Tuesday, November 16, 2010

How to turn income into wealth

moneypuzzleThe secret to financial independence is to turn your income into wealth. In other words, in order to be wealthy you need to take what you earn and make it work for you instead of you constantly working for money.

This short blog post will give you just an overview of the topic, you need to research and learn more about it. As you research you will continually find different ways of making your money work for you.

Here is how it works. Earned income from your job (whatever is left after your expenses) is saved and then invested into assets which then gives you passive or portfolio income. Passive income is income you get from rental properties or money you earn without having to work for it. Portfolio is the kind of income from earn from paper assets as dividends paid to you.

Once you earn the passive income, you invest it into assets which buy you more assets. As you accumulate enough passive income you then use it to pay for your lifestyle expenses such as big TVs, vacations, etc…

The best part of having passive and portfolio income is that your money is working for you so you don’t have to go to work to earn the money.

Each month your assets pay for your bills and buy you more assets therefore increasing your wealth even further.

That is the key to wealth, use your earned income to buy assets and then income form the assets to buy more assets. Each of your assets function as a stream of income that keeps on generating you more and more wealth.

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