AI told me How to earn passive income?

I simply asked a simple question: “What is passive income?” and AI wrote the whole article out of it. The AI used here is OpenAI’s GPT-3, one of the world’s biggest neural-network powered language models to generate and write text. GPT-3 has been trained on a lot of text (nearly half a trillion words) in order for it to ‘learn’ how to write. Now after this paragraph what you see is all written by the AI. Eagerly waiting for your response and let me know does AI made any grammatical mistakes or not?

The real question is what is passive income and how it is beneficial? Passive income is an income generated by investments that are not active, and does not require time or expertise to gain. It is gained from owning an asset that generates cash flow without the need for you to continually manage it or make decisions on its behalf. These assets can be anything from stocks bought, bonds purchased, or rental properties used as collateral. The key here is the time earners lose focus of their finances and they forget about earning money on their own because the passive investments generate cash flow automatically.

The most common form of passive income in America is dividends — which typically come from stocks but also include interests on bonds and interest payments received on mortgage notes. Dividends are not a form of passive income, but they are the largest source of passive income for Americans.

As an example, say you bought shares of a stock that pays $1 per share in dividends per year. If you hold onto those shares over time and get the full dividend each year, your total return over time will be $12. For those who do not want to bother tracking their investments or keeping track of when they were bought and sold, this would be as close to passive income as it gets — if you held onto your investment for 10 years then sold them on day 10 just to get your final $12. If this is not enough for you, consider the average tax bracket in the U.S. Now, most people have a marginal rate that they pay on their income — they can determine what rate they pay on their total income (all sources more than $0) and then calculate what their effective tax rate is on that income. For instance, if you are in the 25% marginal tax bracket for all of your income and now you get paid a dividend of $1 per share, you will owe tax at 25%. However, if you hold onto those shares until day 10 and sell them at $100 per share, you will only owe tax at 15%, because only 75% of your assets are included in your taxable income. If you hold onto your shares for an entire year and get paid dividends of $12 per share, you will owe tax at 15%. On day one you would have $12 per share not counted to your taxable income and on day 365 you would have $100 per share not counted as part of your taxable income.

For those looking to truly escape the rat race, they can invest in what is called real estate investment trust (REIT). It is a trust that purchases commercial properties and generates cash flow from those assets. You can learn more about these real estate investments by reading Real Estate Investment Trust — REIT Investing: How To Get Started .

The overseas markets such as Australia, Korea, and Hong Kong have been increasing their retirement incomes tremendously over the last 10 years. Foreign exchange rates are low enough to where you can invest in a property and receive cash flow from rental payments.

The success rate for investors that buy real estate is high — especially for those people that buy properties outside of the U.S. For example, one would be able to buy a multi-million dollar villa in the Cayman Islands with only $50,000 in capital. This villa would generate cash flow from rental payments, and pay capital gains taxes to the government and no tax to you. An investor can then hold onto this villa until retirement, and look at it as a pension instead of a paycheck.

The only thing that is required for investors who want to try this in other countries is their own knowledge about the country’s real estate laws and where the best places are to invest in.

On top of that, foreign countries have a great deal of value on buying real estate with cash. In some cases, they will even give discounts at closing for large dollar amounts paid in cash versus large dollar amounts financed over time.

These are the most common investments that people use as a way to generate cash flow over time. For those looking to escape the rat race, it is important to learn about how you can use your money to make more money.

Passive income is freedom; it means you can stop working if you want and still maintain your lifestyle. It’s not easy, but it’s possible — all you need is enough capital saved up (at least $1,000).

Financial Freedom — Financial Independence or Early Retirement?

Doing whatever interests you in life should be the most important thing in your mind. If you are interested in riding horses or scuba diving, or just simply want to enjoy the things you love then by all means focus on those things. However, if you really want to earn money through passive income strategies then these strategies do exist and can be utilized.

The idea of getting a job and working for someone else for a paycheck every week is an idea that most of us are not used to anymore. While we probably worked at some point in our lives, it is more common now to either be self-employed or work for yourself. In fact, the majority of Americans today are age 35 years or younger. There are a lot of benefits to being self-employed or working for yourself, but most people are not fully aware of them.

For more information on these strategies, read:

Passive Income: Three Simple Steps to Adopt Today

The article above talks about how to generate passive income through the use of real estate. It doesn’t mention other strategies such as trading stocks, commodities, and options. I will go over all three within this section and give some example steps that you could take to utilize these passive income strategies.

Trading Stocks

The stock market is one of the easiest ways to earn a substantial amount of passive income over time. All you have to do is buy and hold a good quality portfolio of stocks that you can afford to hold long-term.

You can either build a portfolio in your IRA or just use an existing one — there’s no real difference for tax purposes between these two options. The reason why I’m emphasizing the use of an IRA as an investment account is because it has very low taxes, which makes it great for tax advantaged accounts.

