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  • what?

  • In 1987, there were just 140 billionaires in the world.

  • Worth a combined net worth of $295 billion.

  • That's a lot of money.

  • However, things have changed dramatically since then.

  • There have never been more billionaires or even millionaires as today they are now 2,755 official billionaires worth a combined net worth of $13.1 trillion.

  • If these people came together, they would become the world's third largest economy right behind China's $14 trillion.

  • GDP it is mind blowing that less than 3000 people have a net worth of the most populated country on earth.

  • Even countries like Japan Germany or the United Kingdom fall far behind.

  • Never in history have we seen anything like this?

  • Of course, there are reasons why this has happened largely due to the fact that the world didn't start any major conflicts such as the First World War or the second and has embraced capitalism.

  • Even those countries that were found on the basis of communism have given up the idea of socialism and largely based economy on the free market, but not everyone could benefit from this revolution.

  • Only those who understood how this is the works.

  • It doesn't really matter where you are in a free economy like the US or a partly socialist place like china.

  • The rules of the games are the same.

  • It is either you who is going to run behind money or you will take advantage out of the system and we'll let the money run behind you.

  • Yes, capitalism has its share of problems, but you can use these problems to your advantage.

  • Perhaps the greatest invention of capitalism is passive income.

  • The income you earned without directly trading your time for money.

  • It's when you put the work up front and let it generate income while you're busy with other things.

  • But most people fail to create even one source of passive income because most people don't understand how passive income works, but don't worry because we are going to fix that today.

  • We are going to check at five rules of passive income.

  • Understanding the rules of passive income will make it much easier for you to create your sources of passive income.

  • So if you already give this video a thumbs up and let's dive in number one.

  • Passive income isn't completely passive.

  • What most people don't understand about passive income is that there is nothing called as something entirely passive.

  • Every passive income source requires some level of management.

  • Some very little like dividend investing since companies with a long reputation for paying dividends are stable and have a very low risk of going bankrupt.

  • They have established themselves more like a monopoly and it's almost impossible to compete with them.

  • They have the best products, most efficient supply chains and enough money to crush anyone.

  • Some of them have been increasing their dividends for four decades in the role, but this type of passive income requires a lot of capital two or 3% yield is very little compared To what you can get elsewhere.

  • So to create a substantial source of passive income, you will have to throw a huge sum of money.

  • Other sources of income, like a YouTube channel requires a lot of work.

  • Even if you have successfully created 100 videos that continuously generate income, the algorithm will slow down your channel.

  • If you stop uploading take real estate, for example, everyone's favorite source of income from outside.

  • It seems like you buy the property easily rented out and let your agent handle everything else.

  • All that you will do is receive that rental paycheck, but it doesn't work like that.

  • First of all, finding a tenant is not easy as it might appear, but you will still be paying for maintenance, secondly, taken care of a property is not cheap, things get old and breakdown unexpected problems that are outside your control always come up or your tenants might come across an emergency and you have to find a new tenants again.

  • And if you have taken a mortgage to buy that property, the bank doesn't really care whether you rent that place or not, you have to keep making your mortgage payments.

  • If you don't want the bank to sell your property to cover your long.

  • So before creating any source of income.

  • Always keep in mind that in the beginning it is going to be like that, it is going to be a part time job maybe over a long period, you might learn how to automate most of the things, but it will always require your attention.

  • Number two, you don't need a lot of money to start.

  • Another misconception that most people have is that if you want to create passive income, you need a lot of money.

  • But that's only true for some sources of income in the age of internet.

  • There are multiple sources of passive income that you can create with very little income.

  • This channel for example, was created for just $100.

  • I'm not exaggerating just a little disclaimer.

  • This channel has never meant to become a source of income.

  • I started as a hobby to share with the world my ideas and experiences.

  • But it seems like advertisers are throwing a lot of money into online ads.

  • If you're bad at creating videos, you can start with blog post.

