Complete Guide to Economics
Guide: PASSIVE INCOME AND ACTIVE INCOME: ways to make money
Planning for the future and seeking other forms of income, including a reasonable retirement, not counting solely on the Federal Government's pension plan, is becoming more and more frequent on the agenda of investors. Because of this, many people are confused by the difference between passive and active income.
Of course, this requires quality studies and market knowledge and adequate planning that takes into account your profile, your risk tolerance, objectives, external factors and your availability of money. In addition to active income, which is generally the best known and used by people, there is also passive income, which is a great option for those who want to make this planning decision and protect themselves in the future.
What is Passive Income?
Thinking about making money without dedicating yourself to a job seems like a miracle, but it is not and the concept of passive income shows that well. Passive income is the money you receive without investing much or all of your time. For example, you apply monthly for years and then live off the interest on those investments. It seems like a dream, but it is a reality for many people.
Maybe you still think it’s some magic, so let’s clarify the points:
If you are not a millionaire or heir to a fortune, you will naturally find yourself in need of work to make your income. This income generated by your work (salary) is the payment for the effort and dedicated hours that will sustain your choices over the years. The point here is to show that you can make some choices that can make income generation much easier without the physical effort involved, at least not in your total time. This path may require some effort, patience and discretion for a long time, but in the long run it is possible to see the results of comfort and safety that you have always wanted.
Let's get out of the concept a bit and talk about examples: Imagine that an artist, when creating a work (literary or audiovisual) will receive gains / profits generated at the time of launch, but especially, that artist will continue to receive profits, even after many years of creation, referring to the rights of that “product”. This is a clear example of passive income, it is clear that there is no guarantee in this example that the artist will make a big profit from his creation because it depends on interest and other factors. Bringing passive income to the majority of the population is generated through investments, rents, registered patents, among others.
Active Income
Unlike passive income, active income is generated from work. You dedicate yourself a number of hours and the need for regular presence for a certain action and in return you earn a remuneration. In general, active income is generated by salaries, commissions, fees, additions, labor rights and everything related to the effort of an activity, these are the most well-known fixed income assets and generated by people in general.
Within the scope of active income, there is a doubt that permeates a large part of people who seek this subject: is it dangerous to live only on active income? Throughout life, a large part of the income generated by a person is classified as active income, but depending solely on it can be dangerous for several reasons. The first is a question of the regularity that you require in the constancy of work, if you are unable to attend for any reason it may mean immediate losses in your income, if we are talking about an independent professional, these losses can be multiplied sometimes. In this way, passive income can be a guarantee of security and a complement to earnings from active income.
Examples of passive income.
We have already talked about active income generators and in terms of passive income we can mention several examples. Among them, the most common and best assets that generate passive income are:
Rentals: A perfect example of passive income is when you acquire a property and when you rent it to third parties you have values generated by that use. This option is widely used for those looking to live on passive income.
Profit: When undertaking, the interested party invests a great effort (time and money) in its creation and development of the company. Then, the investor can leave the business to a manager and make profits a passive income.
Copyright: As already mentioned as an example, this is also a classic form of passive income, as it continues to generate dividends to the creator of a work even though he is no longer using his efforts for creation.
Investments: Assets variable income it is another good option to mount your passive income. Usually the initial key in this case is action, this is the most common and available way to generate income. With the different applications in the financial universe, you can dedicate yourself to obtain interesting earnings. If you ask yourself how to invest in these assets, the answer is: open an account with a broker of your choice, analyze your investor profile and research the market you want to enter to choose the best options and maximize your earnings.
Generate passive income with long-term assets
If your profile is more conservative and you prefer to insure yourself on assets that have daily liquidity and that you already know your future earnings upon application, also known as fixed income assets, you can seek a long-term option by exploring post-fixed or pre-fixed. Thus, changes in interest rates or any unforeseen scenario in the economy will not hinder your capital. Some examples of financial assets that can generate long-term income are:
Direct Treasury: It is considered a very safe investment for a simple reason: the National Treasury itself is the guarantor of the securities, in other words, the Federal Government. Treasury bills can be classified into assets generated from post-fixed or fixed income. The first may be a good choice for a scenario of high interest rates, while the second is indicated for scenarios of low interest rates. The minimum price to buy this asset is R $ 30,00.
