Most people primarily rely on active income, which involves trading time for money and is subject to the highest tax rates. However, the focus should be on generating and building passive income until it equals or exceeds active income. Let’s explore how to achieve this and attain financial peace of mind.
School Doesn’t Prepare Us
The traditional education system tends to groom individuals to become cogs in the active income-generating cycle. Even high-earning professionals like doctors and attorneys find themselves trapped in trading time for money, with a significant portion of their income going towards taxes.
For instance, a doctor earning $16,000 per month might end up with only $9,600 after taxes, whereas someone earning the same amount in passive income from real estate might pay only $2,300 in taxes, taking home $12,800 each month. The disparity in tax burden highlights the appeal of passive income.
You Still Need Active Income
While passive income is essential for financial freedom, it’s crucial to earn and save active income to facilitate investments. The goal is to accumulate enough savings to invest and continue investing until passive income surpasses active income.
Financial Peace of Mind
In today’s landscape, individuals are responsible for securing their retirement savings. Achieving financial peace of mind involves building multiple streams of income to cover living expenses, regardless of daily work commitments. Real estate investment, particularly in rental properties, offers a pathway to this goal.
Why Real Estate Passive Income?
Real estate investing provides the opportunity to generate reliable passive income streams. Unlike the volatility often associated with the stock market, real estate investments offer stability and tangible assets. The goal is to match your active income with passive income from investments.
Passive Income Ingredients
To embark on the journey of building passive income, it’s essential to focus on investments that appreciate in value, offer cash flow, and are resilient to disruption. Real estate, particularly multifamily properties, has historically demonstrated these qualities, providing a steady income stream over time.
How to Create Passive Income In Real Estate Investing
- Start With Your Why: Establish a clear understanding of your financial goals and motivations.
- Take Action: Dedicate consistent time and effort towards your investment objectives.
- Decide What Type of Real Estate Investor You Want to Be: Assess whether you prefer active involvement or passive investing.
- Decide What Type of Real Estate Assets to Invest In: Choose between residential and commercial properties based on your investment strategy and risk tolerance.
- Learn and Utilize The Wealth Generators: Leverage cash flow, appreciation, leverage, and tax advantages inherent in real estate investments.
- Find the Right Investment Opportunity: Join the EquityNest investor club to access vetted real estate syndication deals that align with your investment criteria.
- Reserve and Fund: Secure your spot in investment opportunities and fund your investments to start generating passive income.
Summary
To achieve financial peace of mind, it’s essential to transition from reliance on active income to building passive income streams. Real estate investing offers a reliable pathway to this objective, providing stable cash flow, appreciation potential, and tax advantages. By leveraging the resources and opportunities available through platforms like EquityNest, individuals can embark on their journey towards financial freedom and retirement security.