  • It's estimated that Google process approximately 63,000 search queries every second translating to 5.6 billion searches per day and approximately two trillion global searches per year.

  • Start a blog joined adsense.

  • Keep writing blogs that people search for.

  • There are multiple resources on the internet that have made the protests of creating a website easy, simple and fast and then it cost 5 to $10 at best $5 a month is $60 a year.

  • The rest is your efforts dont simply write blog posts, but optimize them for the search engines so that they appear on the front page of google but how do you do that?

  • Well you have to figure that out.

  • Yes it is going to take some time but it works if you want more passive income ideas then check out our video on 22 passive income ideas.

  • The link is going to be in the description number three never depends on your passive income.

  • This might sound controversial but it's a lesson I have learned the hard way.

  • Just because you're passive income sources making a lot of money today doesn't mean it's going to be like that forever.

  • Google is driving a lot of traffic to the website but tomorrow google might change algorithm and your website will no longer make that much money.

  • So any revenue you receive from your blog or channel or even real estate should be more of an extra income you invest back into that business or in a more stable assets such as index funds or at least part of it.

  • Passive income sources are often outside your control.

  • You can force your tenants to stay, you can't force youtube to promote your channel and you can ask Jeff basis to share amazon's algorithm with you.

  • So retiring after you have successfully created a passive income source is a bad idea.

  • Yeah it is going to give you the freedom to pursue other things but you always have to keep an open mind and be ready to lose it all.

  • Number four, if your income isn't above inflation, then you're losing money.

  • What people often don't pay attention is Ry versus inflation rate.

  • Understanding these two concepts is extremely important.

  • Otherwise you might be losing money without realizing that even though you might be thinking that you're making money, Take an example of savings account or a fixed deposits.

  • Well it's a pretty safe investment.

  • The R.

  • O.

  • I.

  • is below 1% while inflation is above 2%.

  • And according to some reports it might be even 3% while you're making some passive income were actually down by 2%.

  • Government bones.

  • And another example since interest rates are law, the yield on government bones is also pretty low.

  • As of the time of the script, it is 1.35% for ten-year bones, that's half the rate of inflation.

  • The same applies to dividends.

  • It is not only important to create a solid source of passive income, it should be above inflation by a few percent for it to make sense.

  • Otherwise why risk your money, why waste that much time?

  • But if you're starting something that doesn't require any capital then you should not worry about it.

  • Number five more doesn't necessarily mean better.

  • Youtube is filled by people who claim to have created 5, 10 or 20 sources of passive income.

  • Some statistics say that the average millionaire has at least seven sources of income.

  • So people strive to create as many sources of income as possible.

  • In my humble experience that is a bad idea more.

  • Doesn't necessarily mean better.

  • Each extra source of income means you have to dedicate more time to eat more resources and more stress while when you are expanding your existing source of income it requires a little extra time.

  • So don't try to create more and Fox and a few and master them.

  • There is something called an opportunity cost the potential benefits an individual investor or a business mrs out when choosing one alternative over the other.

  • The time and money you're going to spend on each extra source of income is the money and time you could have spent on your first source of income and expanded further.

  • I know that sounds cool to have 12 sources of income but remember the goal isn't to look rich but to be rich at the end of the day your time is your most important resource.

  • If you spend it all on different sources of income without having the time to pursue things that are important to you then what's the point besides the law of compound interest also works here as well.

  • The more time you spend mastering one source of income, the easier it will get to grow it.

  • So focus on only one source until you master it.

  • Anyways it's time to go and get your two free stocks from Weibo.

  • If you use the link in the description or check out my special course and skills share.

  • That will teach you how to invest in the stock market like those rich people.

  • And most importantly, give this video a thumbs up if you want to help us and subscribe if you're new around here, thanks for watching and until next time.

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B1 income passive income passive inflation blog channel

How I Make $28K A Month Using These 5 Passive income Rules

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    林宜悉 posted on 2021/09/05
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