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In 1960, Congress passed a law creating Real Estate Investment Trusts (REITs), big portfolios of income-producing real estate investments. A REIT is required by law to distribute 90% of its earnings to investors every year. Today, an estimated 70 million Americans invest in REITs.
Due to their special tax status, REITs should follow rigorous compliance standards and therefore carry a certain excellent standard for both the vehicles investment strategy and the property experience of the managing team.
What's more, publicly-traded REITs tend to be connected to wider market volatility, meaning that the share value may fluctuate depending on how the stock market is doing, regardless of whether or not anything has changed with the underlying properties owned by the REIT. .
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On the other hand, public non-traded REITs have become more popular, due to their potential double dividends. But, public non-traded REITs have recently come under heavy scrutiny due to the large upfront fees often charged to investorsand questionable practices around the disclosure of these fees.
In the last couple of decades, pioneering new programs like Fundrise have emerged. Fundrise intends to offer you the benefits of personal market accessibility, but with reduced prices that potentially help investors earn better returns. Leveraging technology and new federal regulations, Fundrise offers investors the first ever diversified commercial property investment portfolio accessible right online to anyone in the United States, no matter their net worth.
Irrespective of which investment plan you decide to pursue to earn residual income, an essential part of the investment process is careful due diligence of each opportunity as it arises and working hard to remove any pre-existing biases. Take time to determine which strategy makes the most sense for you, and carefully compute your residual income goals.
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When looking at income in the long run, shouldnt we be looking at what's going to over here happen and determine if that is what we want life to seem like We need to work backward from that point until we reach now, viewing our decisions with money as the pre-cursor of tomorrow The reason we even speak about residual income is the goal of retirement or what we like to call time liberty. .
When you retire, your Social Security income and pensions, if they're left, and dividends and interest off of your investments and perhaps an income annuity will fulfill your needs and hopefully exceed them, and that means that you can walk away from your day job.
Dividends and interest are a form of residual income. Social Security certainly is, that the government takes money from us every paycheck and we get a little piece back when we retire (even though it's taxed in retirement again).
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So, if the objective is to have residual income when we retire, which appears based on Social Security rules to only be possible in our 60s, and the government has mandated penalties before taking our money before 59.5, wouldnt it be prudent to start investing in sources of residual income now that maybe dont have an age limit into our 60s What guarantee do we have that we'll make it that long.
Furthermore, what control do we really have over Social Security and our 401Ks Looking at the origins of residual income, lets take a look at other high tech places we can diversify. Who knows, maybe you could start generating residual income now and step into that time freedom sooner than your 60s.
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Taking inventory of where you are at is indeed crucial. Are you currently doing one of those seven Dont be confused, not all businesses or investments are residual, in our own opinion.
Earning income has two real definitions. Lets look at those . Residual Income is income that continues to be generated after the initial effort has been expended. Compare this to what the majority of people concentrate on earning: linear income, that can be one-shot compensation or payment in the form of a fee, wage, commission or wages.
We think that income that exceeds your expenses is called PROFIT! So, we're going to use the first definition for the sake of this document. .