The idea of passive income is very simple but very powerful. We are going to try any financial strategy would allow our money to work for us making more money passively. There are always special ways of doing so, and today we will be looking at 4 of those ways.
1. Mutual and Index Funds
There are things that in investment consider when taking Investments. First and foremost, they must consider diversification. What single asset is more diversified then index funds or Mutual Funds? Statistically speaking, index funds are the safest investment that an investor can make. As a matter of fact, 90% of investors that try to pick their own stocks end up underreporting the market in general, therefore it is better to just purchase some index funds and forget about it. The five most popular index funds are the following:
– Fidelity Large Zero Cap Index
– Vanguard S&P 500 trust
– SPDR S&P 500 Trust
– Ishares Core S&P 500 ETF
– Schwab S&P 500 Fund
According to leading analysts “The average annualized total return for the S&P 500 Index over the past 90 years is 90 years.” In our opinion Vanguard is the top pic for many reputed investors, including ourselves. Index funds should be in any investor’s portfolio (No matter the amount of experience in the world of investing).
2. Equipment
Although this isn’t what many might consider a “traditional investment,” anything that has the potential to create cashflow or grow in value overtime can be an asset. Therefore, equipment is in theory a very good investment. If you are a farmer, the tractor is an asset; if you are a programmer or a blogger, your computer is an asset; if you are an Uber driver, your vehicle is an asset. Even something that indirectly helped you generate income, is considered an asset. Therefore, as an intelligent investor you must purchase equipment that move you directly or indirectly towards your financial wellbeing.
3. Patents
A patent allows you to file a specific invention or idea as your own property. It is legally recognized by governments as your property, and anyone that tries to copy you will be sued and shut down. A patent describes in detail the contents of your invention so that copy cats don’t have the power to undercut you on your own invention.
A single patent has the power to make you a very wealthy individual, because in order for companies to use you design they need to pay you royalties up front or for every sale that they encore. As an example, the slinky received almost $3 Billion in sales over all, big mouth billy bass made the owner of the patent about $100 million. Therefore, this is a very powerful way to turn a simple idea that you have into millions of dollars.
4. Raw Materials and Commodities
The price for raw material and commodities fluctuates depending on the market. Just as you should with all other assets you should buy it when it’s cheap and undervalued and then re-sell them when it’s overhyped and expensive. As an example, over the last 15 years the price of gold has increased over 215%. Other commodities such as art has been consistently outperforming the market by a huge margin. This is why wealthy business owner buy and store art, instead of displaying them in their homes. Another example of commodities that boom in price over time are vintage cars. Today, there some cars that are more expensive than multinational conglomerates due to both the power of inflation and the economic standard of supply and demand. While most NEW cars cost people money, the affluent purchase vintage vehicles that appreciate in price over time. Of course this applies for other commodities such as luxury watches, old wines, whiskey, and tequilas.
Party Investors 