What exactly is “passive income”?
It is income that you are receiving whilst you sleep! Typically consisting of interest, trust distributions, dividends, rents, royalties and the like. It requires minimal labour to earn and maintain.
How do you achieve “passive income”?
Nothing comes easy and there are no real “Get Rich Quick” schemes. To start receiving passive income, there can be a great deal of effort, at the initial stage, to establish the strategy/platform. The hard yards must be initially done if you are to achieve a good level of consistent passive income ie first research what you want to get involved with. You might not succeed at first but you need to persevere if you believe in what you are investing.
What is the best thing to do with passive income?
- Pay off/reduce bad and/or non-deductible debt eg private credit cards and home mortgage.
- Purchase more public company shares to take advantage of more franking credits to further reduce your net tax liability or increase your net refund.
- Save up for a deposit to purchase a home or investment property.
- Go on a well-deserved holiday
- Contribute more into super as a concessional contribution for an additional tax deduction.
- Pursue your passion eg music, art, painting, etc etc