Financial Freedom

Passive Income Sources

I found this really good article on Ezine which I thought I should share with everyone. It basically describes some of the sources of passive income that anyone can get. Here is the article attached below:

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Cash is king!

This aphorism from real estate investing perfectly describes the little known method the rich actually use to accumulate millions of dollars. This report reveals 10 sources of passive income. Put any or all of these sources into place and sit back and watch the dollars roll on with no (or very little) further effort on your part.

If you truly want to get rich and live a life of luxury, then you must master the ability of generating cash flow from passive income sources. Without this ability, your income will be limited to traditional ways of making money, such as working. Working will never free you from having to work. You must do something different than working in order to obtain the income you need to live the lifestyle you desire. Passive income is the key.

Before you begin any investment plan, the first rule is to consult with a qualified investment advisor. By talking over your plan and considering possibilities you may not have considered, you will protect your capital to the greatest degree and help protect it from potential loss whiule multiplying your return.

This article will not consider the cost of entry to any investment nor will we look at rates of return. These will fluctuate - possibly every year or even over the course of a year- depending on the economy, conditions set by the SEC and other regulatory bodies and the IRS. This article will consider only the 20 possible sources of passive income; you will need to conduct further research to determine if any investment is appropriate for you.

1. ETF's - Exchange Traded Funds - This is a fund that tracks the performance of an index such as the Dow Jones or Standard and Poor 500, a basket of assets or a commodity. Trading in the same manner as a stock, its price will vary according to the days trading demands. Benefits of owning an ETF include the ability to buy short, buy on margin and to buy as little as one share. Expense ratios are often lower than mutual funds. A common ETF is called a spider - SPDR - and tracks the S&P 500 index. Look for the symbol SPY to research or to purchase.

2. REIT - Real Estate Investment Trust - One of my favorite investments because you own a portion of the real estate (or mortgages) the trust invests in. These also trade like a stock on the exchanges. An Equity REIT buys ownership (equity) in properties while a Mortgage REIT buys the mortgages on properties. Two key advantages to owning an REIT are the tax advantages and the liquidity of the security - you trade it just like a stock.

3. Canadian Oil and Gas Trust - This is an organization that invests in oil and/or gas production and possibly mining in Canada. Several of these are now trading on the American (US) exchanges. Purchase is the same as purchasing a stock in any other company. Tax advantages are similar to those of an REIT and a big advantage - the one I like the most - is that some of these trusts pay ridiculously high dividends - and they pay monthly! My advice: do your research, find a Canadian Oil and Gas Trust you like and then invest as much as you can.

4. MLP - Master Limited Partnership - Want a limited partnership that you can sell or trade as easily as a stock? Enter the Master Limited Partnership. These hybrid organizations feature the limited liability of a partnership while enabling you to trade the partnership units - investment units - just as you would a stock. What could be better? A MLP offers distributable cash flow as well as income and these terms must be mastered and understood before a reasoned decision can be made regarding the purchase of an MLP for your investment portfolio.

5. Annuities - Who has not heard of an annuity? But do you know how they work? Let's keep this simple: an annuity is nothing more than a contract you sign with an insurance company that guarantees to pay you a certain set amount of income over a period of time. You pay for an annuity upon signing and then the insurance company repays you the amount of your investment plus the "profits" (we'll keep this simple and not use the technical term) over a period of several (or many) years. These are generally considered safe stable investments appropriate for a conservative portfolio.

6. TIPS - Treasury Inflation-Protected Securities - Offered by the U.S Treasury, these are securities that are indexed to the rate of inflation meaning your dividend will increase as the rate of inflation increases. A TIPS pays interest every six months and pays the principal upon maturity. Also a conservative investment, you may want to consider these if you are looking to preserve and protect capital from the ravages of inflation while providing a consistent and dependable income, but your money may not grow at the rate you would prefer - but then we aren't looking at capital appreciation anyway.

7. Dividend Paying Stocks - Finally we get to what is perhaps the most familiar method of passive income. Anyone who knows anything about Wall Street knows that companies pay dividends to people who own their stock. Right? Well, most of the time , if it is a well known and established company. Many newer and smaller companies will use their income to grow the company instead of paying dividends and any company that incurs financial trouble may stop paying dividends. So if you are going to buy stock to acquire the income make sure the company has a track record of paying dividends. The best known American companies - commonly referred to as the "Blue Chips" are also the companies that traditionally have paid the best dividends. As with all other investments, research is necessary to capture the best dividends and target those companies with the best potential in future years.

