This article is about active income and passive income of my family. When it comes to earning money, my family has quite stable income these years. Here is what I include in our active income and passive income:
A. Active Income: Full-Time Jobs (Salary). Part-Time Jobs (Wages).
B. Passive Income: Real Estate (Rent). Bank Deposits (Interest). Online Business (Profit). Stocks (Dividends).
While our active income from full-time jobs does not have much room for growth, passive income from our four investments will keep growing. Let’s take a look in details.
Active Income and Passive Income
My wife and I aim to generate both active income from our main full-time jobs as well as passive from various investments.
A. ACTIVE INCOME:
Thanks to lots of career planning done in the last ten years regarding full-time employment, my wife and I have been having quite stable active income these years. And, I would like this to continue in this way until at least 2026.
- Full-time jobs. Me and my wife both have full-time jobs. Our Full-Time Jobs are very stable, so we will continue them without any major changes in order to earn Salary.
- Part-time jobs. I do a few business-related side gigs throughout the year. We also have Part-Time Jobs, smaller gigs from time to time, which pay us Wages.
1. FULL-TIME JOBS
A vast majority of the total income.
Me and my wife are specialists in very narrow disciplines. We currently have full-time jobs that provide our family with steady monthly income and other benefits such as paid holidays and sick leave, public and private health insurance, private K-12 education free of charge, etc. My wife does sales and business development in China of groundbreaking eye tracking technology software for a public limited company from Sweden listed on the stock exchange. I lecture business management at K-12 international schools in China which offer international IB and Cambridge programmes. We have been working full-time in China continuously since 2011 after graduation. My wife holds a BA degree in business management and attended a few executive education programs, mainly in negotiations and sales. I hold a BA degree in business management, MA degree in business communications, and a couple of postgraduate diplomas and certificates in business journalism and teaching business internationally. Because our contracts our confidential, I am not in a position to publish how much each of us earns per month. Lately, I have seen many people on the Internet saying that ‘you should quit your full-time job to follow your passions’. Well, I advise against it – be reasonable and keep balance between reality of daily life and fancy dreams. If you happen to have stable full-time job, I recommend that you continue working as long as possible, so you can receive steady Cash Inflows every month, feel stable and maintain peace of mind for your family. Both me and my wife keep on investing substantial amount of our free-time into our full-time jobs that is why I consider them as an investment.
NOTE: I consider our full-time jobs as being a Cash Cow revenue stream for the family. Our jobs are already found and stable (as we have been doing what we are good at for the last 10 years), and they produce steady cash flow every month. Also, the companies which we work for are quite safe businesses. While a full-time job may not really be considered as Passive Income, selling some of our time for money makes sense in our case.
2. PART-TIME JOBS
A very small part of the total income.
Once or twice a year, I do examine for The International Baccalaureate (IB). I am the IB Examiner in Business Management for the Diploma programme. I also write for several media from time to time about business management and teaching business internationally. My other part-time projects, that I have been involved in for quite a while, include information brokering, business consulting and corporate trainings. My wife also does some freelance work for large multinational businesses mainly in relation to sales and development of technology software for the Chinese market. Unfortunately, I cannot share any details here as these are highly confidential projects. Having some part-time gigs from time to time, in addition to your full-time job, is great. Especially when predictable – happen every year at the same time – so you can get some extra cash from time to time. Same here, trading free-time for money is considered as an investment on my end.
NOTE: I also consider our part-time gigs as being a Cash Cow revenue stream because they are fairly predictable, and we have been doing them for a few years already. You can check more about my specialization in SERVICES.
B. PASSIVE INCOME:
While active income from our full-time jobs and part-time jobs does not have much room for growth in the foreseeable future, our passive income from our four investments will keep growing.
- Rent. From residential real estate.
- Interest. From bank deposits.
- Profit. From online business: advertising, affiliate marketing, selling my own publications including books and eBooks, providing services and sponsorship.
- Dividends. I am working on the list of marketable securities (stocks) that I would like to own.
The following income streams are the only income streams that I consider worth developing at the moment. They create value and increase in price over time, are very safe and relatively stable, generate predictable earnings and can last for a long period of time. Currently, I do not consider any other investments to put my money into. My attitude will most likely not change in the short-term to the medium-term. I simply do not think that there are any other ways of generating substantial amount of revenue that are as good as the following five income streams described in this article.
1. REAL ESTATE
A small part of the total income.
