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In 1960, Congress passed a law creating Real Estate Investment Trusts (REITs), large portfolios of income-producing property investments. A REIT is required by law to distribute 90 percent of its earnings to investors each year. Now, an estimated 70 million Americans invest in REITs.

On account of their special tax status, REITs should follow strict compliance standards and therefore carry a certain quality standard for both the vehicles investment strategy and the real estate experience of the managing team.

There are two primary kinds of public REITs: traded and non-traded. Publicly-traded REITs offer the benefits of money, since it's traded openly on a stock exchange. But this liquidity is very likely to be priced into the worth of these stocks, resulting in a liquidity premium, or a price that most investors pay for the capability to get and sell the asset whenever they desire.

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 all the underlying properties owned by the REIT. .

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On the other hand, public non-traded REITs have become more popular, because of their possible double-digit dividends. However, 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 few years, pioneering new programs like Fundrise have emerged. Fundrise intends to offer you the benefits of private market accessibility, but with reduced prices that potentially help investors earn better returns. Leveraging technology and new federal regulations, Fundrise provides investors that the very first ever diversified commercial real estate investment portfolio available directly online to anyone in the United States, no matter their net worth.

Irrespective of which investment plan you opt to pursue to earn residual income, an essential part of the investment process is careful due diligence of every opportunity as it appears and working hard to remove any pre-existing biases. Take time to determine which approach makes the best sense for you, and carefully calculate your residual income goals.

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When looking at income in the future, shouldnt we're looking at what is going to happen and determine whether that is what we want life to look like We need to work backward from that point until we achieve today, viewing our decisions with money as the pre-cursor of tomorrow The reason we even speak about residual income is thats the goal of retirement or what we prefer to call time liberty. .

When you retire, your Social Security income and pensions, if they are left, plus dividends and interest off of your investments and maybe an income annuity will meet your needs and hopefully surpass them, and that means that you can walk away from the day job.

Dividends and interest are a sort of residual income. Social Security certainly is, that the government takes money from us every paycheck and we get a small piece back when we retire published here (even though it is taxed in retirement again).

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Consequently, if the objective is to get residual income when we retire, that 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 perhaps dont have an age limitation into our 60s What guarantee do we have that we'll make it long.

Additionally, what control do we really have over Social Security and our 401Ks Looking at the sources of residual income, lets take a look at other high-level places we could diversify. Who knows, perhaps 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 these seven Dont be confused, not all businesses or investments are residual, in our own opinion.

Residual income has two real definitions. Lets look at these first. Residual Income is income which continues to be generated following the initial effort has been expended. Compare this to what most men and women focus on earning: linear income, that can be one-shot compensation or payment in the form of a commission, wage, commission or salary.

We think that income that exceeds your expenses is called PROFIT! Thus, we're going to use the first click here for more definition for the sake of this document. .