Welcome to another Monday and newsletter. I trust that our Muslim members enjoyed their Sallah celebrations.
Over the past 2 weeks, I have come across several articles that reminded me of the importance of having passive income.
One of such stories was the declaration made by Burna Boy on the percentage of royalties accruing to singer Toni Braxton from his single – Last Last.
According to the story, the payment is due to the fact that the single is a sample of Ms Braxton’s 2000 R&B hit song “He wasn’t man enough”.
Another story involves another singer – Katie Bush; whose 1985 song “Running up that hill” is estimated to have fetched her royalties totalling $2.3 million in less than 2 months!
The song, which was featured in the latest session of a Netflix series – Stranger Things has risen to the top 5 position on Billboard Global 200 as well as 1st position on UK’s singles chart. It has even set a Guinness World for the longest time for a song to reach the number 1 position on the UK charts. Time and chance truly happen to all.
The last story and the most mind-blowing story (at least to me) is the news that the estate of the late Michael Jackson has made $2 billion (as of December 31st, 2021) since his death in 2009.
Apart from the fact that all the 3 stories involve musicians, the central theme is the fact that these individuals and their heirs (as in MJ’s case) are reaping the benefits of investments that had been made in the past.
Passive income can be defined as income earned from an activity an individual does not materially participate in. This type of income requires little or no effort as the work or investment would have already been done or created in the past (what accountants refer to as sunk costs).
In the case of the 1st two stories, the artists involved had recorded the songs decades before they were used. Prior to now, their main income for those songs would have come from records sales but the current use (work already created) by 3rd parties brought about an additional income stream for them.
As we are aware, royalties are not the only form of passive income; rental properties, businesses (drop shipping, affiliate marketing etc) and intellectual property rights (online courses, training etc) are also other forms of passive income.
Passive income is encouraged because it enhances an investor’s quest for financial freedom. The major advantage it has over active income is that the proceeds continue being generated long after one’s retirement or death (as in the case of MJ).
As listed above, there are many passive income ideas available and with the current economic climate; exploring those you can engage in (if you are yet to) is highly recommended.
Till next, I wish you a fantastic week ahead.