Passive Income Misconceptions Unpacked
Most people misunderstand what is passive income. Simply one has two choices in earning income:
1. Earn “Active Income”
As an employee or business owner work to get paid i.e. Exchange Time for Money
2. Earn “Passive Income”
Earn money while reading a book or sitting on the beach i.e. Income is earned while you are not present!
The harsh reality is that there is no direct route to earning passive income unless one is fortunate to inherit or be given a large lump sum of cash. One must follow the active road to passive income by either working hard, and when income exceeds expenses, saving and investing the difference or build assets that earn passive income. EG. Write a book or create a utube video that people will pay for. Over time, with either route you build sustainable passive income streams.
The mainstream passive income generators are real estate, equities and bonds. We shall focus on real estate
as this is the most popular form of passive income and the foundation of “serious wealth.” Rental from property provides protection against inflation, is taxman friendly, has a low risk profile and often one can use the banks money (Loans) to get “quicker” to your passive income goals.
“However, the Emerging Country Passive Income Trap catches many” says Costas Souris of Quality Group
Since 1970 the RAND has depreciated by more than 7% pa when compared to the US Dollar. In 1970 R1 million was worth $1,4 million. Today the sad reality is that R1 million is now worth $69 000!
Emerging market economies import many goods and services. Cars, mobiles etc including fuel which is priced in US dollars. Every time petrol goes up it sets off a chain reaction of price increases. “The farmer must transport his wheat to the flour mill; from there transport to the bakery; from there to the local Pick and Pay; and then you must drive to buy bread from the retailer. Protection not only against local inflation is required but most importantly against imported inflation because of local currency depreciation.
Can a soft currency like the RAND appreciate? Of course, but sustained economic growth, coupled with clean government and low unemployment begins the foundation!
Invest in HARD currency Passive Income generated by property. With low inflation in hard currency and let’s assume that €uro rentals remain level. Illustrating 5% pa depreciation in the RAND, your standard of living and retirement is assured.
There is also threat of emerging country meltdown. One can combine Investment, Golden VISA PR and Protection for the Family and Preservation of Wealth by investing in EU Cyprus.
FDI in Cyprus
Cyprus is now ranked among the top destinations in terms of attractiveness for foreign direct investment (FDI) thanks to its rapid economic turn-around & beneficial business environment.
Profile of Cyprus
Is the third largest and third most populous island in the Mediterranean, and a member state of the European Union since 2004. Cyprus was a former British colony and gained independence in 1960.
Cypriots are among the most affluent in the world. In terms of the World Bank’s Development Report, Cyprus is ranked 16th (per capita income) adjusted for purchasing power. GDP per capita $29 432.67 (2018) higher than the EU average and although Cyprus is rated a developing nation it is regarded a rich European country. Before the €uro; the Cypriot pound was stronger than the British pound.
Summary of Cyprus Economy Profile
The Republic of Cyprus has a market economy dominated by a services sector that accounts for more than four-fifths of GDP. Since the economic “credit crunch” of 2008 which hit Cyprus in 2012, the economy has been extensively restructured and has been praised for the measures taken. And now is one of the most successful economies in the EU. GDP growth for 2017: €4% for 2018: €3,9%
Tourism, finance, shipping, and real estate have traditionally been the most important services. Tourist arrivals have broken records three years in a row and are about to exceed 4 million per annum.
Cyprus has future focused industry strategies underpinned by solid fundamentals
- Strong business-friendly environment with one of the lowest corporate tax rates in Europe (12.5%)
- Membership in the European Union and the Euro zone
- A multilingual, experienced and low-cost workforce benefiting from low taxes and cost of living
- High quality transport and telecommunications infrastructure, particularly in the ports sector.
- Focused services sector: tourism, international business & financial services, maritime transport, etc.
- A Golden Visa Residency and EU Citizenship program designed to attract Businesses and HNWs
In summary; a stable and prosperous economy with very favorable growth trends
Explore EU Cyprus and why it is rated the 5th Best Relocation Destination in the World by Knight Frank. View our HOT Properties designed for producing hard currency passive income www.qualitygroupsa.com/property/
These properties provide freehold title, guaranteed rentals in €uro, with long term lease backs and the best and most value for money Golden VISA PR for life program evolving into EU Citizenship or immediate EU Citizenship and passports for life, the only European program of its kind in the EU.