As a noted financial professional, Michael Kabarec has become a reputable voice on investment management and wealth building strategies. While Kabarec is known for serving his clients as President of Kabarec Financial Advisors, Ltd., he also remains a strong advocate of financial literacy—believing that the greater the available knowledge on fiscal management, the more likely it is for today’s Americans to build paths towards wealth. Today, many Americans are currently more concerned with paying off debt, satisfying mortgage or building strong retirement plans, rather than simply expanding assets. However, Kabarec explains that hot trends in wealth building can help offer greater fiscal assurance to today’s consumers.
According to a recent article from Fox Business, “passive income” has become one of these noticeable trends. The article explains, “When it comes to wealth-building strategies, there’s no hotter buzzword at the moment than ‘passive income.’ And passive income can do much to quell retirement fears and achieve retirement goals.” But what is passive income exactly? Kabarec offers one perspective, “Many people think that passive income is a stream of revenue that comes in without any effort—a concept that is only familiar to the wealthy. However, it is important that the American public understand that earning passive income is a very feasible practice that can help build wealth. As such, passive income is essentially money that comes in from a source that requires little work or time investment that can help pad savings and other accounts.”
Fox Business also quotes Investopedia’s definition of “passive income” that explains the term as, “earnings an individual derives from a rental property, limited partnership or other enterprise in which he or she is not actively involved.” However, according to Michael Kabarec, this definition may lead many consumers to believe that passive income is simply a term for a get-rich-scheme that requires no investment. He adds, “It is essential that people realize that you still cannot get something for nothing. In order to create a new opportunity, one has to provide some investment upfront, whether that means contributing money, time or other resources to the new project.”
Although many consumers may be turned off by the idea of investing a solid amount of time or money at the beginning of a project to achieve passive income, Kabarec explains that—if done correctly—these efforts can pay off well in the end. He states, “While passive income is a phrase designed to target those who want to boost savings other financial assets, it can prove beneficial far outside of putting a down payment on a vacation property or building up a lavish retirement fund. Those who set up passive income opportunities can find that these streams of revenue can help if one unexpectedly becomes unemployed or suffers a health emergency. Passive income is also a great way to fund a child’s college education.”
So if passive income is often beneficial, how exactly can consumers go about pursuing these unique opportunities? The Fox Business article highlights a few examples that Kabarec believes are worth considering. One of the most popular options—and more feasible—is earning passive income through property rental. Author John Graves explains in the article what individuals need to do to prepare for setting up a rental opportunity. Graves states, “Investing in rental properties is an effective and time-honored way of earning passive income. Nonetheless, it often requires more work than people expect. If you don’t spend the time learning how to make it a profitable venture, you could lose your investment and then some.”
In order to secure a solid investment and passive income opportunity through property rental, individuals must consider risks, such as those presented by location and tenants. John Graves explains in the article that renters should make sure to map out how much they want to earn from their rental income and determine whether or not the property’s expenses will allow for that return.
One other passive income option presented in the Fox Business article refers to dividend-yielding stocks, an asset that Michael Kabarec has considerable experience with. He notes that although these investments are attractive as an “easy” source of passive income, consumers must take time to fully research the companies they are contributing to. In the article, John Graves notes that any potential investor should spend about two to three weeks before placing an order. The article also notes, “…there are ways to invest in dividend-yielding stocks without spending too much of an initial time investment. Graves advises going with exchange-traded funds, or ETFs. ETFs are investment funds that hold assets such as stocks, commodities and bonds, but trade like stocks.”
For many, the work that must go into dividend-yielding stocks is an aspect that wards off many Americans from investing. However, Kabarec explains, “In comparison to some of the other passive income options mentioned in the Fox Business article, dividend-yielding stocks are still often considered one of the most viable. The research and strategy that required for choosing these types investments is a considerable amount. However, those who seek the services of a qualified investment management professional or advisor can find themselves approaching the process with greater ease.”
While rental income and stocks may prove the most popular options, according to Kabarec, the article also features alternatives that may prove intriguing to some. For instance, Fox Business describes how passive income can be generated through affiliate marketing, peer-to-peer lending and the sale of informational products. “Although some are able to receive a considerable return on these passive income opportunities, many find themselves deep in a complicated commitment that requires a great deal of work to succeed. As such, it is important for any individual considering these options to fully research the opportunity and to approach it with caution,” Michael Kabarec concludes.
Michael Kabarec is a trusted investment management professional who carries more than 30 years of experience in this challenging career field. Throughout his professional history, Kabarec has gained strong insight into what skills and knowledge is necessary to perform tax management, investment management, wealth building services, small business development and retirement plans. Today, Kabarec relies on his proficiencies in these areas to serve as President at Kabarec Financial Advisors, Ltd.—a Chicago-based investment management, financial and wealth advisory firm that has existed since 1982.