One of my favorite quotes from Warren Buffett is roughly this:
“If you don’t learn to make money while you sleep, you will work for the rest of your life.”
For many years I thought that there was a big difference between passive income and residual income. So I looked up the definitions of both on Google.
It appears the difference is very slight, and long term if you have either, you will be making money while you sleep.
Let me explain: Passive income is what shows up and requires very little, to no, daily effort on your part. An example is our apartment buildings; tenants go to work daily and each month they share 25% or more of their income with me and my wife.
It took effort to buy the building, and it takes occasional effort to be sure the tenants are taken care of. There are repairs needed, or someone moves out and we have to prepare the unit for the next tenant, but that is not a daily activity. And there are some months I do nothing, but I still have the income. So whether I am awake or asleep, money comes in.
With residual income, it seems more likely tied to the completion of some sort of creative work, like a book, music, movie, or TV show where royalties are paid. However, in the Google definition, it also said rental income.
Regardless of what it says on Google, the point is that if you do not invest in something like real estate, dividend-paying stocks, or create something like a book or video program, you will have to work for the rest of your life to produce the income you need to live.
I would rather not have to work, and still have the money to buy groceries, pay for utilities and donate to charity. Because I have my money working for me, instead of me working for money, I have the choice to work or not work. And I created this when I started saving $500 per month.
I have the choice to travel, or not travel. I have the choice to donate my time to charity or spend time with my wife. I have Complete Financial Choice™.
What would you choose if you did not have to work for money?
And if you want support to have that in your life, the set up a time to chat with me at http://chatwithrennie.com. If you are unable to find a time that works for you send me an email and I will have a member of my team be in contact.
To Your Prosperity,