50 cent- 21 questions

Ultimately, your financial future rests in your ability to create passive streams of investment income. The simplest example is the interest a bank will pay you on a cash deposit. These small, typically single digit sums, depending on what part of the financial cycle we are in, can look small. On a $1000 deposit at 5%, waiting a whole year to make $50 is nothing to throw a party over. However a bank is very safe. There is no such thing as completely safe, if you hand over your money to someone, there will always be some sort of risk, however a bank is a very safe place to put your money and getting it back at the end of the term is not going to be an issue unless there is a major calamity of some sort.

Depositing $2 million into a bank at 5% is a little more useful. The return would be around $100,000 and this amount is passive and use able. After tax, your lifestyle would be quite comfortable. The problem of course for most people is getting that $2 million in the first place.

Financial independence is about freedom from work without a corresponding drop in lifestyle. Anyone can drop out of society and live on welfare, as an example, but your life style would be quite appalling, and that is why we work in a job, to maintain at least a comfortable life style.

There are three known paths for developing a passive income stream of cash.