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Passive
Income
AUSTRALIA

Why passive income is important.

When we surveyed our clients, over 32% responded that their primary motivation to invest was to supplement their income with passive income. When you look at numbers, it’s easy to see why passive income is a common investment strategy in Australia.

When you look at the national averages for incomes and expenses, it’s easy to see why the biggest proportion of investors are those who want to supplement their income to support their day-to-day life.

These figures are for a couple with no children:

  • According to research firm McCrindle, the middle quintile for household income in Australia is $88,764. Using the mean average is not an accurate representation, since a small percentage of ultra-high income earners skew the figure higher.
  • According to the Household Expenditure Measure, which banks use to calculate ‘essential’ household expenses when evaluating a loan, the typical expenditure for a couple with no children is $49,416. This does not include rent, mortgage repayments, HECS/HELP loans, or unessential discretionary spending.
  • According to the 2016 Census, the median annual cost of mortgage repayments is $21,060.
  • That leaves just $18,288 left over, before tax. Assuming PAYG tax on one income of $50,000 and one income of $38,000, there is just $6,594 left over.
As these figures show, most Australian households have very little supplemental income left after tax. Most households are living paycheck-to-paycheck with little opportunity to build up their savings or improve their quality of life. This is why investing is vital if you want supplemental income via passive income.

How to supplement your income with our investment model

Our Passive Income Model

Our Passive Income Model is designed to serve investors who want regular, fixed distributions. Rather than giving you a lump-sum payment at the end of the investment term, we will pay your returns in monthly installments so that you have a source of passive income.

So if you’re looking to supplement your income with monthly passive income, enquire now to check our current availability for Passive Income Australia investors.

Supplemental Income via End Payment

Let’s say you invest $250,000 into an opportunity of ours which will pay a 35% return in approximately two years.
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Once that project is complete, you’d get back your $250,000 plus a return of $87,500 on top of that, for a total of $337,500.

You can then reinvest the $250,000 and take the return as passive income. 

$87,500 over a two year investment is like earning an additional $43,750 per year—except you receive it all at once as a lump sum.

Once your first investment pays out, you reinvest the original $250,000 into another investment, and put the $87,500 into your bank account to spend as you like. In another two years, you’d have another lump-sum payment of $87,500. You can then keep doing this over and over, generating extra income every two years while still keeping your original capital of $250,000. This approach isn’t as convenient in the short-term as an investment with monthly or quarterly distributions, but you are making much more money. Without accounting for compounding (because you wouldn’t be reinvesting the return), this equates to a 17.5% return per annum.

Leveraging existing assets to invest for passive income

If you don’t have savings but still want to invest, there are still options available to you! If you own a home with a mortgage, you can refinance your loan to release capital to invest. This is called an ‘equity release’. Since interest rates are so low (<4% p.a.), by investing the bank's money, you can generate passive income and still make a comfortable profit. If you invest and receive returns of 15% per annum, you're still left with a 12% return after paying off the loan interest.
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Start earning passive income and supplement your income

Wealth Creation - Lion Property Group

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Informed Decision

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