Passive Income (For Real - No BS)

Anybody who has owned any piece of real estate as a landlord knows that you get that call in the middle of the night, doesn't feel very passive.

It's hard to find something that's truly passive. And today we just wanted to talk briefly about. Well, there is a way because I'm doing it.

Have you ever wondered about passive income? Like how do you truly have and achieve passive income? Well, today, Liz, my colleague and I, Dan, we're going to talk about passive income for real. And we're not going to give you any bs. It's going to be a way that you can actually have passive income in your life. So let's just start by talking about what are some of the misunderstandings when you really think about passive income. What is passive income? Well, it's really something where know you're not having to do work, so it's truly passive. Now how do you get to that? Because there's, what are some of the examples that get used quite often and related to passive income that really aren't that passive.

So real estate is probably one of the most obvious ones. People say, oh, passive income. Anybody who has owned any piece of real estate as a landlord, you get that call in the middle of the night, doesn't feel very passive. And there are lots of moving pieces and lots of things to kind of navigate with tenants moving in, out and all sorts of different things around that. Even people who use different strategies around real estate, most of that's very, very active in terms of what's required in terms of either flipping properties or even sort of Airbnb type things. There needs to be a certain amount of management of all of those moving pieces. So very rarely is any of that passive. Even other kinds of investing that people talk about, it usually involves some level of fairly close monitoring because markets change, situations change, and understanding and making sure that those investments are still doing what they need to do. So there's quite a bit of activity around those other types of investments as well. So many people are a little disillusioned by the idea of passive income and wonder whether it really, truly exists.

When you think about, you know, simply investing in the stock market. Oh, that's pretty simple, right? I just, I just buy a stock and I leave it there. Well, you know, you know, you, if you do that, you may really come be surprised about changes that happen to that company that you invested in. So it definitely warrants taking the time to stay connected. Just like you said, Liz, that's a great example that, you know, it's hard to find something that's truly passive. And today we just wanted to talk briefly about, well, there is a way because I'm doing it so I can experience that I'm experiencing, I'm building to a point where right now I could start pulling passive income and all it would require me to do is keep on paying the premium. So let's just talk about that, Liz. And even what I have in mind is I'm going to stop paying the premiums and I'm still going to get passive income. How would we go about doing that? Do you want to explain a bit about that, Liz?

So what Dan's talking about is dividend paying, participating whole life insurance. And it's very important that we mention at this point that this needs to be structured correctly. So we have, Dan and I have both seen policies that perhaps don't perform in the way that what we're talking about and it's simply because they're not structured in the way that we're talking about. Just to be really clear, it is related specifically to a very particular type of whole life insurance that does provide, provide that guaranteed growth with the contractual guarantees. It's guaranteed to grow continuously for the whole of your life. So that's really, really important because we need a growing pool of capital to be able to draw out that passive income. And it's also an important point to note that it's the insurance company that is responsible for that growth. So your responsibility as the policyholder is to continue to pay premiums for a period of time and then the rest of the responsibility around the on that unilateral contract rests on the insurance company's shoulders.

You know, I have some policies that that's exactly what I'm going to be using them for. It's going to get to a time and place when I get to an age and I'm going to decide at that point whether or not I keep putting premiums in. And because what I know about that asset, because that's what that dividend paying whole life insurance policy is, it's an asset. Because what I know about that asset, for every dollar at that stage that I put in, my cash value is going to go up by a lot more than a dollar. And so it'll be hard pressed for me to stop paying my premiums. But if I want to, I will. And I can still, like Liz said, I can still take income out of that policy and my policy will keep growing in value because it has to. One of the things that is so key for people to understand about a dividend paying whole life insurance policy is that it has to grow all the way in Canada to age 100. They value in it has to keep growing because it's contractually written into there that the cash value and the death benefit have to equal each other at age 100. So the life company will do that. They're very good at doing it. Just like Liz had said, these life companies know what they're doing. They have done it for hundreds of years. So they'll do their part. And all you have to do is pay the premiums up until a point where your policy can either go on its own or you decide that I want to stop at this point, I'm past that stage and it becomes truly passive. You can pull value out of that policy and all you can have to do is really just ask for it at that point. And that's really truly passive. You're not having to do anything more. So it's just one of those things that, yeah, there is a way. And we just wanted to share that with you today. And I hope again, if you got any value, if you have any questions, by all means, ask us. We have no problem showing you what we're doing because we're doing this, we're practicing it, and we can clearly show you how you could do that yourself.