Mastering the Art of Passive Income in 2024

April 3, 2024

If your goal is to achieve financial independence before the typical retirement age of 60 years old, it is necessary to establish a source of passive income. This article will discuss the most effective passive income investments in today’s economic climate.

What is Passive Income?

Your Fresno financial advisor will discuss will how passive income is highly coveted in personal finance as it allows for ultimate freedom. With enough passive income to support your desired lifestyle, you are truly free to do and say as you please. Unfortunately, many people are unable to live their truth due to a lack of passive income.

The key to generating usable passive income is by building a taxable investment portfolio, including real estate, alternative investments, and more. While contributing to a 401(k), IRA, and Roth IRA are wise decisions, they typically do not generate enough passive income to live on until after the age of 59.5. In order to achieve financial independence, it is important to do so as early as possible, as time is limited.

What are the Challenges?

Here are some optional passive income streams based on risk, return, feasibility, liquidity, activity, and taxes. The journey to financial independence starts with saving.

The most important reason to save money is to have the freedom to do what you want, when you want, without anyone else dictating your choices. Achieving financial freedom is a wonderful feeling. However, unfortunately, there is no formula or chart that provides guidance on how much to save and for how long in order to reach financial independence.

While saving money is crucial, it is equally important to invest your savings wisely. If you are able to max out your 401k or IRA contributions and save an additional 20% or more of your after-tax, after-retirement income, you will see great results. My ultimate recommendation is for everyone to aim to save at least 50% of their after-tax income.

Your taxable retirement portfolio is what will allow you to retire early and live life on your own terms. This portfolio will generate passive retirement income, as you cannot access your 401k or IRA before the age of 59.5 without facing a penalty, unless you use Rule 72(t). However, in general, it is best to leave your tax-advantaged retirement portfolio invested for as long as possible.

Conclusion

Choosing the right mutual funds is a critical step in achieving your financial goals. By understanding different fund types, assessing risk and return, and considering key factors, you can make informed investment decisions. Your financial advisor in Fresno, Ca is committed to helping you remember to conduct thorough research, analyze performance metrics, and diversify your portfolio to optimize returns and manage risk.

We have a strong team of professionals helping ensure you receive all the assistance you need not only in developing your retirement income strategy, but in maintaining it throughout your retirement. Contact us today at 559-230-1648 or visit us today at Soutas Financial to get your retirement plans on track for success!

Investment advisory services offered through Foundations Investment Advisors, LLC, an SEC registered investment adviser. The commentary on this website reflects the personal opinions, viewpoints, and analyses of the author, Soutas Financial, and should not be regarded as a description of advisory services provided by Foundations Investment Advisors, LLC (“Foundations”), or performance returns of any Foundations client. The views reflected in the commentary are subject to change at any time without notice. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security, or any security. Foundations manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Foundations deems reliable any statistical data or information obtained from or prepared by third party sources that is included in any commentary, but in no way guarantees its accuracy or completeness.

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