{"id":60890,"date":"2022-02-08T17:02:36","date_gmt":"2022-02-08T21:02:36","guid":{"rendered":"https:\/\/www.shortform.com\/blog\/?p=60890"},"modified":"2022-02-21T17:07:16","modified_gmt":"2022-02-21T21:07:16","slug":"create-passive-income","status":"publish","type":"post","link":"https:\/\/www.shortform.com\/blog\/create-passive-income\/","title":{"rendered":"How to Create Passive Income: Leverage Time"},"content":{"rendered":"\n

What’s the quickest way to become wealthy? How can you create passive income? <\/p>\n\n\n\n

MJ DeMarco, multimillionaire entrepreneur and investor, argues that the traditional path to wealth\u2014working for a salary and investing in stocks\u2014is too slow and unreliable. Instead, he says that the fastest way to become wealthy is to create passive income and increase your net worth. <\/p>\n\n\n\n

Here’s how to become wealthy<\/a> by leveraging time.<\/p>\n\n\n\n\n\n\n\n

The Active Production<\/strong> Formula<\/h2>\n\n\n\n

DeMarco defines the Active Production formula for wealth as: unrestricted profits + investments and assets = massive wealth and early retirement<\/em>. He argues that active producers are motivated by the goal to create and enjoy wealth<\/strong>. However, unlike insatiable consumers, they don\u2019t confuse \u201cget rich quick\u201d with \u201cget rich easy.\u201d DeMarco explains that they\u2019re willing to practice discipline and forfeit short-term comfort while they work on creating passive income and increasing net worth. As a result, they achieve extraordinary wealth in a short period of time and can buy what they want without fear of incurring debts. <\/p>\n\n\n\n

(Shortform note: DeMarco characterizes active producers as individuals willing to make strict financial sacrifices and de-prioritize their present happiness and comfort in service of becoming extraordinarily wealthy in the future. But, is this sacrifice really worth it\u2014and will having enough wealth to buy whatever<\/em> you want really make you happy? Arguably not. Research shows that, instead of making you happier, excess wealth and materialism encourage narcissistic tendencies and diminish your overall well-being<\/strong><\/a>: The desire to acquire more money and possessions promotes negative feelings, such as low self-esteem<\/a> and anxiety, and discourages positive feelings, such as happiness and satisfaction.)<\/p>\n\n\n\n

Leveraging Time Creates Passive Income and Freedom<\/strong><\/h3>\n\n\n\n

According to DeMarco, the key reason active producers get rich fast<\/a> is that they leverage their time\u2014this means they use their time to create passive income, <\/em>or <\/em>something that generates recurrent income without their direct involvement. Leveraging your time removes your need to work for an income and dramatically improves your chances of creating wealth. <\/p>\n\n\n\n

DeMarco argues that you can\u2019t leverage your time at a conventional job because your income directly relies on how many hours you work or how much you produce. <\/p>\n\n\n\n