Since there are two sides to the assets and expenses equation, there are two main directions one can focus their energy: accumulating assets or reducing their expenses.
Asset accumulation
Accumulating assets can focus one or both of these approaches:
- Gather revenue generating assets until the generated revenue surpasses living/liability expenses.
- Gather enough liquid assets to then sustain all future living/liability expenses
Expense reduction
Another approach to financial independence is to reduce regular expenses while accumulating assets, to reduce the amount of assets required for financial independence. This can be done by focusing on simple living, or other strategies to reduce expenses.[2][3]
Passive sources of income to achieve financial independence
The following is a non-exhaustive list of sources of passive income which potentially yields financial independence.
- Rental property
- Dividend from stocks, bonds and income trusts
- Bank fixed deposits and monthly income schemes
- Royalty from creative works,[4] e.g. photographs, books, patents, music, etc.
- Alimony, Child Support or Child Trust Fund
- Renting out professional or academic qualifications [5]
- Interest earned from deposit accounts, money market accounts or loans
- Oil leases
- Notes
- Business ownership
- Patent licensing
- Trust deed (real estate)
- Life annuity
- Pensions
- Affiliate marketing
- Start a blog
References:
- Cummuta, John. «The Myths & Realities of Achieving Financial Independence«. Nightingale Conant. Retrieved on 14-Sep-2009
- Early Retirement Extreme: A philosophical and practical guide to financial independence.
- Your Money Or Your Life: 9 Steps to Transforming Your Relationship With Money And Achieving Financial Independence.
- «What is Passive Income?». Investor Monkey. Retrieved 4 July 2013.
- CCIE Pursuit. «Rent Your Cisco Certification For Cash» Retrieved on 14-Sep-2009
This information is from Wikipedia
