Wealth and income are not the same things. One describes the value of your assets. The other describes how much money you bring in. You could be living in a very expensive home but barely bring in enough cash to cover your expenses. That’s called being house poor. You have wealth in your home. But as we all know, you can’t eat your house. You need money, cash flow, passive or active income to do that.
How many neighbors or people do you know that look rich (live in nice houses, drive nice cars, wear nice clothes) but when you ask them to buy a few boxes of your daughters Girl Scout cookies, they conveniently tell you they left their wallet at home?
Wealth isn’t about how much money you make or spend — it’s about how much money you keep.
I’m a saver. I like to put money away. I like to invest in assets that I can use while they increase in value. For me, that was usually real estate. Sometimes you win. Sometimes you lose. But then again, I have that savings account. I like the money going in. I don’t like the money going out. I also like to live off my passive income. Unfortunately, my passive income doesn’t equal what my assets suggest.
To compensate for my discrepancy, I keep my expenses low. The usual thing to do would be to go out and earn more money. Or increase my passive income. That could be done in the stock market but as we all have seen this week (and what I always rant about) Wall Street always screws you in the end. Wall Street almost always wins.
Financial experts always like to recant from the days of the 1929 stock market crash to today. They tout the market ALWAYS comes back. Maybe so. But isn’t it possible that one day it might never? Then what? There’s always that Black Swan thing. There’s always that one thing that happens that inspires people to say “geese, that never happened before”.
It you’re thinking about becoming wealthy, why not try some of these passive methods of earning income in addition to investing in the stock market. Some of these suggestions I already utilize (click here for source). Here are some good examples of passive income:
- Rent from real estate property investments
- Patent royalties for an invention
- Trademark licensing fees for characters or brands you’ve created
- Royalties from books, songs, publications, or other original works
- Profits from businesses in which you have little or no day-to-day responsibilities
- Earnings from online advertisements in a blog or on a website you own
- Dividends from stocks, REITs, equity mutual funds, and other equity securities
- Interest from owning bonds, certificates of deposit, money markets, and other cash and cash equivalents