Jun
6
2007

Be a Passive Entrepreneur

Passive income is the income you earn from your savings. This is interest earned, rental from properties, commissions from your downlines in case of legitimate networking. The income will come to you whether you work or not. Passive income is the key to your lifetime wealth. The one who earns Passive Income is a Passive Entrepreneur.

Active income is the income you earn by working. This is your salary, overtime, commissions or sideline. This is the income that you do not get unless you actually work. No work, no pay.

Why do I always encourage everyone to be a Passive Entrepreneur. It is because you can only be an active entrepreneur for a part of your life. An active entrepreneur has to work in order to earn. Unfortunately, everyone will grow old and cannot work forever. It is very hard to realize this when you are young. The young always feel that they have so much time. Then all of a sudden, time just passed and they are nearing retirement.

However, you can be a passive entrepreneur all your life. An passive entrepreneur earns through the proper management of his assets and investment. The beauty of it is that you can be a passive entrepreneur at the same time that you are an active entrepreneur.

Passive Entrepreneurship is the key to lifetime financial security. Humihina ang kakayahang magtrabaho sa pagtanda. Kaya kinakailangang mayroon ka ng laging source of income. Kailangan mong maging isang passive entrepreneur at kumita mula sa na-invest mo. Sa ganitong paraan mo masusuportahan ang iyong napiling lifestyle kapag retired ka na.

But it should be clear that you cannot be a Passive Entrepreneur unless you have money saved in the first place. Your money could have come from inheritance or winning the lotto or sweepstakes but most of the time, your money would be hard-earned as an Active Entrepreneur. This is why you need to save methodically to have money to invest while you are still young and earning active income.

When you put up a business, the salary that you earn because of you are actually working for and are involved in the business, is your Active Income. If your business makes some profit after paying for all expenses including your salary, then that profit can be distributed to the owners as dividends. If you are one of the owners, the dividends that you receive would be Passive Income. Of course, if your business loses money, you might have received one Active Income for your work but you would definitely not have the Passive Income. In addition, your Investment Fund might have lessened so that you future Passive Income will be impaired.

Therefore, it is not just going into any business or investment to earn Passive Income. You also have to be very careful of the business or investment you choose.

Francisco J. Colayco is an entrepreneur, a venture developer and financial advisor. He is the Chairman of the Colayco Foundation for Education and the Author of Four Publications, Three of which are Bestsellers: “Wealth Within Your Reach” (Awarded 2004 National Book of the Year, Business and Economics by The Manila Critics Circle), “Making Your Money Work” (Nominated 2005 National Book of the Year, Business and Economics by The Manila Critics Circle), “Pera Palaguin Workbook” and just off the press, “Money For Kids.

He is available for talks, seminars, and workshops. Learn more about his advocacy at www.colaycofoundation.com or email info@colaycofoundation.com.

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