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Posted: April 29, 2008 | Permalink| Comments (16)

As a child, André Letoit (later known as song-writer Koos Kombuis) noticed that people on holiday are much nicer than those that work. Friendly, relaxed, patient with other people, energetic… No wonder that he decided to become someone who is always on holiday when he’s grown-up.

If you need no convincing of the merits of being on holiday all the time, the good news is that you’re normal. The bad news is that you won’t be able to pay the bills unless you have some kind of strategy. Below are my favourite four. Feel free to add more.

Strategy 1: Find the type of work that you love and it won’t feel like you’re working. I used to think this only happens to people like Steve Jobs, but I’ve finally found the kind of work and environment that matters to me and where I can express myself. You need to dabble in different things, though. It may take more than a decade, part-time studies and changing industries a few times, but please don’t give up until you know how it feels to feel good about your job.

Strategy 2: Start earning passive income through clever investments as early in your life as possible. For those who don’t know the term, ‘passive income’ is any income that you earn which is not dependent on the time that you spend working. In other words, you could be taking a round-the-world trip for a whole year and you will still be earning that income. For example, if you buy a flat in an area where there is a shortage of rental properties and you get a dependable tenant, you’ll be earning rental income without much effort from your side. If you don’t have enough capital for a property investment, you can opt for unit trusts where your R500 per month is pooled with other investors’ money. If you are new in the investment game and it’s all a bit overwhelming, try and get a copy of either Benjamin Graham’s ‘The Intelligent Investor’ or Mary Buffet’s ‘Buffettology’. Sorry, it probably won’t feel like holiday reading, but you might be surprised at how interesting financial stuff can become eventually – once you know a little bit more about the subject matter.

If you choose a good investment and re-invest your income every year, the capital value of your investment should grow and with it the income that you earn from it. If you started investing early enough in life, you could end up with enough passive income to scale down on the number of days per week that you earn active income long before you retire. Let’s face it, no matter how much you enjoy your work, there will be stages in your life when you want to spend more time with your family or pursue other interests. But be realistic: building up a sizeable passive income through investments is usually a very long-term strategy.

Strategy 3: If you have the right temperament and a good idea, create passive income through your own business. This is a much higher risk strategy than the second one, as you could lose all your capital if your idea doesn’t fly. But you could also potentially create more passive income much quicker than with strategy 2. Just be careful not to confuse being self-employed with being a business owner. Are you sure you’ve designed a system where you can disappear for a year and the business will continue to generate income? Kiyosaki’s ‘Cashflow Quadrant’ remains the most digestible book I’ve read on the transition from salaried or self-employed to business owner and investor.

Strategy 4: Lastly, if your circumstances don’t yet allow you to pack your bags for a year’s break, lighten up at work. Crack a joke; Allow someone else to make you laugh; Try gratitude; Break your routine a bit. I’ve come across so many people who seem to believe that they only deserve to get paid if they always look frantic, anxious, stressed and serious at work. Numerous research reports have shown that people are most productive and creative when they are in a relaxed state of mind. Yes, a little bit of stress now and then boosts productivity, but not all the time!

Now go ahead, select your strategy and start planning that holiday.


Filed under: passive income — admin @ 9:59 pm