What do you mean when you say “property will give you a passive income” or residual income?

Income is money you earn from an investment you have made or work that you have done.

Active income is money that you earn on a one to one basis, in other words, one unit of work earns one unit of money. So, one month of employment earns you one month’s salary. The next month you start again and there is no end in sight because you always start each new payment cycle at R0. This makes you very dependent on your job – you are always just one notice period (a month usually) away from trouble should that job cease. No employee is so indispensable as to be immune from this insecurity.

Passive income is the term used when the money keeps coming in even after you have stopped working for it. One unit of work leads to many units of payment – possibly infinite. Put differently, it is when you work once but continue to get paid over and over again for work you’re no longer doing.

Passive income brings financial freedom with real financial security, because you are not dependent on a boss and a job that may at any time decide they can do without you.

What is financial independence?

Financial independence means freedom from the need to have to work.

It can occur in varying degrees from partial independence (when you can take a few hours off work) to complete financial freedom (where you no longer need to work at all).

The way to attain financial independence is through acquiring passive income.

Passive income is money that flows into your pocket and is largely independent of the number of hours worked.

It needs to be emphasized that there is really no such thing as complete passive income because every Rand of passive income must flow from some kind of work or effort in the first place.

For example, while rental income might seem to be passive income, the task of finding and investing in property, together with managing the tenant, filling in tax returns etc. is anything but passive! However, Wealth Creators are prepared to put in the time and energy because it still adds up to only a fraction of normal working hours, and gives real financial security.

The word 'passive' really means avoiding being paid by the hour.

Instead you seek to do some work today and leverage off it tomorrow.
This leverage is in the form of receiving multiple payments without the need to work again.

For example, if you invest in a property with a positive cash flow, then you hope that the work involved in finding and acquiring the property will create a positive income stream that will last until you sell the property.

Work now for a lifetime of return later – that’s what it’s all about!