Some people hear the words “passive income” and imagine a life with little to no work. And while many passive income streams do have a “set it and forget it” component, others require more active nurturing to stay viable.
Payday Friday. The two words all hard-working employees love to hear. Whether you work part-time or full-time, most of your income likely comes from the hours you’ve put in over the past pay period. But what if that active income became less important? What if other passive streams of income slowly became the lion’s share of your income, freeing you up to spend time doing the things you love?
What Is Passive Income and Why Is It Important?
Passive income are earnings you receive from things like stock dividends, royalties, real estate and other investments. Unlike a salary, your passive income is not directly connected to how much you work. Initially, you may have to work hard to create a passive income source. But if done correctly, the amount of active work will decrease over time.
Passive income also protects you from losing all your income if you lose your job. It allows you to pay off debt faster, save for retirement and creates more opportunities to build long-term wealth.
The reality of life is that we all have the same 24 hours in a day. So how do we combat this reality? Simple…by putting your money to work for you. There are lots of ways to do this. You can use digital platforms, investment mechanisms or even outsourced labor.
Even if you earn an extremely high salary, you are limited in how much you can physically do. To achieve financial freedom, you have to earn more of your income from sources like interest, dividends and other capital gains.
Thankfully, you do not have to be Warren Buffett to earn passive income. There are many ways you can get started right away. From writing a blog to investing in the stock market, the following ideas can help you generate a lasting source of passive revenue.
How Can I Generate Passive Income?
Start a Blog
When you create a blog, you can use it to sell your products or services. Additionally, you can sell other company’s products through affiliate marketing with programs like Amazon Associates.
Create an Ebook
In the past, you had to work with a major publisher to sell a book. Now, you can create an ebook by yourself. In addition to being easier than traditional publishing, you can also receive higher royalties when you publish on your own. While an ebook requires a lot of time and effort to create. It requires almost no work to maintain. Once your ebook is online, you can keep earning royalties forever.
Sell an Informational Product
Thanks to the internet, you can easily teach online. Unlike teaching in person, you can sell the same class repeatedly. For example, you can create a course to sell on SkillShare, Coursera or Udemy. Because the course is recorded, you only do the work once. After the course is online, it can sell thousands or millions of times to people around the world.
Vending machines are fairly inexpensive to buy, and they require little upkeep. Once you have found a location for your vending machines, you just collect the cash and replenish the merchandise every week or two.
More Passive Income Ideas…
Create a YouTube Channel
Video content is becoming more popular, which means video ads can be an excellent source of income. Once you post your videos, you can use ads to earn revenue from them. While it may take many videos before you can earn a significant revenue stream, the views can add up quickly.
T-shirts, posters and affordable arts and crafts are more fantastic examples of passive income ideas. By creating digital file versions of your designs, you can sell them on platforms like Etsy and generate ongoing revenue.
To address the issue of time, consider hiring others to do work for you. Let’s say you run a business and have 20 clients. You only have so much time in the day to be able to help each of those clients. But if you hire a handful of the “right” employees, you will be able to develop a business that can crank out client projects much faster. While creating a powerful passive income stream for you.
Whether you have an extra unit or a vacation home, your unused space can help you bring in more income. Exceptional properties can rent for $1,000 or more per night. So this income source can quickly add up.
Residential and commercial rental properties are excellent sources of revenue. If you do not want to do the work of managing it yourself, you can always hire a property management company.
Passive Investment Ideas
Real Estate Investment Trusts (REITs)
A REIT allows you to invest in real estate without having to manage or own a property. Basically, a REIT buys many different properties and manages them. Then, investors buy shares of the company. According to Nareit, more than 145 million Americans own REIT shares. And the shares are posting strong annual returns..
Peer-to-peer lending allows you to function like a banker. You pick individual loan applications and the amount you want to fund. In exchange for taking on this risk, you earn interest on the loan amount. Once someone has paid you back, you can reinvest your earnings.
Another great passive income idea – and one with lower risk – is to buy investment-grade bonds. These can either be corporate bonds or government bonds. Municipal bonds can also be an option with lower tax consequences.
There are many large and small businesses looking for investors. In addition to starting your own business, you can become an angel investor. Later, you can turn it into a franchise or sell it outright.
By investing in dividend stocks, you can receive consistent payouts quarter over quarter. When looking at which companies to invest in, you want to consider stocks that have not only maintained dividend payouts for at least 25 years. But also increased them every year.
By investing in passive income, you can reduce the amount of work you have to do each week. In addition, you can gradually increase your retirement account. While some of these options initially require effort, they can all lead to ongoing revenue streams in the long run.