Create Passive IncomeWealth Principles
All paths to success are not equal. There are many ways to leverage passive income to acquire success, and they vary in the amount of effort for return. By grouping work types into categories based on whether they deliver active or passive income, and regarding passive income categories as higher than active, you can focus on efficient ways to acquire wealth.
The biggest difference is not the amount of work done. The difference lies in what the work requires you to do and how much input it requires. Many people spend their time working more, but never actually gain wealth. They work several jobs without seeing material increases in financial security. Alternatively, they work upwards of 40 to 50-hour weeks and barely get by. This is usually due to earning money only from low-end work, sometimes combined with wasteful personal finance.
How do we define low-end work? Low-End Work requires your presence, and your payments are controlled by others, namely your boss or organization. If you aren’t at work you don’t earn, and if you are at work the amount you earn is controlled by someone else. If not showing up equals not getting a paycheck, or your boss decides your paycheck, then it’s low-end work. Hourly wages, salary, and commission, no matter how high or low, are all forms of low-end work because of their constraints. Regardless of the amount paid, you need to show up to earn the check.
High-end work delivers passive income independent of your presence and varies in return according to the amount of money you use. While not being as easy as “set it and forget it”, it continues to create earnings (when executed properly) while you are free to do other things. It creates passive income. Higher work earns returns without your direct presence, and usually earns more returns, than lower work. Investment is a form of high-end passive income work because you can literally be traveling, sleeping, eating, playing, romancing, and still make money. You’re “automating your work” because you’re getting paid without actively working. The work is being done for you without your presence. These mechanisms also return income depending on the amount initially invested and the success of the business driving the investment. There is no boss deciding to limit your hours, paychecks, or raises.
Gaining wealth involves simply removing the boundaries that prevent you engaging in higher work, and then continuously expanding the amount of High-end work executed for your profit, and actively seeking passive income. This means saving until you can enter higher work, then using returns earned from higher work and lesser work to continuously buy into higher work forms. This reduces the limitation of your presence to earn wealth, removes controls that others have over your wealth, and allows you to continuously generate profit.
The best way to gain wealth is to move towards high-end work and passive income streams. Fortunately, you live in a world where it is easy to invest and develop businesses via the internet.
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A Concise Guide to Macroeconomics, Second Edition: What Managers, Executives, and Students Need to Know
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