Generating a large amount of passive income is a dream for everyone so that one could be able to reduce the reliance on active income and utilise the time spared in doing something creative.
Generating a large amount of passive income is a dream for everyone so that one could be able to reduce the reliance on active income and utilise the time spared in doing something creative. As time is limited for everyone and nobody can work round the clock or even more to increase active income, to create wealth, passive income is absolutely necessary.
One may earn passive income either through business by engaging more people under him/her or through investments, where the money invested will work for one to earn more money.
While starting a new business requires large amount of capital and also involves lots of risks, for common people, the only way to generate passive income is by employing money in small amounts in running businesses of successful business houses through some investment avenues.
For starting investments, you need to save money from your disposable income after expenditures. More you can curtail your expenditures on luxury and limit it to essentials, more will be your savings and investments to generate meaningful passive income in future to reduce reliance on active income.
However, due to availability of easy loans and credit facilities, many people have developed a habit of buying even unessential luxury items by going beyond their available disposable income either by taking loans or by using credit cards, which not only curtails their ability to save money, but also binds even their future income in paying high-interest EMIs of credit card dues and other loans.
So, to start investing, they not only need to stop buying things on credit, but have to repay high-interest loans and credit card dues first so that monthly cash outgo gets reduced and they may save more to start some meaningful planned investments as soon as possible to facilitate generation of enough passive income that leads to wealth creation.
The priority should be to pay back the loans and dues that attract highest interest and of small amount. The money freed up due to stopping of EMI would next be used to pay off the loan/due with second highest rate of interest and larger loans and so on.
As soon as you are left with low-interest and large loans, like home loan that also provide tax benefits, you may start your investment journey comfortably in a determined manner towards wealth creation.