You want to become rich, right?
“Of course, Sowmay. Obvious, that’s why I’m reading this blog”
That’s great! And guess what, I have some excellent hack to help you understand – Why Rich are Rich and Poor are Poor?. The idea is actually quite simple and revolves around the idea of creating wealth while you’re sleeping.
What is it?
Passive Income
Of course, you & me and everyone out there, working hard every single day want to become rich.
But why it is so that more than 80% wealth is acquired by 1% of the rich population?
Any guesses?
The only reason is: They know how money works. And poor people, like you and me, lack this knowledge.
That’s why we are in the remaining 99% of the population. So are you intrigued to know, How money works? Alright, keep scrolling.
Before I pour out the secret of Why rich are rich?, I need to break down the word “Passive Income”
That’s how Business dictionary defines it.
It’s a term used to define the type of income which fills up your bank account even if you’re not working. It can be in any form:
- Dividend from Equity
- Rent from Real Estate
- Capital Appreciation from Gold, Silver, Shares.
- Affiliation income from a website/blog.
- Sale of your book
- Et cetera (lists never end)
Have you noticed something common in all above sources of income?
Alright, take the time to figure it out.
They all keep generating income for you even if you’re enjoying your holidays in Las Vegas or sleeping in your coach or bathing, eating, dancing, running or whatever, freaky activities you do.
Might be somebody buying your book on the other globe while you’re sleeping.
Or might be the stock you purchased announced the dividend.
Or might be somebody is buying a product on your blog while you’re enjoying your weekend watching Sultan movie.
What I want to say is that passive income is something which will keep generating income for you like a cash generating machine even if you’re doing nothing.
Here’s the shocker:
But creating that source is not an easy task. You had to work your ass hard to make that machine.
“Sowmay, why the heck are you’re wasting your time making the blog all day?” people ask me.
The only reason is it’s a source of passive income for me. Of course, not now but in future. Initially, I would have to work hard to make that source of passive income and once it is done, cash will keep depositing in the bank account for doing nothing or may be, little.
I’m not here to tell you how to make money blogging. There are many masters out on the web to teach you that. Just have a Google search.
However, if want me to help you make a blog? Initiate an email – investor@sowmayjain.com
“Sowmay, Is there any example who make their livelihood on just this passive income?” You might ask.
And Yeah! there are many.
Pat Flynn from smartpassiveincome.com:
This guy is creating wealth (read his mind dazzling income statement) online and helping others to do same. Go on, have a visit to his site. I’ll wait.
Another best example would be The Bucket List Family:
They are a family of 4 (A couple and their 2 kids). They have no home (in other words, the world is their home).
What do they do?
Nothing, they just travel all over the world and chronicle their adventures on their blog (link).
From where they manage the funds?
Again, that’s what the beauty of passive income. Entrepreneur Garrett Gee decided to ditch the regular lifestyle and travel the world after selling Scan, a mobile scanning app he co-founded, to Snapchat in 2014. The deal for Gee and his co-founders was valued at $54 million at the time — $30 million in cash and the rest in equity in Snapchat.
So now he and his family are enjoying the return from Snapchat shares and enjoying spending cash all over the world. The most remarkable point is: He is not participating in the management of Snapchat for even a single minute.
Could an android app considered as a source of Passive Income?
Heck, YES.
Anything which creates wealth for you even if you’re not working should be considered as a source of passive income.
Think of this: All Time Popular Game “Clash Of Clan“
Ilkka Paananen, CEO of game developer company “Supercell” are making money while you’re wasting time playing the game.
Remember, how people burn their money for buying virtual GEMS.
So now think it in this way, you’re playing the game here in India and his owner sleeping in the US.
Here’s the relevant news shot:
You pay, he earns.
Think of it in this way (in perspective of books):
You wrote an awesome book “XYZ” by scratching your ass for 1 full year. In a couple of months, you got featured as a best-seller. People was just crazy on the book. Every 1 in 5 read the book.
Notably, You worked hard for 1 year to create that awesome product (book) but now even if you don’t work, the book will keep selling year after year. People will keep reading it and referring others even after you die.
There are many popular books out there for years. You can get a peek on Amazon here. E-commerce made the complicated work of allocating books easy.
Do you know, who Chandler Bolt is?
If you’re an introvert, like me, you probably do.
But if you’re part of the other 99.9% of the world extroverts, who isn’t super hyper about “this internet marketing stuff”, you’ll have never heard of this man.
Then what the hell is he doing with this headline on Business Insider?
How did he get on there?
Is he rich or something? Yes. Yes indeed.
That’s part of the beauty of Passive Income.
This 21-year-old kid dropped his college and made hundreds of thousands of dollars, right from his kitchen table.
No connections. No need for fame, magazine interviews, talk show visits or acting classes (you know, to act in a blockbuster movie).
Just a book made the change. Now he is helping other on his website to publish best-selling books like he did (5 best selling book author).
That’s the one example. There are many out there. Warren Buffett in Equity Investment, Robert T. Kiyosaki in Real Estate etc.
If you had read Rich Dad Poor Dad by Robert Kiyosaki then you may have understood the topic more clearly. When I first read it, I was so much influenced that I run outside and tried some lessons from the book.
Let’s take a look at the secret of creating Wealth?
Money is a form of power. But what is more powerful is the financial literacy. Money comes and goes but if you’ve knowledge about how money works, you can start building wealth.
