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Active & Passive income X FIRE

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Active income:
Direct compensation that an individual receives for services rendered. Comes in the form of salary, wages, tips, commissions, etc.

E.g. your 9 to 5 job

Passive income: Income that does not come from actively rendering a service
E.g. Dividends, interest earned from savings

Passive income to 1 person can b active income to another, & vice versa
E.g a store employee earns an active income while the shareholders earns passively
Sm activities/Investments/incomes r a hybrid of active & passive income

-A singer records an album, later earns passively from sales & royalties
-An actively managed Investment Portfolio
-Rental income - owner engages in maintenance, repairs & upgrades, if not outsourced
My internal model for classifying activities - Effort required vs how income is earned;

A pure passiv(passiv/passiv) income offers d greatest freedom; a pure active(Activ/Activ)income requires the most effort
The capital requirements of a passive income stream are greater than those of an active income stream

Income expectations of stream: passive income stream < active income stream

This explains why the FIRE(Financial Independence Retire Early) number always looks daunting

E.g. you can easily earn R1 000 from your day job, however, earning the same income from a passive stream tends to need more effort/capital, and takes longer to generate the same amount of income
FIRE is based on the idea that your passive income is able to cover your living expenses FOREVER; having a day job optional. Or at least, you are able 2 do what you love, & not what u have to do to survive

Some FIRE Rule-of-thumbs:
-monthly expenses*300
-annual expenses*25
Achieving FIRE centers around:
-minimising expenses
-maximising income & Investments,
to achieve yr FIRE number

Are you on a FIRE journey?
What does your idea of FIRE look like?
What's yr fire number?
What r u doing 2 achieve yr target in the shortest time possible?

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