The Importance of Passive Income

I wrote an article a short time back about Passive Income, and my desire to be a millionaire before I’m 40, or to at least retire by the time I’m 40. As long as you have enough money to survive with and pay your bills you are effectively “retired”, and the more time you have the more free time you have to use. For those wondering, the reason I want to retire is because I’d rather volunteer (preferably working with animals) because I love them, and having the time/money to focus on my personal projects which better humanity, I would feel ashamed personally if I worked all my life and achieved nothing. This may seem like an impossible task to some, but I believe it’s possible and quite easily done You just need focus and commitment.

Why is it important to me, well basically, you earn money whilst you sleep. Even if you just earn 1p per hour whilst you sleep, it all adds up over time and multiplies quickly

There are various sources you can use for “Passive” income. Also I refer to the income being Passive in the sense that once I set it up, or have put some work into it. I don’t touch it thereafter. I may primarily change setups from time to time as experiments, but other than that once they’re setup they become a source of income

Now. The maths so that people can understand it. At this moment in time, I use (or have) at least 5 sources of Passive income that I can use to make money from. Here are some examples that I use or have looked into just to give you some examples and why I use them. Much like compounding, the power comes from the sources you have and the fact they run continously without touching

  • eBay Partner Network
  • Google Adsense
  • Youtube
  • Amazon KDP (Bookshelf for authors)
  • Website Store (currently not activated yet)
  • Amazon Affiliates (not using, but an option for some)

I’ve tried to give realistic figures here rather than make believe ones.
Each source “earns” you £0.01 per hour in passive income (£87.60 per year) or £7.30 per month
£0.01 (P/H) x 24 (Hours per Day) x 365 (Days per Year) = 24p per day income

Now, you have a total of 6 sources below – they’re all earning a total of £0.01 per hour
6 x £87.60 (per year) = £525.60 (£43.80 per month)

Now, let’s say you have a let’s say you have 30 sources of income each earning you £0.01 per hour
30 x £87.60 (per year) = £2628 (£219 per month)

Or, how about you have 5 sources of income each making you £0.12 per hour
You’re now earning £2.88 per day per “source” of income – or £14.40 per day overall (£5256) per year (£438 per month)

As you can see, it doesn’t take much to boost your income for a relatively low amount if you have a large number of sources of passive income. Or you have a small number of sources that gain large income.

Just some optimistic calculations, to put things into perspective (how a little can turn into a lot)

You’re a heavy content creator on Youtube. You have a large base of followers who like your videos, maybe you make VLogs. You run adverts on your videos. Each of those videos only make you £0.001 per hour, but you’ve amassed over 300 videos, and about 10% of them are watched often (earning you £0.72 per day – 24H x 0.001P/H x 30 Videos)
This source earns you £0.03 per hour or £262.80 per year

You’re a creative bookwriter, you’ve got lots of books for sale on Amazon KDP. You have written 100 books, but only 30% of them actually earn you £0.005 per hour (or £3.60 per day – 24H x 0.005P/H x 30 Books)
This source earns you £0.15 per hour or £1314.00 per year

As you can see, I’ve only listed two sources of income above, and these could earn you £131.40 per month more in income given my two situations above. Combine that with a website, you can run Google Adsense / eBay Partner Network ads on it for some more income (I personally don’t make much via Google, but EPN I earn between £20 – 50 per month) which I reinvest mainly (my webhosting costs me about £100 Per Year)

Even if I could use the 6 sources above that I mentioned all it would take for me to make almost £1400 per month would be for those sources each to make me £0.40 per hour or £9.60 per day. When you look at the price of a minimum wage job in the UK £8.72 per hour for my age currently. You realise that when you have passive income sourcs, the money you earn doesn’t matter, because it all adds up over time. I actually have about 30/40 sources of “income” that I’ve been thinking of (both active / passive) which I’m currently researching as methods to boost earnings.

Additionally, you should also focus on debts. No point earning £1400 per month passive income and not putting it on debt, because once the debts are paid, you’re then freeing up more income and lowering you’re outbound expenses.

Maybe the next time you think of Passive Income, it will get your mind thinking about how you can have another source of income. Put your mind to use when you have 10 mins free time, and make it work for you in the long run. I think most people would love the luxury of not having to worry about money when they wake up each morning, knowing how their next bill will be paid, or like me, being able to retire when I’m young and enjoy life.

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Retire at 40

Something I thought of the other night, how much I hate my job, and it had me spurred on. I would really like to work hard, so I can retire at 40. Now, this is no easy challenge. I’m talking proper retirement, not working a single day again in my life and living the life I want with it’s luxuries until I died.

Now, I manage a rather generous guess here on how much I’d need to save up to retire at 40. I worked on the basis of my current expenditure, I guesstimated I’d need around the region of £20,000 per year to live off based on current spending and finances.

I wouldn’t actually need this much, but thought it better to over estimate than under estimate. Also, I want to start this plan when I turn 30, so it’s not a short term plan, it’s a long term plan over 10 years.

Drum roll please…. in order to retire I think I’d need around £3,000,000 (3 million)

Now, this figure isn’t purely for living. I don’t expect to live beyond 70 years old but I would be putting money aside. Around £1.5 million of this is to build my very own custom house. I’m talking about a large plot of land (maybe 0.5 acre) where I have no close neighbours and a house custom built to my requirements to live in until I die. I’m talking things like home cinema, home computer room, gym, swimming pool, games room, etc.

The actual figure I worked out for retirement would be around £1 milllion. At £20,000 per year before inflation, this would work out around 50 years of no employment I could live off. The other £500,000 would be for a safety margin that I could live off if the shit hit the fan

So, how am I making this money. Working and gambling with roulette. Some say gambling with roulette is stupid, but it’s not. Just a case of using your brain and knowing when to quit and knowing your limits. The technique I’m using is very slow, but it has a very high success rate (nothing is 100% on roulette)

To make £3,000,000 in 10 years to retire at 40 years old (playing every day for 10 years). If I work on the basis of 365 days per year, I need to average £821 per day in order to make this amount.

Short of winning the lottery. Roulette will be my next go, it definately works, just a case of perservering. The method I’m using basically returns the original bet you made when you gamble. If you lose, you need to double up the bet. So for a stake of £1 you win £1 back. If you lose you need to bet £2, and then £4, and then £8, etc.

This method is slow, but the money you earn picks up when you have large figures.

I’ll keep adding more posts the further I go, but even using this method of £30 per day you can still earn yourself £900 per month. As for the money on £20,000 per year. Part of this plan is to pay off the mortgage and all debts and buy myself an evo. That way I have a disposable income of £600 per month towards adding into ISAs or high interest accounts. I leave these with a large deposit (say the 500k safety money) compounded interest over 20 years, probably puts this in the region of 1 million more

So, it’s a dumb plan, but something I intend to achieve. Hopefully I’ll take pictures when I save up the money when the house is built 🙂

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