Here I would like to outsource the awesome para from the book Rich Dad Poor Dad:
One of the reason the rich get richer, the poor get poorer, and the middle class struggles in the debt is that the subject of money is taught at home, not in school. Most of us learn about money from our parents. So what can poor parents tell their child about money? They simply say, “Stay in school and study hard.” The child may graduate with excellent grades, but with a poor person’s financial programming and mindset.
An eccentric definition of wealth given by R. Buckminster Fuller. It was pretty confusing at first, but after reading it, it began to make some sense:
Wealth is a person’s ability to survive so many number of days – or, if I stopped working today, how long could I survive.
So, if you’re not rich that doesn’t mean that you’re not wealthy. What you studied all over your life is to become rich, not wealthy.
What school teaches you is to study hard, get awesome certificates and high paying jobs.
Most of the people in the world preach only to get high paying salary package. Nobody preach to become the person who distributes the package (owner of the firm).
You get paid for working hard for others and in consideration, they pay you paychecks (salary).
Once you stop working, they will stop giving you paychecks. Even they cut it off if you took holidays.
Also, well quoted by Robert Kiyosaki:
Money is not taught in schools. Schools focus on scholastic and professional skills, but no financial skills. This explains, how smart bankers. doctors and accountants who earned excellent grades may struggle financially all of their lives. Our staggering national debt is due in marge part to highly educated politicians and government officials making financial decisions with little or no training in the subject of money.
Here’s another lesson for you by Jack Ma (Second Richest person In China):
Image Read – I told my son: You don’t need to be in top 3 in your class, being in the middle is fine, as long as your grades aren’t too bad. Only this kind of person has enough free time to learn other skills.
Here’s another lesson, I would like you to know:
Don’t work for money, make money work for you
Once, I was paid for watching Game Of Thrones.
Yeah! It’s not a joke.
I received an email from ICICI Bank at midnight (while I completing the seasons of GOT) which somewhat look like this:
Dear Member,
Payment of 21st Dividend for the year 2015-16 through
NECS / RTGS / NEFT / Direct CreditAt the 22nd Annual General Meeting of ICICI Bank Limited (ICICI Bank) held on July 11, 2016, dividend at the rate of ` 5/- per share was declared for the year 2015-16 payable on or after July 11, 2016.
The details of dividend in respect of your shareholding are as under:
(Details not to be shared)
In case of any discrepancy in details mentioned above, please write to our Registrar quoting your Folio No. / DP ID-Client ID.
Yours sincerely,
P. Sanker
Senior General Manager (Legal)
& Company Secretary
Now it’s not hard to figure out (in a sarcastic tone): How I’m being paid for watching Game of Thrones. The company is paying me dividends for each share I own. That’s what is passive income.
Who else are interested in getting paid for watching GOT?
Here I want to draw your attention to a very important point – Don’t work for money, make money work for you.
I’m investing since last 11 months. I had made a portfolio of dozens of stocks based on my analysis.
They all are high dividend paying companies with great fundamentals. So I’m getting paid for holding shares and the value if stock increasing with time (as I bought undervalued stocks so they are likely to hike).
Double benefits: Dividends and Capital Appreciations.
And stock market provides a miraculous service of liquidating my stocks in money on the single call.
Now, I’ve income generating investment portfolio that fully cover my monthly expenses. If I want to increase my expenses, I must increase employees in my portfolio. By employees, I mean money.
And also note that at this point, I’m no longer dependent on my salary. Because I’m already having money working for me so why do I work?
And the best thing about money is: They never betray you and they work 24 hours. So whether you sleep, eat, run, bath or whatever you do, money will keep working for you.
And always remember, Never let any penny out of your portfolio which invested instead invest more and more (grow up your portfolio). Every penny in your portfolio will invent an another new penny for you.
This is what known as Bacterial Growth. In my case, every penny invested in stocks are making another penny in the form of Dividends.
“Sowmay, I don’t have funds to invest. So it’s not my cup of tea to create Passive Income” asked by many people but….
You don’t need money to create passive income.
I’m not saying you to leave your studies or job instead keep it parallel. Start planning today on How to make passive income. Be the early bird.
Even you can start with no or less money.
Like if you’ve something valuable thoughts that people will like, then build a blog and share it.
Or even you can write a book (ebook will be much better for a newbie)
Or start you youtube channel (you know, earning through ads)
Or work as a freelancer. (There are many earning lakhs by just working 2-3 hours a day).
Or set up a website selling product.
Or grow up your social profile and become a referral source.
Or an engineer can make an awesome app (recall the story of the bucket list family).
Or try affiliate marketing.
Whatever you do, just do it ASAP. Or you’ll get hired by others to do it for them. Well quoted by JRD Tata:
“Get corporate before you get hired or fired”
Just broaden you mind. You will find more than enough ways.
Hint – A simple search on Google “How to create passive income” will swamp you with more than enough results.
In my opinion (may be biased), Investing and Blogging is the best source for Passive Income. Investing is ranked 3rd and Blogging 4th, in terms of popularity among different niche on the internet.
Side Note – Currently, I’m writing a book related to stock market. You can subscribe to the blog to receive an email update after completion.
Wrapping it up.
Start creating passive income early have a lot of awesome benefits. When you start to do this, you will notice you are getting more intrigued to create wealth. And more you’re intrigued, more you’ll focus, the better, right?
If you already have investment portfolio then take a look at this content and figure out how to analyse stock for the perfect match for your portfolio. When you do it, always make sure it is absolutely strong and a great representation of business fundamentals with the long run. Because passive income only works in the long term.