Passive Income Ideas

Is climbing the career ladder the only way to achieve financial freedom? Have you observed persons doing this until either they become the wrong person for the job or they find themselves in a position that they don’t like?

I was raised in a system that encourages to get good grades at schools, to get a good job and to get raises or promotions in order to make more money so you can spend on bigger or expensive things. Getting a better laptop, a better phone, a better car, a better house etc. this loop is a vicious cycle that repeats over and over and the true expense is the most important resource of your life, that nobody can give it back to you: your time. Robert Kiyosaki explains this concept really well in his book “Rich Dad, Poor Dad”.

I think this book is a good place to start your financial education, but you will need to read a lot more and to do tons of practical tasks to create your first assets. Before getting into the details, let’s clarify what an asset by paraphrasing the example given in the book:

“Everything that puts money in your pocket is an asset. Everything that takes money out of your pocket is a liability”

The second element that is critical for your financial freedom is passive income. Let’s define it also, this time using Wikipedia: “Passive income is income resulting from cash flow received on a regular basis, requiring minimal to no effort by the recipient to maintain it.

With these two elements, we are able to go back to the title of this post and define the mission: “Getting out of the rat race” which translates to:

“Your monthly passive income is higher than your monthly expenses”

We can start by taking a look at our past expenses. Most of us have a rent or mortgage to pay, different kinds of loans, insurances and of course taxes and fees. Let’s imagine that all of our expenses would sum up to 100 euros (I’d wish :)). If we manage to make 101 euros out of passive income then we accomplished our mission.

As I started this year on this journey, my first dilemma was what kind of passive income activities I can do here in Germany, since I am not a native. To my surprise, there are quite a lot of options and great resources for each of them. Here are a couple that  triggered my interest:

Stocks and Dividends

I started looking at how I can buy stocks and in January I opened a “Depo”. For my first try, I choose Apple since it is a very renown company and the chances that it goes bankrupt in the next months are quite minimal. Initially, I had no knowledge of different stock types or what I should look for, and fill this gap I completed the course on udemy: “Investing in stocks” by Steve Ballinger.

The process was easier than I expected and I proceded with buying income stocks and a couple of growth stocks. Dividends are a quite nice example of passive income and there is a couple of famous company that provided investors a constant revenue stream over many years. When looking daily at the stock price the market has a completely different feeling than on long-term investing. Therefore, I felt the most comfortable with knowing that if I buy a stock I will keep it at least one year and with this mindset the volatility of the market had not such a big impact on me.

After my initial investment, I start receiving around 3 euros per month in dividends. I know it is not much, but it is the first amount of passive income.

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