My 5 Current and 3 Future Passive Income Streams

investment

Recently, a reader reached out to share how his taxes were affected by his various passive income streams. It turns out, to no surprise, that the taxes on those income sources are much lower than those levied on his earned income.

Although my passive income streams have grown steadily over the years, I haven’t put too much thought into their role in either my taxes or my standard of living until recently.

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My active earned income dropped dramatically. Now that I don’t work a W-2 job, my cash flow situation and taxation look a lot different than they did before, and passive income sources play a more prominent role in my life.

What Changed?

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My 5 Current and 3 Future Passive Income Streams

#1 Interest

Banks are not paying much in interest, but there are several online banks with a solid reputation paying 1% interest or more. I am not a huge fan of sitting on cash, but for various reasons, I’ve been doing a lot of it lately. I keep an emergency fund. When you don’t have a steady paycheck, it’s good to have readily available money. The pandemic has highlighted the importance of having that fallback to rely on.

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#2 Dividends

I’ve never been a big fan of dividends. When I wrote about the only individual stock I held, I highlighted the fact that it pays no dividend and why that’s a good thing.  I’ve demonstrated how selling shares of a company is better than receiving a dividend from it.

If I were to count each investment or even each type of investment as a different source of passive income, I would have way more than four. I’ve chosen to lump them together into the same category, and I’ll briefly review what these are.

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Real Estate Investments

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