With a little thought most people would like to achieve financial freedom, but what exactly does the phrase mean? What does it convey to you? We often hear of an individual who has won the lottery or the pools.
A little investigation will show that most people who are lucky enough to win a large amount in excess of a million Rands have enjoyed the benefits for a few months, sometimes even a few years, only to end up broke and with no job – since their job was the first thing that they gave up.
Financial freedom is not gained by a sudden large windfall, though a large windfall followed up by some wise investment can put one on the road to it.
True financial freedom comes from having a passive income – an income that you don’t have to go out to work for; an income that gives you the freedom to do all of those things that you’ve always wanted to do, but never had the time or the money.
There are a number of different sources of passive income, including:
- Earnings from a business that does not require direct involvement by the owner
- Rent from property investment
- Royalties from intellectual property (music, literary works, patents etc.)
- Earnings from internet advertisements such as Adsense
- Residual income - regular repeated income earned by a sales people such as a life insurance broker
- Dividends and interest from securities (or portfolio income)
- Pensions Of all of these, perhaps the most sound and sure method is property investment, sometimes known as buy to let income
The current financial climate has meant that there are many cheap cash positive properties available all over the world.
Contrary to what you might think, it is an excellent time and opportunity to get into the property investment market. Many banks have long lists of properties that have been foreclosed and would like nothing better than to get them off their hands.
Cash positive properties can be picked up for a fraction of their true value and rented out so as to give a regular passive income. Many people make the mistake, when purchasing property with buy to let in mind of appraising the property as though they themselves were going to be the occupier.
It should be looked at purely from the perspective of what it is – a property that will be rented out. The prospective purchase price should be compared with what can be charged as a rental. When you purchase property for rental not only should the rental (which increases annually) cover the monthly mortgage repayment, but the property should also increase in value annually, so the correct property will be an unbeatable investment.