8. Covered Calls - This is a passive investment instrument that is often considered risky. But it is not. A covered call is selling the option to buy stock that you own. You do not sell the stock, you only sell the option to buy that stock at a future price and time. The person buying the covered call buys the option at the price you agree upon - actually at which the market agrees upon - and you just set back and forget it. Well, not quite. The person who has bought the option has the right to buy your stock at any time between the time you sold the option and the expiration of that option. Writing (selling) a covered call is the only options investment that is considered safe enough by the IRS to be included in a 401K or other retirement plans. But you must do your homework and thoroughly understand the world of options before using this method.

9. Real Estate - Everyone knows what real estate is and everyone knows - or at least is intuitively aware - that big money can be made from real estate. Real estate provides tax advantages as well as the opportunity to highly leverage your investment - leverage being a factor that is limited or absent in many other investments. Many real estate advisors and gurus insist that the one house at a time or the flipper strategy or fixer upper or wholesale method or other flavor of the month is the absolute best way to make money in real estate. Generally speaking, avoid all that. Making big money - meaning massive income - in real estate is possible with highly leveraged deals which are a certainty only in commercial property. Multiple family properties, office buildings, retail facilities and warehouses would all constitute commercial property. Of these, the best strategy is to invest in multiple family properties. The bigger, the better. This requires knowledge and education more than it requires capital. Capital can always be acquired through your network, but knowledge is the one ingredient that will make this passive investment method work. And, with a big property, the income from that one property may be all you need to secure your retirement - today!

10. Business Ownership - No, this isn't what you think. Owning a small business for most people is worse than working 9 to 5. In your own small business you get caught up in the details, trying to make the business go, searching for a market, dealing with customers; it quickly becomes more than a full-time job. That's OK if that's what you love to do. But, what we mean here is starting a business or franchise with the short term goal of handing it off to someone to run. The faster you can do this the better. If you can do it from the very beginning so much the better - the more time you free for yourself, the more time you will have to enjoy and/or create more passive income sources. A book that will help you is The E-Myth Revisited by Michael Gerber, another is the Four Hour Workweek by Timothy Ferris. Both of these books will help you structure your business ownership in a way that frees you of actually running the business yourself - margaritas on the beach anybody?

As this article is already so long, we will create a Part 2. Passive income source number 11 is Private Lending - a relatively new income source and we will also look at a few others you may not be familiar with.

All of these sources require work to set up, but once established, they can be structured to run hands free. The two books mentioned in item 10 above will help you structure your passive income sources to be truly hands free income.

Perry Jones,millionaire1000.com
results by jpnelson.blogspot.com
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David Bach Automatic Millionaire

We have all heard from the various wealth experts be they Robert Kiyosaki or Suze Orman or Donald Trump. Today, I will introduce David Bach.

Intro to David Bach

David Bach is the author of books like the Automatic Millionaire Homeowner, Smart Couples Finish Rich and Start Over, Finish Rich. Just by reading the first chapter of Automatic Millionaire Homeowner alone, I had already gained insights into how home ownership can actually slowly make one a millionaire over the years.

The thing about the way David Bach writes is that he uses real life examples in his books so that all can follow and relate to these cases. It shows that nothing is impossible and getting ourselves out of debt and onto an abudant life is really easy. Of course, one will still need to gain the necessary knowledge when it comes to various things like mortgage loans, retirement plans, buying real estate, managing your debt, etc.

Grow Rich

The true life examples or success stories remind me that wealth is possible as long as you believe that it is achievable. Important concepts like paying yourself first are also once again highlighted. I guess it is by studying all these concepts from all these wealth gurus can we then see where the commonality lies and what are some of the principles they have applied in their lives that have helped them to achieve financial freedom.

Buy A Home For Financial Freedom

One of the things that struck me was the concept that buying a home instead of renting one makes much more financial sense in the long run. Just imagine: a person who rents out a home will definitely be renting it out at a rate that is much higher than his monthly mortgage payments so as to make a profit. Thus, it makes sense to buy a home once you are able to afford it.

The author thinks that people should read David Bach's books or at least visit his website. His ideas are not new per se but serves as a timely reminder for us on our road to financial freedom.

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Portfolio Update

I have sold off 10 lots of Suntec REIT at a price of $1.08 which I bought previously at $1.02. This is a return of almost $550+ in profits not counting the dividends that I have collected from it.

Re-invested that amount of money into NOL at a price of $1.75. The chart above is that of NOL which was plotted using ChartNexus. I believe NOL is a good company facing troubled waters and this could be the reason why its price is so depressed now. It used to trade at the $3 to $4 range. I am prepared to keep NOL for the long term even if the stock price trades lower in the short to mid term. However, I am also willing to take any profits if I can get a 5% ROI in the next few weeks

I am abit disappointed with my selling of Penn West Energy Trust (it's a Canadian Royalty Trust if you haven't heard of it yet). After selling it at $14.63, the price has shot up way past the $15 mark. But guess I will just wait on the sidelines and see if it is worth re-entering into this canroy

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Free Tickets To Singapore Zoo

Apparently, there are 1000 free tickets up for grab to go visit the Singapore Zoo.

