4th Step to Financial Freedom: Wealth Accumulation & Increase Passive Cash Flow part 3

Here are more places where you can find money to free up to generate passive income for wealth accumulation:

Business Equity – If you are self employed or you have a corporation with assets, you can leverage the assets and borrow against them to invest, providing more cash flow for your business.

What if you have money in retained earnings but you want to invest personally and you no not want to take the money out because you are worried about tax? Paying dividends can be really useful in this situation.

RRSP’s – The good thing about an RRSP is that you obligate yourself to put money aside for retirement. The second benefit is that you are deferring tax to pay it later.

Most RRSP’s are invested in Mutual Funds and many people who have mutual funds are not happy about the returns. Most of the people invest in mutual funds blindly because they do not know what stocks or bonds the fund holds. We need retirement plans but they do not need to be registered with the government.

To free up money from an RRSP, you have to check first if the RRSP is locked or unlocked. If the RRSP is unlocked, you can use a melt down strategy minimizing the tax you pay to pull out your RRSP. This is done by withdrawing your RRSP in increments of $5,000 to keep your withholding tax to 10% and then having a proper tax plan to offset that extra income. It is also good to withdraw RRSP in lower income years.

Once you free up the money, you can put it to work and make it your slave! Making money our slave allows us to become wealth with purpose.

Remember that investments come and go. We need to continually be open to new investments and opportunities. Make sure to consult a professional for new investment opportunities.

4th Step to Financial Freedom: Wealth Accumulation & Increase Passive Cash Flow part 2

In looking at your assets or your family’s assets, you can see what are income producing and which are not. The goal in this 4^th step is to produce more income producing assets, thus providing more cash flow and asset growth.

Some people have cash to invest. However, the majority of people do not have cash sitting around doing nothing. We have to free up money and generate passive income to start wealth accumulation.

Here are some of the places you can find money to free up:

Home Equity - When your are planning to free up money from your home, you should make sure that the investment that you are going to put the money into is as secure as your home is. You have to feel comfortable with that guarantee as you feel with your home or land. You also need to know how much equity you have:

Equity = Value of your Home - Mortgage

There are three ways to free up money from home equity: 1. Second Mortgages work for people that do not have good credit.

2. Line of Credit on your home equity; with a line of credit you pay interest only with no principle, or you can pay as much principle as you’d like, anytime with no penalty.

3. Adjustable Mortgage is a mortgage and a line of credit all attached in one. This has a locked in portion and a line of credit portion. If you are worried about interest rates, you still have a regular mortgage locked in and a line of credit that fluctuates with prime rate. So every time you pay principle on your mortgage, your line of credit lending goes up. So you do not have to re-evaluate your house every time you need money.

More place to find money to free up on my next blog!