How to Get Rich III – 20 Sources of Passive Income, Part 1


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This aphorism from real estate investing perfectly describes the little known method the rich actually use to accumulate millions of dollars. This report reveals 20 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.

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