Residual Income

Buy a brothel.

By Brewster Rocket, Space Guy on Oct 17, 2009

All of your consideration can be turned into residual income. But the main thing is always to understand the investment product by going for courses, seminars or learn directly from the best guru in that investment product.

By tancy2411 on Oct 19, 2009

First of all, their is no “Best” Strategy. There is strategies depending on the amount of risk your are comfortable with and how much annual income you would like to make. Assuming you want to have a relatively safe and consistent stream of income, this is what I would do:

1. Put all money either in treasury bonds or a bank account. This serves two purposes. First, it “freezes” your money. This is important because it gives you time to think about your future and assuming you are not a financial expert, give you time to learn as much as you can about the different ways you can invest (there is no time limit for this: take as much time as you need, and helps you not be tempted to be an impulsive spender (Cars, diamonds, ect..). Secondly, it allows you to make some interest off your money while you think.

2. Personal Finance Planner. This can be done several ways, but either you find someone that you can trust to help you manage your money, or do it yourself.

3. Diversify. You are going to want to invest. Diversification helps protect you from one of “those” days, where the market crashes, a terrorist attack happens, ect. You should not just invest in one thing (Going back to diversification). Bonds,stocks, real estate, are the three that I feel most comfortable with.

With bonds, you should have a “basket” ( a group of bonds) that are highly rated (No less than an A rating). Certain types of bonds (corporate and municipal) can be tax free. This is what a lot of financial advisors that help the uber wealthy (celebrities, athletes, ect) do for their clients (You can use Merrill Lynch, Charles Swab, Goldman Sachs).

Stocks. This is where it can get interesting. First and foremost. If you do not want to pick your own stocks, and want to have someone else manage your portfolio (mutual funds, hedge funds,ect.), you need to be an educated client. As I said earlier, learn as much as you can about the subject.

Assuming you are picking your own. You should have no more than 5 stocks, that you do at least an hour of homework per stock per week (Jim Cramer). This allows you to get to know your stocks intimately, and not get overloaded. I personally agree with the majority of his advice, so I the essence of saving space, read his books, and draw your own conclusions. Personally, with the way the market has been acting, you should consider some constant dividend paying stocks (shown to beat the market).

Real estate. This has everyone scared out of their mind. This should not be taken lightly, and should be considered after you have a decent annual pay from stocks or bonds, and again have decided if you want to do this by yourself, or have help.. It has become a buyers market.

I personally like the buying apartments route, because my father owes several, and I know how the system works, but everything from single family homes to parking lots work well. The basic idea is that you don’t really want to buy property outright. It strips you of to much capital (money) that could be put to better use. You want to find real estate that will pay for itself over a period of time.

Apartments fit into this description, where you receive monthly rent from tenants. The goal is to have the rent pay for all of your liabilities (insurance, mortgage, house maintenance, paying (if you choose to have someone do this for you) a property manager) and still have money left over for you to to as you please with it (buying more property with it never hurts).

In conclusion I offer some pieces of advice.

1. If you want to get wealthy, keep yourself from getting poor.

2. Knowledge is power. The more you know, the less you can be fooled my thieves wanting to trick you out of your money, and the more control you can have over your money. Learn as much as you can.

3. Be careful with trust. When you have become educated on these investing ideas, you are more knowledgeable about what is going on with your money, and can be a better client. Don’t trust just one person with all your money. Diversify (as in people helping you invest your money). Be consistent in checking up on whoever is managing you money on a regular basis and make them tell you everything that is going on with your money (how they are investing it, what they are investing it in, how much money they are putting into it..) and have them explain anything you do not understand. If a money manager tells you something is not important, or that you don’t need to know it, fire him/her and hire someone else.

4. Use common sense. Simplicity is best. Don’t invest in complicated schemes that you don’t understand. Same goes with stocks, bonds, and real estate. If you can’t understand what it is, how it works, or how it can make you money, don’t invest in it.

5. Don’t get greedy. Pigs get slaughtered.

Good luck and if you need clarification, feel free to email me.

Ps. If you really are investing 1 Mil and do make money, feel fre

By cbi96 on Oct 22, 2009