How to Protect Your Passive Income
Identify your sources of passive income., Combine sources of income., Review your investments regularly., Continue to build your passive income.
Step-by-Step Guide
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Step 1: Identify your sources of passive income.
A pension is one of the best examples of passive income, but most people must wait for retirement before receiving one.
For younger people, passive income can come from interest, investments, or rental properties.
Most sources of passive income require at least some amount of input or upkeep.
Rental income requires property maintenance.
Investment income generally requires capital with which to start and periodic decisions and review. -
Step 2: Combine sources of income.
Having some passive income usually does not preclude holding a regular job and earning a salary, because passive income, by definition, requires only a moderate investment of time.
By having an additional source of income, you can avoid situations in which you might have to sell some of your passive income-earnings assets to cover unexpected expenses., Different investments may need review at different frequencies.
Re-balance your investment portfolio on a quarterly or annual basis.
Reevaluate your savings and spending goals when life changes (marriage, children, job changes etc.) occur.
Make a regular appointment to review your investments.
Try the beginning or end of the calendar year, tax time (or right after it, if you want to work with an accountant), or your birthday.
At this time, make sure your investments are still earning you positive passive income.
That is, make sure any fees or costs associated with the investment are not higher than the income you earn from that investment.
You should also check in on your rental properties to make sure they are being maintained properly, even if you have hired someone else to manage them for you., Look for additional opportunities and investments that could enhance your passive income.
Remember that passive income is passive in the sense that you don't work to earn it, not in the sense that you need do nothing at all to create it.
You can either reinvest your passive income into further passive investments or you can invest more of your active income as you are able to save it.
Over time, reinvested passive income can snowball into a much larger income stream.For example, you can use your dividends earned from dividend stocks to purchase more shares of the stock.
Or, you can use rental property income to buy additional properties once the first property has been paid for. -
Step 3: Review your investments regularly.
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Step 4: Continue to build your passive income.
Detailed Guide
A pension is one of the best examples of passive income, but most people must wait for retirement before receiving one.
For younger people, passive income can come from interest, investments, or rental properties.
Most sources of passive income require at least some amount of input or upkeep.
Rental income requires property maintenance.
Investment income generally requires capital with which to start and periodic decisions and review.
Having some passive income usually does not preclude holding a regular job and earning a salary, because passive income, by definition, requires only a moderate investment of time.
By having an additional source of income, you can avoid situations in which you might have to sell some of your passive income-earnings assets to cover unexpected expenses., Different investments may need review at different frequencies.
Re-balance your investment portfolio on a quarterly or annual basis.
Reevaluate your savings and spending goals when life changes (marriage, children, job changes etc.) occur.
Make a regular appointment to review your investments.
Try the beginning or end of the calendar year, tax time (or right after it, if you want to work with an accountant), or your birthday.
At this time, make sure your investments are still earning you positive passive income.
That is, make sure any fees or costs associated with the investment are not higher than the income you earn from that investment.
You should also check in on your rental properties to make sure they are being maintained properly, even if you have hired someone else to manage them for you., Look for additional opportunities and investments that could enhance your passive income.
Remember that passive income is passive in the sense that you don't work to earn it, not in the sense that you need do nothing at all to create it.
You can either reinvest your passive income into further passive investments or you can invest more of your active income as you are able to save it.
Over time, reinvested passive income can snowball into a much larger income stream.For example, you can use your dividends earned from dividend stocks to purchase more shares of the stock.
Or, you can use rental property income to buy additional properties once the first property has been paid for.
About the Author
Brenda Gonzales
Brings years of experience writing about DIY projects and related subjects.
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