The Power of Passive Income

Everyone has one thing in common: they want to end their careers richer than they began. That’s all well and good, but few ever secure a mentality of wealth; instead, they spend the majority of their lives chasing it.

So how do you settle into wealth without stressing? The answer lies in passive income.

The Professional Class Mindset

A professional mindset says, “I’m going to make a solid income, one much higher than most people, and that’s going to be the basis of my wealth.” That way of thinking is fine. But once you start adding taxes in, the strategy isn’t as effective.

The same goes for the professional mindset’s retirement tactics. Most people build a nest egg so they can retire. They crack that nest egg open and siphon it off as the years go on, hoping it’ll last till they die.

That’s why longevity is one of the biggest risks to retirement nest eggs. Even if you save $600,000 in your 401k or IRA, there’s a good chance you’ll outlive your money because of inflation and medical bills.

The professional mindset isn’t terrible, but it’s not the most successful, either. Just because it’s a comfortable life doesn’t mean it’s the best choice.

The Leisure Class Mindset

The leisure class mindset is a little different. Instead of relying on earned income from a job, they receive passive income from their owned assets. Once they put in a little groundwork, the property does the work for them. And best of all, they get outrageous tax advantages, too.

When it comes to retirement, the leisure class understands it’s much better to invest in an asset like real estate. That way, they live off the property’s cash flow instead of digging into a slowly dwindling nest egg and getting taxed at 30%.

When you get a leveraged real estate portfolio, you put much less initial money down, and in the end, you get all the gains from the bank. Your tenants pay the homes off for you so you can live off that cash flow. Because of that, you don’t have to touch the asset during retirement, which means you always have extra money tucked away.

If you want to move to the leisure class, you need to change your mindset. Be warned, this comes with a few sacrifices.

You have to have some money tucked away if you’re going to switch to the leisure class, and that sadly won’t happen if you spend your extra money on boats, cars, or luxurious vacations.

Adopt a frugal lifestyle, and within a few years, you’ll have enough in savings to begin the investment process.

In the end, the professional class mindset has some advantages. But if you take the time to educate yourself about real estate, those benefits will multiply. And it’s all because of the power of passive income.