in 1987 there were just 140 billionaires
in the world worth a combined net worth
of
295 billion dollars that's a lot of
money however things have changed
dramatically since then there have never
been more billionaires or even
millionaires as today there are now 2755
official billionaires worth a combined
net worth of
13.1 trillion dollars if these people
came together they would become the
world's third largest economy right
behind china's 14 trillion dollar gdp it
is mind-blowing that less than 3 000
people have a net worth of the most
populated country on earth even
countries like japan germany or the
united kingdom fall far behind never in
history have we seen anything like this
of course there are reasons why this has
happened largely due to the fact that
the world didn't start any major
conflicts such as the first world war or
the second and has embraced capitalism
even those countries that were found on
the basis of communism have given up the
idea of socialism and largely based
their economy on the free market
but not everyone could benefit from this
revolution only those who understood how
this system works it doesn't really
matter where you are in a free economy
like the us or a partly socialist place
like china the rules of the games are
the same it is either you who is going
to run behind money or you will take
advantage out of the system and will let
the money run behind you yes capitalism
has its share of problems but you can
use these problems to your advantage
perhaps the greatest invention of
capitalism is passive income the income
you earn without directly trading your
time for money it's when you put the
work up front and let it generate income
while you're busy with other things but
most people fail to create even one
source of passive income because most
people don't understand how passive
income works but don't worry because we
are going to fix that today we are going
to check at 5 rules of passive income
understanding the rules of passive
income will make it much easier for you
to create your sources of passive income
so if you're ready give this video a
thumbs up and let's dive in
number one passive income isn't
completely passive what most people
don't understand about passive income is
that there is nothing called as
something entirely passive every passive
income source requires some level of
management some very little like
dividend investing since companies with
a long reputation for paying dividends
are stable and have a very low risk of
going bankrupt they have established
themselves more like a monopoly and it's
almost impossible to compete with them
they have the best products most
efficient supply chains and enough money
to crush anyone some of them have been
increasing their dividends for four
decades in a row but this type of
passive income requires a lot of capital
two or three percent yield is very
little compared to what you can get
elsewhere so to create a substantial
source of passive income you will have
to throw a huge sum of money other
sources of income like a youtube channel
requires a lot of work even if you have
successfully created 100 videos that
continuously generate income the
algorithm will slow down your channel if
you stop uploading take real estate for
example everyone's favorite source of
income from outside it seems like you
buy the property easily rent it out and
let your agent handle everything else
all that you will do is receive that
rental paycheck but it doesn't work like
that first of all finding a tenant is
not easy as it might appear but you will
still be paying for maintenance secondly
taking care of a property is not cheap
things get old and break down unexpected
problems that are outside your control
always come up or your tenants might
come across an emergency and you have to
find a new tenants again and if you have
taken a mortgage to buy that property
the bank doesn't really care whether you
rent that place or not you have to keep
making your mortgage payments if you
don't want the bank to sell your
property to cover your loan so before
creating any source of income always
keep in mind that in the beginning it is
going to be like that it is going to be
a part-time job maybe over a long period
you might learn how to automate most of
the things but it will always require
your attention
number two you don't need a lot of money
to start
another misconception that most people
have is that if you want to create
passive income you need a lot of money
but that's only true for some sources of
income in the age of internet there are
multiple sources of passive income that
you can create with very little income
this channel for example was created for
just a hundred dollars i'm not
exaggerating just a little disclaimer
this channel has never meant to become a
source of income i started as a hobby to
share with the world my ideas and
experiences but it seems like
advertisers are throwing a lot of money
into online ads if you're bad at
creating videos you can start with blog
posts it's estimated that google
processed approximately 63 000 search
queries every second translating to 5.6
billion searches per day and
approximately 2 trillion global searches
per year start a blog join adsense keep
writing blogs that people search for
there are multiple resources on the
internet that have made the process of
creating a website easy simple and fast
and they cost five to ten dollars at
best five dollars a month is sixty
dollars a year the rest is your efforts
don't simply write blog posts but
optimize them for the search engines so
that they appear on the front page of
google but how do you do that
well you have to figure that out yes it
is going to take some time but it works
if you want more passive income ideas
then check out our video on 22 passive
income ideas the link is going to be in
the description
number three never depends on your
passive income this might sound
controversial but it's a lesson i have
learned the hard way just because your
passive income source is making a lot of
money today doesn't mean it's going to
be like that forever google is driving a
lot of traffic to your website but
tomorrow google might change its
algorithm and your website will no
longer make that much money so any
revenue you receive from your blog or
channel or even real estate should be
more of an extra income you reinvest
back into that business or in a more
stable assets such as index funds or at
least part of it passive income sources
are often outside your control you can't
force your tenants to stay you can't
force youtube to promote your channel
and you can ask jeff bases to share
amazon's algorithm with you so retiring
after you have successfully created a
passive income source is a bad idea yeah
it is going to give you the freedom to
pursue other things but you always have
to keep an open mind and be ready to
lose it all
number four if your income isn't above
inflation then you're losing money which
people often don't pay attention is roi
versus inflation rate understanding
these two concepts is extremely
important otherwise you might be losing
money without realizing that even though
you might be thinking that you're making
money take an example of savings
accounts or fixed deposits well it's a
pretty safe investment the roi is below
one percent while inflation is above two
percent and according to some reports it
might be even three percent while you're
making some passive income we're
actually down by two percent government
bonds are another example since interest
rates are low the yield on government
bonds is also pretty low as of the time
of this script it is 1.35
for 10-year bonds that's half the rate
of inflation the same applies to
dividends it is not only important to
create a solid source of passive income
it should be above inflation by a few
percent for it to make sense otherwise
why risk your money why waste that much
time but if you're starting something
that doesn't requires any capital then
you should not worry about it
number 5
more doesn't necessarily mean better
youtube is filled by people who claim to
have created 5 10 or 20 sources of
passive income
some statistics say that the average
millionaire has at least seven sources
of income so people strive to create as
many sources of income as possible in my
humble experience that is a bad idea
more doesn't necessarily mean better
each extra source of income means you
have to dedicate more time to it more
resources and more stress while when
you're expanding your existing source of
income it requires little extra time so
don't try to create more and focus on a
few and master them there is something
called an opportunity cost the potential
benefits an individual investor or a
business misses out when choosing one
alternative over the other the time and
money you're going to spend on each
extra source of income is the money and
time you could have spent on your first
source of income and expanded further i
know that sounds cool to have 12 sources
of income but remember the goal isn't to
look rich but be rich at the end of the
day your time is your most important
resource if you spend it all on
different sources of income without
having the time to pursue things that
are important to you then what's the
point besides the law of compound
interest also works here as well the
more charm you spend mastering one
source of income the easier it will get
to grow it so focus on only one source
until you master it
anyways it is time to go and get your
two free stocks from weibull if you use
the link in the description or check out
my special course and skillshare that
will teach you how to invest in the
stock market like those rich people and
most importantly give this video a
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thanks for watching and until next time