is defined as any earned income including all the taxable income and wages the earner get from working. Linear active income refers to one constantly needed to stay active to maintain the stream of income, and once an individual chooses to stop working the income will also stop, examples of active income include wages, self-employment income, material participation in an s corp, or a partnership.[4] portfolio income is derived from investments and includes capital gains, interest, dividends, and royalties.[5]
How To Engineer Your Layoff – In 2012, it took me four months of absolute focus and two years of data to publish my first e-book about helping people negotiate a severance. The book went through over 30 revisions by four people. Then I updated the book for 2018 with 50 more pages (150 pages total) using more successful case studies and highlighting more strategies for those who want to break free with money in their pocket.
Leveraging the internet to create, connect, and sell is something every creative person should attempt to do. The only risk is lost time and a wounded ego. You can start a site like mine for as little as $2.95 a month with Bluehost and go from there. They give you a free domain name for a year. Forget all the add-ons. Not a day goes by that I’m not grateful for my site.
If you want to add a little excitement to your passive income investing, meet Lending Club, the web-based peer-to-peer lending platform where investors looking for high-interest opportunities provide the funds for loans. You can earn interest rates in excess of 10 percent a year – about 10 times what you will earn on more conventional interest-bearing investments.
It is very important to understand that contacting a “professional” to learn how to do this only results in them trying to sell me crap properties (whether high end or low end). I’ve tried contacting realtors out of state, and they attempt to sell me crap or someone else’s problem. No one has a vested interest in actually helping someone or teaching them about how to get an out of state rental. very frustrating. I could go out tomorrow and buy a rental in my city, but that is the last place I want to own one. Anyone? Are there an real people on here?
Your articles are so in-depth and helpful, I’ve never seen anything quite like it. I am a 22-yr old finishing my last semester of college, studying Computer Science and Psychology. I’m in a really good place with my finances (2k savings, no student debt, only expenses essentially rent, groceries, and utilities) and I want to get ahead financially so I can pay my parents back and save up a lot.
Awesome article…if this does not give somebody a clear roadmap, they probably were never going to get there in the first place! I’m kind of like you trying to figure out where to place “new” money and maturing CD’s in this low interest environment. Rates have to go up eventually…I dream of the days again where you can build a laddered bond portfolio paying 8%. I plan for a 5.5% blended rate of return, with big downside protection.
But nowadays, there is so much opportunity if you search for brand-suitable domains and also keyword-rich or otherwise popular names on the myriad of new domain name extensions like .io, .at etc.  And I should know, because I’ve paid several domain squatters a king’s ransom to purchase these sorts of domain names in the last few years!  Continue reading >
When done correctly, investing can be a great way to generate residual income. There are many different types of investments you can choose from to earn income passively — whether you choose to purchase high dividend stocks, try peer to peer lending, or choose to invest in real estate. No matter what you choose to do, make sure you do your research first and talk to a tax advisor to ensure you understand your specific situation and what option is best for you.

Another benefit of investing in rental properties is the loan pay down. If you obtain a loan to buy the property, each month your tenants are paying off part of the loan. Once the mortgage on the property has been paid off, your cash flow will increase dramatically, allowing your mediocre investment to skyrocket into a full-fledged retirement program.


This is a venture that is growing rapidly. You can create videos in just about any area that you like — music, tutorials, opinions, comedy, movie reviews — anything you want . . . then put them on YouTube. You can then attach Google AdSense to the videos, which will overlay your videos with automatic ads. When viewers click on those ads, you will earn money from AdSense.


I wish I had more time to put into real estate. Given the run up since 2012, I may even be interested in selling my condo that I currently rent out. I need to get it appraised to really see what it’s worth, but I think conservatively it’s gone up ~50%, although rent is probably only up ~10% or so. I am bullish on rents going up in the future… mostly in line with inflation, or perhaps even slightly faster due to constricted credit and personal income growth which should provide a solid supply of renters. At this point, I just don’t want to manage the property. I’ll probably look into a property manager as my time is likely worth turning it into a nearly passive investment.

On August 4, 2003, Brad and Karen Murray’s marriage ended. They continued arguing over their assets for another four years. Brad worked as an independent broker for Ameriplan – a marketing company specializing in providing discounted rates on services related to healthcare. As part of his job, Brad sold monthly memberships to Ameriplan’s discounted health plans. He also recruited other brokers to do the same.


#9 Military pension/VA disability. Obviously requires a lot of front end effort in your 20s and/or 30s depending on length of service however once out and receiving it is totally passive with cost of living adjustment included most years. It has changed somewhat with new “blended retirement” plan but even those not staying past first or second enlistments often will get some VA rating. My wife got it on both ends of her service as the Navy paid for med school and then she was rated by VA after seven years active duty.
3. Start as soon as possible. Building a livable passive-income stream takes a tremendously long time, largely because of declining interest rates since the late 1980s. Gone are the days of making a 5%-plus return on a short-term CD or savings account. Today, the best 12-month CD is at 2.5%, and the best money-market rate is about 1.85%, which is not bad, considering such rates were below 0.5% just a couple of years ago. Know that every $100 you save can generate at least $2.5 in passive income.
That income is considered residual income because as long as the apartment is rented and the rent is collected, the income is earned without additional effort. The effort came when the property was purchased and a tenant was found. Each month after that, the money automatically is paid without buying the apartment again or finding the same tenant each month.
When a taxpayer records a loss on a passive activity, only passive activity profits can have their deductions offset instead of the income as a whole. It would be considered prudent for a person to ensure all the passive activities were classified that way so they can make the most of the tax deduction. These deductions are allocated for the next tax year and are applied in a reasonable manner that takes into account the next year's earnings or losses.
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* I use Personal Capital to track all my finances in one place. It’s much easier to use their free software to follow 28 accounts on one platform than to log into various accounts to check my balances. They’ve also got great tools for x-raying your portfolio for excessive fees, recommending a more optimized asset allocation, and planning for retirement with their Retirement Planner.

There are many people who get paid vast amounts of money to become the CEO of a company, play professional sports, or star in a movie. Earning a high active income is often a lot of hard work and requires a dedication beyond most of us. It’s also limited because no matter how much money you get paid you still need to show up to work to earn your money.
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