Passive Income Streams: Getting Rich On Your Back Pockets

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Earning money for retirement can give you a sense of accomplishment every time you look at your accounts, but it does have the drawback of having to work for it. Worse still, the financial environment of today makes retirement less than a sure thing for many people, and many ‘retirees’ are outliving their savings, forcing them to downgrade their standard of living or return to the workforce. If those options seem unacceptable to you, it may be time to bolster your retirement prospects with passive income streams.

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photo credit: RambergMediaImages

A passive income stream is a source of earnings that requires little to no upkeep once the initial investment is made, such as shared profits or leasing payments collected. The majority of passive income streams require a substantial investment of time, money or both up front, but their consistently profitable nature makes them well worth the investment. For example, a painter has a passive income stream. Once he completes his work, he is able to place it in a gallery where it can later be purchased by a private buyer with the painter receiving much of the proceeds from the sale.

However, most painters’ work is sold at prices far below a year’s salary, and so they must produce and sell multiple pieces to maximize the effect of that stream on their finances. The key is to use an existing skill in your spare time to generate income to supplement your paycheck.

Investing is an excellent passive income stream. Along with bonds and mutual funds, dividend-bearing stocks are a popular tool of passive income. Dividend-bearing stocks periodically release payments when they perform well, and returns on investment can easily exceed 3 percent yearly if you chose a large and stable corporation.

If you are uncomfortable placing your financial fortunes in the hands of a single business, an index fund allows you to invest in multiple companies with the same funding, lowering your risk but also limiting your profit. Another investment option is TIPS, or Treasury Inflation-Protected Securities. TIPS are purchased from the government and held for a predetermined maturation period, after which they can be sold at face value adjusted for the interest rate for a guaranteed profit.

Some insurance companies offer a product known as an annuity which pays out money every year for the rest of your life in exchange for an upfront fee. The amount of the payment depends on your age at the time of purchase, but it is entirely possible that you will live to appreciate your investment.

Another common source of passive income streams is to develop a website that displays advertisements alongside static information about a topic of interest. With a sufficient traffic flow to the page, the ad revenue will begin to slowly roll in, and the static nature of the information means there is almost nothing to update. Your ads will continue to pull in revenue until the Internet is deactivated, and so this is a reliable long-term stream when run properly.

Developing multiple passive income streams makes life much easier if one of your sources of income is reduced or eliminated, and can also guarantee you will continue to make money after retirement or even retire early. A passive income stream is a way to profit forever without working the rest of your life away.

Sponsored Post by Suncorp

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