What do the wealthiest and most successful investors in the world know that you might not? I’m going to provide four instrumental pieces of information that you may have never considered:
- One of the challenges with being an employee is that, no matter how good you are at your job, your future employment is not in your control, but rather, someone else’s.
- What the largest and wealthiest investors in the world recognize (that the average investor does not) is that their wealth and financial freedom aren’t based entirely on how much money they have in the bank, but rather on how much income they can generate from the assets they own.
- You need to constantly improve your sources of active income, not only passive income.
- The rules of compounding definitely apply to wealth creation. You can’t get rich by putting your money in the bank at 2%. You need a 15%, 20%, and even a 30% compounded rate of return, year over year, for many years, to become UHNW (ultra-high-net-worth)
Now with the above in mind, and considering the current state of the economy and sky-high unemployment rates,it becomes that much clearer that you need to take control of your financial future.
The thought of quitting your job and starting a new business can be daunting. And I’m not going to sugar coat it; starting and running a business is challenging work, fraught with risk. Of course, with risk comes reward.
What if you didn’t have to quit your job just yet and could still reap the rewards of business ownership?
What if you could continue working at your job for many years, live off your salary, and then build a source of passive sustainable income streams that could lead you to the promised land of early retirement with fewer money stresses?
In this article, I specifically want to address this scenario and highlight the benefits of building a stream of passive income.
It’s Time to Build a Passive Sustainable Income Stream
Just after I sold my business, I started investigating the possibility of purchasing a small online business, and more specifically, something I could run in my spare time.
The ideal business I was looking for was:
- something that produced $100,000 per year in profits,
- was relatively easy to manage in under ten hours per week,
- had a steady stream of sustainable recurring revenue perhaps through subscriptions, and
- was in an industry that I found interesting.
I considered multiple business opportunities, and as you can see from the screenshot below, which I found from Quiet Light Brokerage, and from what’s listed in this image, there are multiple opportunities that fit my criteria.
In fact, based on this link, you will notice there are 33 listings in total, some starting as low as $100,000 in asking price.
Interestingly, there are many more online brokerages like Flipp and Empire Flippers where you can find many more online businesses for sale.
What’s also interesting is that included in each listing, in addition to all of the financial and business details, most of them indicate the amount of time it takes to manage the business. And somewhat surprisingly, in most cases, they’re part-time opportunities that can be run in under ten hours per week.
Take a look at this opportunity as an example, and more specifically, the details from the following paragraph:
Let’s dive in a bit.
There’s a business opportunity that’s selling for $2.5 million, with an income of $700,000 per year. The owner only spends 10 hours per week managing the business and is looking to sell this business in order to spend time on other new projects.
Although I haven’t consulted with the owner of this listing, I’m imagining that this person is on to their next business venture. I suspect they’ve already started another business, built it, and will sell once again for a few million dollars.
I haven’t bought an online business yet, but that option remains on the table.
And I’m constantly looking for business and investment opportunities.
So What’s The Above Have to Do With You?
I’m not suggesting that you necessarily buy one of these businesses, although that’s always an option, but rather, you can start an online business of some sort.
You can even start a business in your spare time.
There’s no reason that you can’t be one of these individuals that builds one, or many profitable online businesses.
Here’s Another Passive Income Opportunity I am Looking At:
My investment criteria: I’m looking for an investment opportunity that doesn’t take too much of my time to manage, that can produce a steady stream of passive income, with an excellent return on investment (ROI), and a healthy internal rate of return (IRR), with minimal downside risk.
As an example, over the course of the last few weeks, I’ve bid on three music royalty opportunities, and although I haven’t won any as yet, I intend to continue researching until I find and ultimately win the right opportunity.
From what I’ve determined, there are many opportunities to buy some old music songs, some of which have been around for over 30years, that produce an ROI of 10–15%, or greater, with a 15% IRR, and in many cases, will provide a stream of income for over 70 years.
On the link I provided, you will see songs from Dirty Dancing, The Doobie Brothers, Trading Places, and many more.
What I’ve listed above are two examples of sources of passive income. And there are many more.
The Nest Egg is Great, but Build a Stream
Most people are looking to build a large nest egg of $1 million, $2 million, or more so that they can retire early and live off their savings for the rest of their lives.
