This is probably one of the most important newsletters we are preparing.

This letter will change the way you approach investing in the stock market.

I urge you to come back and read this letter once a month. Furthermore you should pass this letter on to friends and relatives (our web site has the electronic version).

It is simple but powerful.

I want you to take a step back and just think about this question; Why do you invest for retirement?

The answer that you have been bombarded with is something like this;

One must invest and have there money grow so that once they retire they can live off the income from no risk interest paying investments. Your planner probably came up with a fancy work sheet and questionnaire and at the end they tell you based on X% interest you will need $Y when you retire so that you can have an income of $Z per month when you retire. This income is called passive income. If you think about it, that is what we are all in the end trying to achieve.

Passive income is when you work once but continues to get paid over and over again from work you’re no longer doing. Passive income, in most cases is income earned from real estate investments or true businesses owned and operated independent of your personal involvement. Investing in or creating true assets that provide passive income for you is your ticket to wealth. To gain financial freedom you need this cash flow from Passive Income. So far so good.

This is the thought pattern I went through back in early 2001. However, this seemed impossible. The market had crashed. I had no Idea how I could save enough from my earned income to eventually build up a nest egg. So, like everyone else we keep chasing the big score on a real estate deals, stock market or even a lottery.

There is no such thing as something for nothing. That is why most of will fail at achieving the big score.

To put it simply, passive income is income that continues to generate money for you even when you have stopped working. Passive Income is financial freedom with real financial security.

Financial freedom does not have to rely on a paycheck for your standard of living. If you are sick, or want to take a vacation, you will still have money coming to you from your investments. This is Passive Income. Passive Income is Freedom. Passive Income is Security.

The earlier you start planning and building your passive income, the earlier you can achieve being financially free. It takes time and effort, especially in the beginning, just like building anything worthwhile does. You build a foundation and gradually build up your passive income from there.

There are many types of passive income such as

· Private business income

· Real estate income

· Residuals on mutual fund sales (This is what financial planners, brokers and the entire financial industry runs on)

· Welfare Income

· Unemployment Insurance Income

· Workers Compensation Income

· Disability Income

· Government Pension Income

· Employer Pension Income

· Registered retirement plan income

· Interest Income

· Royalty Income

· Dividend Income

When you look at the list above you can see why government social programs are so popular. By the way if you plan your future around passive income from Government you will become bitter and disappointed. By the time you figured out that you have been fleeced it will be too late. Why? Because the passive income they give you will be less in real purchasing power than you think. The problem is that it is so gradual that the unsuspecting public does not see it happen.

How can you build your Passive Income?

The cornerstone of all wealth understands the difference between assets and liabilities. The difference is this: Assets put money IN your pocket. Liabilities take money OUT of your pocket.

A liability is something that takes money out of your pocket.” (Monthly and continuously) Most people think their home, car, and other possessions are assets. But, the truth is that in most cases those things take money out of your pocket. They cost you money. They don’t make you money. Those things are liabilities. They take money OUT of your pocket each month.

An asset is something that puts money in your pocket monthly and continuously. When you have more money coming IN from real assets than you have going OUT to pay for liabilities, you will be financially free. This is really all you need to know. If you want to be rich, simply spend your life buying assets. If you want to be poor or middle class, spend your life buying liabilities. It’s not knowing the difference that causes most of the financial struggle in the real world.

Most people use their money to buy liabilities whereas the rich use their money to buy assets that pay for their liabilities.

Passive income is when you work once but continues to get paid over and over again from work you’re no longer doing. Passive income, in most cases is income earned from real estate investments or true businesses owned and operated independent of your personal involvement. Investing in or creating true assets that provide passive income for you is your ticket to wealth. To gain financial freedom you need this cash flow from Passive Income.

But note the definition of a business!

Owning a business that provides passive income means the business works without you having to be there. You have a business if you can leave it for a year or more and then return to find it more profitable and running better than when you left. But if your business would falter without you then it’s more like a ‘job’ than a business. This is exactly what Canadian Income Trusts are. When you buy an income trust you get all the benefits (and risks) of owning the business directly without you having to work in the business itself. It’s that simple. Wall Street does not (or doesn’t want to) understand this. This is what Warren Buffet does. He owns a bunch of businesses. He has other people running the businesses. At the end of the year he takes all the cash they generated. He only gives it back if they can give him a good reason too. If not he does something else with the cash.

Everyone has income, but not everyone maximizes the use of that income. Of the four income patterns, the one to shoot for is that of the rich. And one myth you can dispose of is “It takes money to make money.” Regardless of your income you can begin to acquire assets that return an income every year — passive income that comes in, rain or shine, whether you work or not. This is money working for you, not you working for money.

Unlike passive income, earned income or linear income requires that you work for your money. You are basically exchanging your time and effort for money. You get paid when you work. The moment you stop working, you don’t get paid.

The rich incorporate their assets and are able to: Earn, Spend and Pay Taxes on what is left.

The poor and middle class work at a job and must: Earn, Pay Taxes and then Spend what is left.

Only 4% will actually achieve freedom of choice or financial freedom, and a mere one per cent actually achieve his dream for true wealth. This means that only 5% of people are able to provide for themselves when they retire. Are you currently positioned to become one of the 5%?

The main reason people struggle financially is because they have spent years in school but learned nothing about money. The result is that people learn to work for money but never learn to have money work for them. The rich don’t work for money; they have their money work for them.

We have given you a lot to think about. Remember, we have nothing to sell you here. Instead of listening to the media and all the experts just think about this on your own. Your gut will tell you that we are right.

Remember, as Warren Buffet said if you are a poker game and you cannot figure out who is the patsy then guess what…your the patsy.

  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • Reddit
  • Twitter
  • StumbleUpon
  • email