Wealthy people understand how creating passive income streams is the secret to becoming rich. By spending some upfront time and effort in creating a system that automatically produces an income, they can move on and duplicate the process to create multiple income streams. When you learn how to produce passive income streams, you virtually have the power to print your own money.
What is passive income? It is the income that is generated with no or minimal work. Usually it requires some capital investment or doing work only once in order to continue to bring in profits. The best example of passive income is writing a best selling book. The author only has to write the book once, and as it continues to sell copies, the paychecks keep coming in. Another popular example is owning rental properties. Real estate investors do some research and purchase a piece of property that they can rent out for a profit, and month after month the checks keep rolling in.
When you can do this successfully one time, there is no reason you can’t replicate the process over and over again in order to bring in a tremendous amount of passive income. Notice, though, that even though most of the work is doe one time, it does not meant that no work is ever required again. The author may have to do some book signings to help boost sales and the investor may need to higher a management company or do minor maintenance.
Passive income can also come from interest or dividends from paper assets, such as stocks and mutual funds. For example, assuming the stock market returns about an average of 10% a year, you can expect a $100,000 investment to bring in $10,000 a year in passive income.
When you take your profits and reinvest it into more shares of stock, more rental properties, or hiring a ghost writer to produce your next best seller, you compound your earnings and greatly increase your ability to become rich. As a result of taking advantage of compound interest by reinvesting your profits, you can quickly double your money and continue to double it again over and over.
Why is producing passive income streams the secret to becoming rich?
1. You have the ability to earn more by doing less.
2. You have the freedom to work when you like and where you like.
3. Income is generated 24 hours a day whether or not you work.
4. By replicating the process, you write your own paycheck.
5. Your income is only limited to how many passive income streams you want to produce.
6. By taking advantage of compound interest, you can become incredibly wealthy.
These are just some of the reasons why producing passive income streams allows people to become incredibly rich. It does not mean that you do not have to work or put significant upfront effort into producing a cash producing system, but it does allows you the freedom to build one system and move on to building the next one.
Learn more about how to build passive income streams and transform debt into wealth by visiting Millionaire Money Habits. A free report to teach you how to become a millionaire is waiting for you at http://www.mmhabits.com
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