3 Ways Passive Income Investing Builds Wealth

Most likely you’ve heard the term passive investing and for many it sounds too good to be true. The thought of putting money into a system, leaving it and then some time in the near future the money is worth more sounds a little too easy.

But the truth is that passive investing is that simple and is important because it creates stability, security, and financial freedom for you and your family. The fact that investing passively doesn’t require additional time makes it one of the best wealth building strategies available.

This model becomes even more important for busy individuals who have very little time to focus on investments.

Here we’ll look at a number of ways that passive investing can build wealth and create financial stability.

Put Your Money to Work for You While You Sleep

Fun fact: This term literally comes from the investing world where certain investments continue to make money for an investor at all hours of the day including overnight while you sleep.

And who wouldn’t want to make money while they sleep?!

For those who have a little more knowledge on the subject, most of them think about real estate investments when envisioning a “money while you sleep” model, but there are so many other avenues that achieve the same result. This same investment effect can also be achieved through investments in businesses that manufacture goods and provide services that while they are operating, growing and profiting provide you with continued growth in your investments as well.

Putting your money to work making more money means your trading assets to grow your assets instead of spending valuable time that can’t be earned back and is the most limited commodity that you have.

Financial Stability Through Diversification

You’ve heard it before and maybe you know a little about it, but what actually is diversification of your investments? Simply put, it’s investing across a number of sectors, assets and models to stabilize your investment portfolio so that it can grow in value under all circumstances.

When most people think of investment diversification, they think of spreading it over things like...

• Stocks
• Exchange-traded funds (ETFs)
• Government bonds
• Mutual funds
• Real estate
• Businesses

These are all great investment vehicles and they all can provide some level of passive wealth building, but depending on “how” you invest in them will determine the amount of passivity involved with that particular investment.

If keeping your time commitment low is a high priority for you then making sure you talk to your investment partner about the level of time needed to commit will be important.

Needless to say, diversification is key to building wealth. A good example is the COVID-19 pandemic, when it hit, many were unprepared, thousands of workers were laid off and financially strained. If those same people had a secondary income stream or cash source, like those created through passive income investing then those same individuals could continue collecting an income or pull from that cash when their main source of income suddenly stopped.

Reduces Stress and Anxiety 

Another huge benefit to passive investing is the reduction in stress and anxiety it will provide from you knowing that you are financially secure.

Below is a list of some of the biggest noted financial stressors for people today…

• Not enough money for retirement
• Not prepared for the cost of a child's college tuition
• Underprepared for a future medical need
• Not having the means to leave behind security for your family after death

Needless to say “life can be stressful” and the last thing you want to be the source of that stress is not having enough money to do the things you want and need to do.

Whether it’s the rise in college tuition and your kids getting closer to joining university or you’re approaching retirement and don’t want to spend an extra 5 to 10 years working, the answer is the same… “Passive investments started now can build the cash needed to do the things you need to live stress free knowing that they are taken care of”.

If you haven’t started investing passively yet then now is the time to start!