I am a firm believer in developing a passive income, the majority of one’s earnings are derived through the sale of their labour through employment, especially in the early years before building new income streams.

This could also involve a business, a business is normally engaged in a transaction either goods or services. This could be a combination of the both, the business may design, manufacture and sell a product along with installation, on-going maintenance or repairs. Regardless of employment or business orientation, these goods and services possess a direct labour content. The development of a passive income is usually derived from investment such as share dividends, property ownership [rent], a financial product, interest from a term deposit, bonds or derivatives.

The passive portion involves not requiring a labour direct input after the initial purchase. Basically, one earns a return whilst they sleep or engage in fun activities. My preference is building a buffer during the early years and enjoying the income in the future. During their working life, the reinvest the income to compound their returns and can draw earnings down on this should they be out of work, injured or just seeking a break. Given enough time, this becomes their retirement income, now individuals are covered throughout their lives.