…is passive income. The standard of living one sustains through time and energy is admirable, but the standard of living that can be sustained through money arriving passively is the true measure of wealth. Many resist this change of perspective. When a paycheck supports a luxury sedan and a $600,000 home, it can be hard to admit that one’s true wealth only supports a daily cup of coffee (time to log into your retirement plan and check that quarterly dividend!)
But for those that alter their mindset, how refreshing it can be! First, that cup of coffee…no work, paycheck, or feeling like a cog in the system! A few more dividend-paying securities and now the cell-phone bill is covered. Tack on a rental property and there’s the utilities.
The importance of basing standard-of-living on a passive income stream reminds me of a letter in the May 2014 issue of Money magazine. 1)Page 9 “Sinking Fortunes” The reader was criticizing the March 2014 cover showing a retired couple on a yacht. He astutely points out that, in reality, retirees who buy a boat end up viewing it as a money pit. Certainly the case when its expenses whittle away at the retirement pot. But a boat is an entirely different experience for those whose net worth generates the passive income to support it. His advice to “have a large pot of money aside if you want to own a boat in retirement” isn’t applicable if the money keeps rolling in!
A new pair of shoes or another share of Colgate-Palmolive? Think about…
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