Disclaimer: This is in no way accounting advice, just my point of view on the passive income topic. Happy Reading!
Passive income is the dream goal. It is retirement without the retirement account. Money flows in without having to work at all to make it. Here is what we will talk about for passive income:
-Find out what Rich Dad, Poor Dad has to say
-Easy passive income strategies
-Our passive income breakdown
Rich Dad, Poor Dad
After reading the book Rich Dad, Poor Dad, I was inspired by the entrepreneurial spirit of the author, Robert Kiyosaki. His way of thinking outside of the box to acquire wealth came from being taught at an early age to not be afraid of failure and to think about money the way that rich people do. One of the main pictures that was clear from this book was the cash-flow chart:
Notice that the rich acquire assets that brings them income. They have limited expenses and liabilities. Also notice that the poor receive their income and a majority of it goes to expenses and liabilities.
Rich people acquire assets while poor people acquire liabilities. Rich people’s money works for them while poor people work for their money. This is a list of assets that Kiyosaki recommended people should acquire for passive income:
1. Businesses that run themselves otherwise it becomes your job.
3. Mutual funds
4. Income-generating real estate
My eyes will remain open for business opportunities and ways of acquiring passive income because of this book. I was inspired to write down our passive income year-to-date. Our most notable and the only one listed on Kiyosaki’s list is our mutual fund account through Charles Schwab. The others I have listed are the Ally online bank account, credit cards that give cash back, and rebate apps for groceries. While these may not be completely passive (specifically the rebate apps), I consider it money that I made while doing something I was already going to do.
I opened my mutual fund with an online investing company at the advice of my grandpa a few years ago. He was a hard worker and not a risk-taker, but he seemed to like the game of mutual funds and electronically traded funds. It was a good investment in his later years. His biggest excitement came from the dividends which is money that companies give their share holders based on their earnings.
The stock market changes every day, but I have noticed that dividends bump up my interest on mutual funds an extra 1-3% on the already-increasing price of the stocks. In a recent Instagram post, I pointed out that even though the stock market price increased our money by 5.56%, taking dividends into account increased our real gain to 7.80%. In this case, over 2%. It is now 2 1/2 weeks after that Instagram post and the stock prices are up to 6.99% now, but including dividends, it’s a 9.28% gain. It was even higher before the Instagram post, but alas – that is the stock market for you. They go up and down, although in the long run, the trend is up.
Ally Savings Account
Ally online bank has a great savings interest that they recently increased to 1.20% from 1% – an already great interest rate for savings accounts compared to other banks. We keep most of our savings in here, but we are working on moving a portion over to mutual funds. You can get a lot more than 1.20% with other streams of passive income, but for a savings account, Ally offers one of, if not the, highest interest rate.
Cash Back Cards
Our cash-back cards typically gives us 1-1.50% cash back unless it’s a category that redeems 5% for a certain quarter of the year. We ONLY use our credit cards for money that we budget. We NEVER go beyond our means. By opening two new credit cards this year to ensure that we received cash back on money we were already spending, we received a total of $250 in bonuses. If we are going to spend the money anyway, we would like to get paid for it.
The rebate apps that I use for groceries are primarily Ibotta and Checkout 51. These apps made me $56 my first month of using them. I got most of my groceries for free when I was pretty consistent with couponing and using the app.
– Getting $125 Worth of Freebies My First 20 Days Couponing | You Can, Too
– Retirement Made Easy
– How to Budget: Retirement, Own Your Home, Assets
Passive Income Breakdown
Here is a breakdown of our year-to-date residuals from passive income:
|Ibotta & Checkout 51||56.75|
Surprisingly, it would cover about one to two months of our current, bare-minimum expenses. It could be argued that if we don’t spend, we wouldn’t have the cash-back from Chase, but since the Ally Savings and Schwab mutual funds carry half of the weight, I think we would manage just fine after growing our passive income in times to come.
By the time we retire, on top of our passive income, we will have our Roth IRAs and retirement accounts to pull from as well. Yet, it’s nice knowing that income is becoming passive for us starting now.