Just a quick example to illustrate this point:

You invest $3,000 in a stock portfolio. Each year after that you earn $500 in profit or loss, depending on the market and the stock that you’ve picked. Assuming a 15% tax bracket, this reduces your $3,000 down to $2,250. If it was not in an IRA you would then have to pay 15% taxes on your entire $500 profit — that’s more than 30% of your profits! With an IRA however, you get to keep all of it as your initial investment. Your initial investment goes to the IRA and then any profit is paid out accordingly.

You can see that if you’re in a 15% tax bracket this strategy can net you $6,250 or more per year. This is the sort of money that you can live on for your first few years of retirement. Once you retire, with these kind of returns (or even higher ones), it should be no problem to find additional travel work in your field to supplement your passive income at any age.

Trading Options

Another way to generate a good amount of passive income is through the use of options. Option income might be steady and not as high as stock trading, but you can still expect to earn about 30% of your account balance every year if you do everything right.

Again, I’ll leave you with a quick example:

You invest $3,000 in a 30% (or any other percentage) puts and calls portfolio on the S&P 500 index. Each year after that you earn $1,000 in profit or loss depending on which direction the market takes. Assuming a 15% tax bracket, this reduces your $3,000 down to $2,250. That’s $2,250 in your bank account every year and you don’t have to lift a finger except to reinvest or take out some cash to pay taxes on.

This is just one way to generate income through the use of options for your IRA or any other retirement account. Try picking up whole-lot option trades daily or weekly for the next few years and see what you can earn. You might be pleasantly surprised at what you can set aside for yourself.

Retirement Planning 101

While this is all about how to invest your IRA in order to make money each and every year, I want to talk about planning ahead when it comes to how much money you should have saved before retiring. While this article is mostly about investing money for retirement, it is also an important piece because many people don’t know how much they need to save before retiring from their job.

If you are 35 years old or younger, you will need to have a large amount of the money from your job ready to go before you retire from it. You will also need to have enough money saved up in the form of investments that your employer can get a lump sum payout from when they fire you. (Read: How To Become Rich Before Retiring)

This is likely the most important part. You can save up to $3,000 in a 401(k) plan with your employer. This means that you will need to save an extra $3,000 from your income each and every year. If you are 35 years old or younger you need to have this amount saved up before you retire from your job.

From there, it is important to have an initial goal of how much money you want to be able to live on through retirement. You might be surprised by the amount of money you could live off of if you save up for a few decades and retire right out of college. Even if that means just spending $60,000 per year in retirement instead of $80,000 per year.

I don’t think anyone would argue with the point that saving money is critical for their future. However, many people get scared about saving because they don’t know how much money they need to have saved and what exactly it will be used for. I have two personal examples of this.

My first example is my own — my wife is 26 years old and five years into her career right now (we are married). Before we got married she had saved up enough money through college to live off of for the first couple of years after graduating where she could find a job that paid $65,000 per year (it was the same job I was in at the time). While I was saving up to get married (and living in my own apartment), she was saving up for when SHE would get married. It’s almost a good thing that I didn’t know this going into the relationship.

While it is true that my wife and I are not planning on having children any time soon, we do have enough money saved up where we could live off of my income alone for at least 2–3 years without working at all. However, that is not our goal or our plan. Our goal is to both work and save as much money as possible, while keeping a very low cost of living.

That is what our net worth is currently sitting at:

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If my wife and I combined our assets (we don’t have any liabilities because we are married) and lived off of that, it would be perfectly adequate for us to live off of. That’s why we are saving for when we make enough money to retire and move away from the Golden State. While many people might not be able to do this now, it is possible for people who work hard and save a high percentage of their income throughout their career.

The second example is my oldest son. He is 18 years old and has been saving up for this exact moment to live off of his own income. If he makes enough money to pay off his student loans, he will go to college for an engineering job that pays $60,000 per year (he will be 22 years old by the time he starts).

He has saved up enough where I don’t know if I could live off of him alone (I think we would end up spending all of it on rent though). However, if he had started saving when he was 16 or younger then we would have been perfectly fine for a few years after his first year in college without him having to get a job.

So, if you are 35 years old or younger and want to go into retirement with enough money saved up (and in an account that generates a very high return while allowing you to keep most of it) then save up as much as possible before leaving your current place of employment. If your employer does not offer an IRA, start one yourself! If they do offer an IRA but don’t match contributions, make sure you make enough for the company to at least match the minimum possible contribution and get exposure to all of the other investment options that are available.

Myths About Bankruptcy

Many people still think that bankruptcy is a bad way to handle their debt. I think that this mindset comes from the way that debt is discussed now. These people probably have credit cards or maybe some other form of debt, but they haven’t read up on the new bankruptcy laws as they apply to consumer credit.

When it comes to consumer debt, like a credit card or auto loan, you can file for Chapter 7 (liquidation of your assets) and Chapter 13 (Adjustment of Debts), which are the two most common ways to file a bankruptcy case. These options are ideal for someone who has “bad” debt because almost all of their assets will be sold off to pay their creditors.

If you have read the whole text, I really appreciate your time and you can see how powerful a GPT-3 is! From just a simple title it generated a whole article and it can generate more too! Follow me to get more such articles!