Retiring by the age of 37 sounds like a difficult thing. However, this actually can be an attainable goal that you can achieve with the right strategy and proper effort. When many people retire, they amass a specific amount of wealth so that they can draw regular distributions from it, decreasing the balance with each distribution. It takes an incredible amount of capital to retire in this manner at the age of 37. Still, another idea is to structure your investment portfolio so that you can live off of the income it generates without ever eating into the capital. This is the idea behind retiring off of passive income.
What Exactly Is Passive or Creative Income?
After you learn more about what passive or creative income is, you will be able to better develop a strategic plan for retiring at a young age. Active income is money that you exert time and energy in earning, such as is the case with salaried employment. Passive or creative income, on the other hand, is essentially money that you are not actively working for.
However, this concept can be misleading. Generally, you need to plan to work hard to create an investment portfolio that throws off substantial passive income before you can reap the rewards. In addition, you must actively manage your passive income portfolio to ensure that it continues to generate the return you need to live off of throughout your retired years. As you can see, it will take exceptional saving effort and strategic planning to retire off of passive income.
Ideas to Generate Passive Income
Your goal to retire off of passive income can be accomplished by researching all of the passive income options available thoroughly. You must explore all of the passive income ideas to find ones that are most well-suited for your financial situation, goals, and interests. You should also consider the benefit of diversifying your portfolio to create different income streams that you can rely on in retirement. This is because the return, as well as the reliability of the different income streams, varies. These are some of the excellent ideas that you can consider if you want to generate passive income.
1. Participate in a Corporation
When you explore the true financial definition of passive income, you will see that one legitimate way to generate this income is to own shares in a corporation. As a minor shareholder in a corporation, you may simply be a financial backer rather than an active player in the corporation. As such, you may enjoy a regular stream of income without having to work in the company as long as the company remains profitable.
2. Invest in Income-Producing Real Estate
Another excellent idea for producing passive or creative income is to purchase income-producing real estate. This may include rental houses or duplexes, a self-storage property, a multi-family property, an office building and more. These investments require regular management and upkeep. Therefore, you may need to hire a property manager to assist with the daily operations.
Keep in mind that this type of passive or creative income is incredibly popular among investors. You can leverage your investment through a real estate loan. Also, you can enjoy great tax deductions that are not available with many other types of passive income-producing investments. Furthermore, your tenants’ payments can pay down the loan and contribute to equity growth while you also benefit from a stable income stream.
3. Purchase Dividend-Producing Stocks
There are stocks that produce dividends as well as stocks that do not have dividends. As an investor, you can use dividends as an income stream. Commonly, investors re-invest stock dividends to increase the growth rate of their portfolio. However, you can pull out these dividends to enjoy the regular income they provide. The dividend rate can vary from stock to stock, and some companies may adjust their dividend rate frequently. Therefore, pay close attention to the dividend history of a stock when making a buying decision. With this type of investment, the value of your stock portfolio can increase or decrease while you benefit from regular dividend income.
The dividend rate can vary from stock to stock, and some companies may adjust their dividend rate frequently. Therefore, pay close attention to the dividend history of a stock when making a buying decision. With this type of investment, the value of your stock portfolio can increase or decrease while you benefit from regular dividend income.
4. Set Up a CD Ladder
Setting up a CD ladder is a great way to enjoy a stable income stream, but this low-risk option typically has a low rate of return. To set up a CD ladder, you purchase one CD per month every month for a specified period of years. For example, if you purchase a two-year CD every month, you will continue to purchase CDs for two years. At the end of the two-year period, the CDs will expire. Now you can re-invest the capital in a new CD while pulling out the interest as income.
5. Create Royalties
Some people are fortunate enough to generate income from royalties. This can be from creative activities, such as writing books or songs, recording songs and more. You can even take photos and sell your images online. Royalties can also be from ownership in oil reserves and much more. You can explore royalty streams to determine how you can best take advantage of this type of income stream in your retired years.
6. Consider Peer-to-Peer Lending
Peer-to-peer lending is a relatively new investment concept that has developed through online technology. Essentially, individuals or business owners who need money will create a loan request online. As an investor, you can read the online loan request details to determine which individuals or businesses you want to contribute funds to. You can choose how much you want to invest and enjoy a rather high rate of return with a regular stream of income for the loan term.
7. Be a Passive Owner in a Successful Blog
Blogging is a labor-intensive activity that has proven to be very profitable for some people. To make money blogging, you need to have great readership on a regular basis. Advertisers will then purchase ad space from you. If you want, you can purchase an already successful blog page from someone. Then, you can outsource the writing and management tasks to an employee to enjoy the profits from the advertising revenue.
8. Lease Out Your Home or Car
If you plan to travel in your retired years, you can also consider leasing out your home or car on a short-term basis while you are away. There are various travel-related platforms available through the Internet and apps that connect you with potential renters. This is an exceptional way to make a few hundred extra dollars per week while you are traveling.
As you can see, you do not necessarily have to work hard at an office job earning a salary to make money. There are many innovative ways to generate a passive or creative income stream that you can enjoy on a regular basis. Because some of these sources offer more reliable income to live off of than others, it is important that you carefully set up a portfolio of investments that generates a stable income from multiple sources. Now that you are aware of different income streams available to you, you can take the next step to create a retirement plan to retire by the age of 37.