Currently, we are maintaining our investments in residential Real Estate as they bring us stable passive income from Rent. Anyone who invests in rental apartments to generate stable Passive Income can expect annual returns to be somewhat between 3% and 8% annually on average. Once you purchase the apartment, finalize all the paperwork related to buying residential real estate and find stable tenants, renting your apartment to other people can be a great source of stable Passive Income. Having responsible tenants who pay on time is crucial. Remember, the smaller the apartment, the higher the returns. But the larger the apartment, the more stable the tenants. In real estate, three things are important – location, location and location. That apartment is around 10 minutes walking-distance from the beautiful beach. So, at this stage of our lives, we are not into saving money to buy a home anymore, nor we are into paying the mortgage. We have our home already and that apartment was paid for entirely in cash. We are also owners of some other Residential Real Estate (…). We do not own any commercial real estate though.
NOTE: Realistically, you can expect to generate from this Cash Cow around the average 5% in annual returns after all property management fees, sporadic maintenance costs and TAXes.
2. BANK DEPOSITS
A small part of the total income.
I will keep on investing, as planned, in 3-Year Deposits at the bank in China to earn Interest. My target for the bank deposits is to generate RMB100,000 in passive income per year. This requires the investment of RMB2,857,142 at 3.5% annual interest. I may be able to finish building this second passive income source at the end of this year. With bank deposits, I am building one of the income streams for my family that can be completely passive. Certificates of Deposit (CDs) are very safe as they do not risk losing the initial capital, can generate us with predictable Cash Inflows at the exact date in the future, and do not require any mental or physical effort from me. Investing risk-free and stress-free is awesome! I am building something like ‘the CD ladder’ with different deposits maturing each month generating monthly Cash Inflows. Presently, I have been aggressively pumping money into 2-year and 3-year bank deposits since the beginning of 2020. I am mainly considering long-term CDs and renewable upon expiration with fixed rates around 3%-4%. Interest rates in China have been quite high comparing with the rest of the world. Some countries even have negative interest rates! I like investments that give me secure and predictable returns instead of the highest unknown returns. I would collect risk-free 4% or 5% annually rather than 10% annually with 50% risk. In general, you can expect annual returns on average between 2% and 5% from investing in CDs.
NOTE: So, this income stream is my Star passive income source as it takes the biggest part of my free time and already started to generate returns. Once all the bank deposits are set at the end of 2022, they will run pretty much on autopilot renewing automatically without any work from me, therefore bank deposits will change from being a Star to being a Cash Cow.
3. ONLINE BUSINESS
Just starting.
I am developing this website in order to earn Profit. The target for this site is to generate us RMB100,000 as well in passive income per year as mentioned earlier. This website being my own business project was launched in January 2021. I invest both my free time, mental faculty, and money to pay for the server and the domain name every year. I launched Super Business Manager mainly with two reasons in mind. First, to make it as a hub where I can put all of my life experiences together. And second, to make it as an economic engine to realize strategic goals of my family in the long-term perspective – build another Asset that can be another Passive Income source for my family budget. When I get older and quit my full-time job, it will become my part-time job. Then, I can pass it down to my children to play with. Well, I treat this website as a long-term project, so after 10 years of building Super Business Manager, I expect it to bring in between USD$1,000-USD$3,000 per month in Passive Income without much extra work. We will see.
NOTE: As of today, this website remains a Question Mark revenue stream. It will be a consumer of my free time and energy until it can be sufficiently turned into a Star, and then into a Cash Cow.
4. STOCKS
Preparing myself.
Prepare myself properly to slowly enter into the stock market to buy stocks that pay Dividends.
NOTE: As of today, investing on the stock market is my Next to Be revenue streams. Once I start investing, it will immediately turn into a Question Mark revenue stream consuming my attention. I will need to follow up on share prices of individual stocks, dividend yields and Index prices.
Overall, there are three Cash Cows, one Star and one Question Mark in my portfolio of income streams.
Summary of active income and passive income
Thanks to career planning, my wife and I have been having quite stable active income over the last 10 years. I would like this to continue until in the next couple of years without any significant changes. Our investments in money-generating assets also earn us a decent amount of passive income.
Here is the summary of our active income and passive income:
A. Active Income:
1. Full-Time Jobs. Earn Salary for us.
2. Part-Time Jobs. Smaller gigs pay us Wages.
B. Passive Income:
1. Real Estate. Mainly residential Real Estate bringing in stable Rent.
2. Bank Deposits. Mainly long-term 3-Year bank deposits to earn satisfactory Interest.
3. Online Business. This website earns some Profit already.
4. Stocks. Invest in the stock market buying stocks that pay regular and growing Dividends.
The overall strategy is to build four independent passive income sources including Real Estate, Bank Deposits, Online Business and Stocks. Each of these sources is expected to generate RMB100,000 per year (approximately USD$15,000 per year). So, altogether, I am hoping to generate RMB400,000 per year (approximately USD$60,000 per year) to comfortably live off our investments.
One day in the future, we are hoping to live off passive income entirely as the family without touching the invested capital.
