Benefits of Passive Income

Passive income, or money someone receives for existing and owning certain assets, is a beneficial way to accomplish many tasks that lead to a healthier, less stressful, and financially safer life. The main overarching benefit gained from this is it leads to financial security and freedom. With income coming in for just waking up in the morning, it frees any individual up by giving that individual extra money and allowing them to decrease or stop working all together. This extra free time can then be devoted to a hobby or life goal and creating a happier, healthy person. Below are several important benefits from passive income. 

Passive income helps secure a retirement. The purpose of saving for retirement is to be able to stop working altogether and still have enough money to thrive and accomplish remaining life goals. This can be accomplished in many different ways, but the most sustainable is by allowing passive income to cover all of the expenses and never dipping into the principle of the investment. This income can come from many sources including stocks, ETFs, bonds, CDs, and other sources. This passive income can be used without selling the principle assets that make up the retirement account. Therefore allowing for that income to come in year after year.           

Passive income also helps financial security during emergencies. The assets that make up passive income come in very forms of liquidity, or ease of conversion to cash, with some being relatively simple, such as selling stocks or cashing in CDs, while others require the sale of a company or business. The more liquid assets can be sold quickly for cash required within a couple of days to rebalance the accounts that where withdrawn from to deal with the disaster such as a car engine blowing out or a home destroyed. This ability to deal with life’s ups and downs in turn leads to another benefit.

Having a passive income reduces stress. Having some passive income adds flexibility to a person’s life. Passive income overtime could reduce dependency on a day job to pay the bills. This allows for more leisure and vacation time. It could also allow the opportunity to take a lower paying job or switch career fields since the job is not the only source of income going into the household.  Passive income also provides buffers against financial emergencies, which reduces the stress of job insecurity, and the stress of simply just worrying about everything that could go wrong.  The reduced stress created by being financial secure can then lead to a plethora of health benefits ranging from lower blood pressure to a stronger immune system. 

Passive income creates far more benefits then listed above. It provides financial freedom, allows people to escape the working rat race, and is a foundation of the modern economy. With all of these benefits, passive income, or income generated from owning assets, is one of the best ways to supplement or provide an income in the modern world.