This is thanks to Dr Madeleine Chew, the 37-year-old managing director and founder of MW Medical, a Singapore health-care firm which specialises in home medical services. She forked out her own money to allow the celebration of the International Day for the Elderly.

What is the criteria?

Singaporean or permanent resident aged 60 and above. Offer lasts from Thursday to Sunday. Only limited to the first 1000 readers.

How do you claim the tickets?

Those who are interested in the zoo visit can call 6250-0625 up to Friday from 9am to 5pm to register for a ticket and choose their dates.

Tickets, which will be handed out on a first-come, first-served basis, can be collected at any ticket booth at the zoo on the entry date.

An identity card is needed for verification.

Inform the counter staff that you have registered with MW Medical when collecting your free ticket.

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5 Million by 2010

Nope. I do not mean that I hope to have 5 million by 2010. Instead, I just read the news that Singapore could have up to 5 million people pretty soon. The official figure currently stands at 4.99 million people in June 2009.

I remember the days when Singapore's population was just around 3 million. Those were the days.

Today, it seems that everywhere I go, there is a huge crowd. And the fact is this: I hate crowds. Go to Orchard road and it is crowded. Go to Vivocity and it is also crowded. Even the foodcourt downstairs is crowded. Ha.. Guess that will be the way of life in Singapore in the future.

I once read that if the whole world had the same population density as Singapore, we could squeeze the entire world's population into South Africa.

So let me try to do an analysis of what 5 Million People living in Singapore might mean to me:

1. More cars on the road? Definitely. With more people, there will be a need to increase the number of taxis, buses and cars on the road. The roads will be more congested I guess and perhaps.

2. More people on the streets. There will be alot more people on the streets. So there better be large shopping malls and complexes in every corner of Singapore. If you haven't figured it out yet, people in Singapore LOVE to hang out at shopping malls and complexes. So the best way to deal with this problem is to built like mini Orchard roads in all the four corners of Singapore so that people stop congregrating at Orchard Road.

3. More food to Eat? With a bigger population, hopefully there will be a greater variety of people from different countries. Perhaps then we will have more exotic food like Russian cuisine and stuff. Let the European people in I say!

Oh well. That is all I can think of at the moment. I sure look forward to seeing Singapore become more cosmopolitan. We need these foreigners to push our country to greater heights!

Majulah Singapore!

Free Stuff

It is time for me to share with people some free stuff that you can get online. Afterall, keeping our expenditure low is one of the best ways to become financially free.

Free Charting or Trading Tools

For charting purposes, there is a free software out there called ChartNexus that is extremely easy to use. The download is pretty fast too. The user interface is likewise easy even for the begineer. I would seriously recommend it to anyone who is trying out charting for the first time to download this software. Just type ChartNexus into Google and you should be able to find the site to download it from.

Free Sites for Movies or Drama Serials.

I am not talking about downloading movies illegally. Rather, it is about watching movies through streaming websites. You are not downloading anything per se. My current favorite site is www.mysoju.com . In this site, you can find all the latest korean and japanese movies and drama serials. The time it takes to load these movies are also pretty fast.

Free Sites for EPL matches

Want to watch English Premier League matches but can't afford to pay for the sports channel? Fret no more. Simply type MyP2P in google and you should see a website that allows you to watch live matches. You will need to download Sopcast (which is a sort of media player) in order to watch these streaming matches live. If you just want to watch the match highlights, go to YouTube or type matchhighlights.com and you can watch all the goals of the lastest matches.

Free Sites for News

Why buy newspapers when you can read them online? Apart from getting a free copy of the Today newspaper, there are a wide variety of news that is available online today. The following is a non-exhaustive list where I get my daily news from:

So there you have it. Some of the free stuff you can get off the web at no cost to you. Hope you enjoyed this posting.

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Income Investing - Bonds

Bonds are probably investment tools that most people are familiar with. A bond is basically a debt instrument in which the issuer is obliged to pay the holders or buyers of the bond an interest (usually in the form of coupon payouts) and the principal sum at a later maturity date.

I never really liked buying bonds due to the hassle involved and the lack of liquidity. I prefer to get my exposure to bonds through unit trusts as it is a far simpler way compared to going down to the banks or ATM to subscribe for government bonds or treasury bills.

In Singapore, you can invest in bonds by buying it through the primary market. The good thing about bonds is that the income that you get from it is exempt from tax. You can also use your CPF to invest in bonds. You are however required to set aside the first $20,000 in your CPF-OA and the first $30,000 in your CPF-SA before you can invest in the rest.

There are some great links to read up on the bond market in Singapore. You can view some useful info here: http://www.sgs.gov.sg/