CBD: Bank Deposit Certificate is one of the best known fixed income investments. In the case of the CDB, who defines the fees is the institution you chose to purchase the security. In the CDB there is also the option of post-fixed, pre-fixed and hybrid (a mixture of the two). The yield is linked to the CDI (Interbank Deposit Certificate), a rate that accompanies the Selic fluctuation.
Investment Funds: This option has varied returns and are more risky compared to the first two mentioned. Its main characteristic is to gather applications from different people and the manager, respecting the fund's objectives, seeks a higher remuneration for the quotaholders when investing in financial assets according to the fund's characteristics and strategies.
Private Pension Plans: It is closely linked to the concept of passive income. His plan options have gained a great boost in recent years due to the profitability and security ideal he offers to the client, especially those who are thinking about the long term (retirement).
Empiricus: Credibility and examples of income-generating assets.
This point is very important to be used in order to be used as an example to alert people looking for companies to build their income generating liabilities. Until 2019 Empirius was considered reliable by the vast majority of people, however, after Betina's famous and disastrous video, claiming to have made R $ 1 million from R $ 1500 in a short time the company's image was eroded. In general Empiricus has a very aggressive marketing strategy and is often considered misleading advertising. Empiricus is not a financial broker, it sells (and expensive) reports and "manuals" to multiply assets (business arguments). Especially for beginners, it is not a good option to follow the path proposed by company policy. Another point that brings a lot of insecurity in relation to
this is the constant clashes that she and the CVM (Securities Council and automatic subscription renewal. Naturally Empiricus offers a portfolio of income-generating assets (such as stocks, government bonds and CDBs), but they are always loaded with false income promises. It is important to keep an eye on this so as not to fall into these pitfalls that, unfortunately, exist in the financial market and that can compromise your assets, in addition to not giving you what you wanted in the beginning: comfort and security.
Is Hinode a Financial Pyramid?
Before going into the subject it is important to talk about the concept of financial pyramids. A pyramid occurs when the main source of income for a business is the entry of new people by paying “entrance fees”. It is generally known by the term “mutual aid” within the market. This system starts to go wrong when there are no more people to enter the pyramid. Hinode is a direct sales company and its products are sold by independent distributors, who maintain a relationship with the company without the need for a fixed establishment, as is done by other consultants and other companies (Avon, Jequiti).
In a way, pyramids work as follows: a consultant enters the scheme by paying R $ 50,00 and soon afterwards gets 10 other members who also pay R $ 50,00 each. The consultant who nominated these new members earns half the amount (R $ 250), 1/3 is divided for whoever nominated that consultant and 1/6 goes to the person above who nominated the consultant. So, already aware of the basic pyramid concept, it is possible to notice some similarity and define this activity as one, right ?! However, there is a detail in the company's marketing that does not characterize it as a pyramid: when the member joins it, it is necessary to buy a kit of products that will be sold later. There are no membership fees, consulting pays only for products and tries to resell them later to customers, this being your main activity, so Hinode's strategy is known as Multilevel Marketing which is permitted and regulated by law.
Linking our central passive income theme with income generating activities, Hinode's proposal is:
Conclusion
If you are thinking of passive income, it is because you have seen that it is not recommended to rely only on active income forever or on government aid, such as social security. The ideal is to start planning your personal finances as soon as possible, to guarantee a monthly percentage to save and invest. Among the various options, both passive and active income can be beneficial to the investor.
Invest in long-term fixed income assets, as recommended, in pre- and post-fixed securities with daily liquidity, but also see the option to diversify by placing stocks and investment funds in the portfolio and maximizing earnings. To choose these applications remember to research the market and look for a solid and secure financial institution that does not promise you unrealistic returns and also has activities that help generate more wealth.
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