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There are numerous paths to wealth, but for most of us, the key isn’t our 9-to-5 job, but the income we are able to generate passively.
“Wealthy people tend to live off of passive income, not earned income,” Grant Cardone, the serial entrepreneur and author of “The 10x Rule” told GOBankingRates. “Once your passive income exceeds your earned income and all of your expenses come from your passive income, then you have achieved wealth.”
Here’s a closer look at how you can build passive income, and the passive income stream Cardone has used to build his own personal wealth.
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How To Earn Passive Income
Before you can earn passive income, it’s important to understand what it is. Passive income simply means income that you earn through non-work-related activities.
Some examples of passive income include stock market investments, interest paid on bank accounts, dividends from stocks and bonds, real estate rental income and income from ads on a website you own.
How Cardone Earns Passive Income
When it comes to the various passive income streams, Cardone said he has a strong preference for one above all else.
“I dump all of my money into real estate because it is a real asset that generates monthly passive income,” he said.
Although it does take an initial investment to get started in real estate investing, it’s an investment that typically does pay off over time.
The Importance of Multiple Income Streams
While Cardone is a big proponent of passive income, he acknowledged that you shouldn’t rely solely on passive income to build wealth.
“Everyone should have multiple flows of income: 1) ordinary income, 2) bonus revenue and 3) passive income,” he said.
Cardone also suggested a few ways to increase your current income streams:
Getting prospects for your company
Buying a business that’s already running and producing income
By taking advantage of your ability to create multiple income streams — including passive income — you’ll be able to build wealth.
“Wealth should be a mandatory goal for all people,” Cardone said. “Creating wealth should literally become part of the American pledge.”
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