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My income flows only when I work……..

Twice today I heard the words “passive income”. They were spoken by small self-employed business people who were the main generators of income for their business. Like many small business owners they had not adequately prepared for retirement; they make an income which provides for a comfortable life-style but have not been able to save enough to stop working and live off savings or other investments.

Assuming a retirement age of 67, both these business owners were within 6 years of their 67th birthday. A little bit of math, (financial planning) and it was determined that it was impossible for either to earn enough money   to save/invest so they could retire without any other income by their 67th birthday.

Is passive income a viable dream? Is it possible to have an income without working? In my opinion, the answer is a qualified “maybe yes,” but it is not an easy undertaking. By definition, passive income is re-occurring income that comes in every month whether you are there or not.

If the business is sellable and it can provide a sizeable next egg that will last for another 25 years after retirement, factoring in the inflation factor, that the problem may be solved. If not, then it’s time to try and start a new business that has the possibilities of providing that residual income. One advantage in today’s market is the internet. It gives you access to many people; and if you can identify the need of a large market and satisfy that need, there is a possibility for success.

The following are a few possible examples for generating reccurring income:

  1. Satisfy an identified need with access granted through an annual subscription
  2. Write a book(s)
  3. Start a targeted chat line and sell advertising
  4. Consult a business and take a percentage of future profit
  5. License intellectual property
  6. Invest in income producing real estate
  7. Start a club, social or business.

If it was easy, everyone would do it and no one would be working. Developing a recurring income business takes a lot of hard work. The research to identify the large market and then to understand their needs is the key to success and then the planning and implementation. Don’t expect the money to start coming in next week; it may take 2 to 5 years to make it a reality.

Success is never a guarantee but without putting forth an effort you will never know.

Nick J. Petra CFP    subscribe to   many new business ideas will be coming every month.


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