Alternatively, or in addition, how about building multiple sources of passive income that provide $5,000, $10,000, or even $100,000 per month in income that requires minimal time to manage?
If you can build your income streams, and ideally diversify your streams so that you have some downside protection in the event one has problems, then you can keep the nest egg aside, and live off the income. You can “retire” early to manage your sources of income.
In the above example, if you’re producing $10,000 per month in income, you probably don’t need a day job. You can quit your job, and manage your investment(s) and businesses. If you’re not quite ready to quit your job, then hang on to your job for a few years, live off the income from the job itself, and invest the income stream into other income-producing streams, something like buying an apartment building, for example.
An apartment building is another excellent example of an investment that produces passive income with a minimal time commitment.
The Problem with the Nest Egg
At the beginning of this article, I wrote the following:
“What the largest and wealthiest investors in the world recognize (that the average investor does not) is that their wealth and financial freedom aren’t based entirely on how much money they have in the bank, but rather on how much income they can generate from the assets they own.”
Today, $1 million is barely a decent nest egg. Two million is better, and while building a large nest egg is an excellent idea, it certainly isn’t a panacea.
Your nest egg can go bye-bye. So can your income streams, but if you have a large nest egg along with multiple income streams, then you’re well-positioned, properly diversified, and are now creating wealth like the savviest investors in the world.
I’m not suggesting you shouldn’t have a large nest egg. You absolutely should. What I am suggesting is that you should build a nest egg, a large one if possible, and live off your income flow.
Let’s consider some examples of passive income:
5 Examples of Passive Sustainable Income
I’ve already provided some examples of passive income. Three that I’ve spoken about include:
Real estate is probably my favorite income-producing asset, and if you’ve been reading my articles for long enough, you’ll know that I’ve written extensively about using real estate as a vehicle to produce wealth.
Not only is real estate income-producing, but it’s generally passive and inflation-protected.
You can read some of the dozens of my real estate articles here.
You can buy a stock or a number of stocks, but keep in mind that many publicly traded companies pay a dividend—in some cases, a very healthy dividend. There’s a grouping of stocks, known as dividend kings and aristocrats. These are stocks that have been paying continuous, uninterrupted, and increasing dividends for 10, 25, and some for even 50 years.
Take CIBC as an example.
At the time of writing this article, CIBC is paying a dividend of 6.22% and hasn’t missed a dividend payment for 150 years!
I’m not suggesting you buy one stock only. To mitigate your risk, you can buy dozens of dividend-paying stocks, or you can buy an ETF like SDY.
I’ve written many articles on investing, and in particular, dividend investing. Here’s an example: Long Term Investing Strategies That You Can Use for a Lifetime.
I discussed royalties earlier in this article. There are many different types of royalties including:
There’s no reason that you can’t be one of the business owners, much as you’ll find on the brokerage sites I mentioned earlier, and build a business, online or not, and have that business produce a passive stream of income. If you’re looking for inspiration, check out Quiet Touch, Flippa, and Empire Flippers.
Perhaps you have a unique skill you can share with the world.
You can create an online course and sell it on a site like Teachable. In fact, you can create a number of courses in your spare time and then sell them.
** Here’s an example of the course I created on improving profits inside your business. How to Turn Your Small Business Into a Profit Machine in 60 Days
Many people are making 6, 7, and in some cases, 8 figures of income per year by selling their online courses.
You can watch Patrick in this video discuss how he built a 7-figure business selling online courses:
If you want to build massive wealth, you’re going to need to take some risks. You’re also going to want to diversify your wealth so that you don’t have everything in one basket. You’ll want a business that produces a source of active income, and then you’re going to want to diversify your assets across multiple currencies, asset classes, and sources of income. Building a stream of passive recurring income is an excellent start.
Are you trying to build your business? You might find this article helpful: 9 Steps to Build a Sales Team From The Ground Up – Both Inside Sales Team and Outside Sales Team
You should consider subscribing to my blog. I publish one article a week on small business and wealth creation. You can subscribe here.
Also, I published a book during the summer of 2018, “The Kickass Entrepreneur’s Guide to Investing, Three Simple Steps to Create Massive Wealth with Your Business’s Profits.” It was number 1 on Amazon in both the business and non-fiction sections. You can get a free copy here.