Why is passive income so important?

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What is the most valuable commodity in the universe? Something that cannot be recovered or recreated? 

That’s right, we are talking about time. 

Time puts us all on equal ground because no one has more than 24 hours in a day. Once those 24 hours are gone, they are gone forever. 

We exchange our time for money so as to be able to afford both our wants and needs. 

However, since we only have a fixed number of hours each day, does that mean our income has to be limited? 

This is where Passive Income comes in. 

Passive Income makes money for us whether we are asleep or awake. 

It puts our money to work even when we are not and allows us to earn more money outside of the limited timeframe that we have in one day.  

This reminds me of an illustration that was shown to me early in my career.

It shows 2 best friends, Alex and Zack, who were both 25 and made a pact to amass $1million by the time they turn 60.

Their approach however, was different.

Alex started saving $500 a month immediately while Zack, who wanted to impress a girlfriend, opted to purchase a car and was unable to save for the next few years.

They bumped into each other again when they turned 32. 

By then, Alex had invested a total $42,000 over the course of 7 years and was able to let it grow at 10% for the next 29 years to reach his goal without forking out another cent!

On the other hand, Zack, who was reminded of their earlier agreement, had to invest a total of $174,000 for the next 29 years just to catch up!

This is why time and passive income are so crucial when it comes to retirement, and I would recommend everybody to start early.

That’s it from me today. Join me next time as I share my views on speculating excessively for quick gains

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About Me

Hi, my name is
Joshua Hoong
I’m a Chartered Financial Consultant (ChFC) at ACTS Advisory Group, IPP Financial Advisers specialising in comprehensive Retirement Planning, as well as a Million Dollar Round Table (MDRT) member.

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