Ways to Passive Income

Passive Income

Passive income is a move towards financial freedom. It can play important role in achieving the milestone of  financial freedom. Passive income is a great strategy to build wealth and make enough money for life particularly after retirement.

It seems an easy task to make passive income, but still it needs a lot of work. In many cases it requires initial investment and a lot of hard work and nurturing at the beginning.

When you add passive income streams to your portfolio it can help to increase your earnings and speed up your financial goals in life.

As the word ‘passive’ refers ‘not participating readily or actively; inactive. It means that, you have to do nothing to earn passive income, but it is not true. There are misconceptions about passive income that we must understand them.

In order to make passive income it requires at least one of the following;

• An initial financial investment, or

• A Time Investment.

To make passive income streams in some cases we need finance to investment and then it can help to have a source of income. But, on the other hand passive income requires ‘time investment’. Where, financial investment may not be involved.

There are many sources to make passive income, but the United States Internal Revenue Service (IRS) recognises two main sources of passive income;

• Rental activity

• Trade or Business activities

In these activities where, an individual does not participate actively or materially.

Frequently Asked Questions (FAQ’s)

How do I generate passive income?

There are many ways to generate passive income. You can invest in different businesses or stock exchange or some other kind of business where you do not involve in daily activities. On the other hand, if you have skills like developing mobile apps, web designing and graphics designing skills, can help you creating passive income streams.

You can start freelancing on internet by taking projects online from websites like Upwork or Fiverr. Or you can start buying and selling online. There are many more ideas to get passive income stream, but depend on the person which skills he/she possesses.

What are the types of passive income?

There are a lots of types of passive income. There are types of passive income where we need some investment at the start. But, there are types of passive income where we need time and skills to develop passive income.

For example, investing in stock or bonds needs initial finance before having passive income stream. On the other hand, developing mobile apps need skills rather than finance. Affiliate marketing requires technological skills rather than needs money to invest.

There are other types of passive income where we can develop ways to earn money without physical effort.

How can I make passive income with no money?

Passive income can be made without money? I think the answer is yes. It seems almost impossible to make passive income without money. But there are possibilities to make it.

You will have to find the ways where does not involve any financial investment. If you have the skills of technology and computer you can find the websites where you can take projects and use your skills to develop passive income. As on fiverr, many people earning money by providing services online.

You can write eBook and then sale on internet. You can provide the services of content writer online. There are many opportunities to make passive income with no money, but you just have to observe and act. 

                    

What is Passive and Active Income?

Passive income refers, where an individual makes income with little or no work. For example investing in a business without participating actively or using skills for producing some product that gives an income without further work.

On the other hand, active income refers where individual exchanges his/her time for money and involves in physical activities to perform some kind of job. For example an accountant exchanges the time for doing some accountant related job in an office for which he/she developed skills.

How can I increase my income without working more?

The possibility for increasing your income without working more is there. You will have to find more income streams that give some extra income. And passive income is the best way. You can invest in stocks and bonds from where you can generate extra income.

Or if you have skills you can provide your services online. There are many websites where you can register as freelancer. Graphic designing, web designing and content writer are the most wanted freelancing skills. So, there are many ways you can earn extra income without working more.

Passive Income Definition

Passive income is the income or earnings that are derived from different sources without involving physically or actively. In other words, income that requires little or no effort to earn and maintain it, refers to passive income.

Passive income can flow from the passive activities;

• Cash flows from renting property such rental income, cash flows from owing financial assets such as interest.

• Activities such as business or trade without actively involving on daily basis.

• Royalties from producing products, videos, music and, other kinds of intellectual properties.

Passive Income Source/Passive Income Examples

There are a lot of ways or sources from which you can generate passive income. Such as producing information products and selling online, rental income, affiliate marketing, savings accounts, dividend from stocks, investing in bonds, selling products online, producing mobile apps, designing shirts, freelancing on internet.

You can see there are many more ideas and sources of passive income. But, the thing is there is not a formula which suits each and everyone. Every individual has different circumstances and skills. And he/she has to realise and identify the sources from which there is possibility to generate passive income.

Why Passive Income is important?

The reason for importance of passive income is, it can give you financial freedom and you make money without involving physically and actively in daily activities. It saves your time and time is precious than money.

By creating passive income streams you can earn money while you sleep. When you add more and more streams to your passive income portfolio, you expand your earning from different sources.

Passive Income Ideas and Strategies

There are a lot of passive income ideas you can pick any idea to earn money. Passive income can help in getting financial freedom and resolving financial problems in life. Here are the best passive income ideas:

Passive Income from Investing

Investing in Bonds and Stocks

Investing in bonds and stocks can be a good source of passive income. Many people invest in stocks and bonds from where they generate earnings. Stocks investment can be an idea for passive income but bonds are more secured form of passive income.

Throughout the life of bonds the investor gets income in the form of interest. This is a reliable source of investment.

Dividend Investing

When you invest in stocks of a company directly or through a fund, you can receive dividends. It is a portion of company’s profits that distributes among shareholders by the company. The amount of dividends depends on the number of shares an individual holds.

It is a great source of passive income. There is no need to sell your stocks or shares; the company gives you dividends on regular basis.

Rental Properties

A cash flow from rental property is the best strategy to generate passive income. But the problem with rental property is that it needs substantial amount of investment.

For example, buying shops or houses and then renting is the best way to make money. There is possibility of outsourcing your property to the management company and you can get complete freedom.

You can rent spare room in house to someone, or rent out your parking space or you can rent out your backyard. All these options are available, but it needs investment in real estate.

Invest in Existing Business

Investing in an existing business is not a bad option to generate passive income. This is investment based strategy for passive income. You can be a sleeping partner after investing without involving yourself in daily activities.

When you invest it can generate returns in a percentage of profits. This is a risky way to invest, but when there is high risk it generates high income as well. There is possibility to reduce risk by investing in different businesses rather than just in one business.

High Yield Saving Account

If you want the money work for you then the option of putting your money in the high yield saving account should be considered.

Many banks offer high interest savings accounts. Where you can put money and it can generate a safe passive income stream.

You can find and invest in low-risk but high return saving accounts. In this strategy there may be a short-term as well as long-term strategy of investment.

You can use this strategy where you can create the safest and stable source of passive income.

Certificate of Deposit (CD)

Certificate of Deposit (CD) can be a safest and stable way to create passive income stream. The important thing is that, most of these deposits are low-risk therefore the return on that can be low.

This is the product offered by the banks to pay interest to the customer for leaving lump sum money for predetermined period of time.

You can buy CD from a bank for a set term, which gives you a fixed interest on your money. But, for many people it can’t be an amazing idea to buy CDs because the return will not be so high. Still, there are CDs that pay higher interest and even higher that high yield saving account.

Passive Income from Online Activities

Mobile App/Software Development

Mobile technology changed our lives tremendously. The demand for use of mobile phones is increased. Developing mobile apps can be a great idea and in this modern age it could be a good source of passive income.

In every mobile there are a lot of apps, they have been developed by someone. But for this strategy it needs technology related skills.

In the same way, developing software can also be a good idea to create passive income. This can be a one-time effort, but it can pay you back for long time.

Sell Stock Photos

If you like photography then you can create a stream of passive income by selling creative photos on internet. Thanks to internet you can access to millions of customer online.

There is a huge demand for photos online. Individuals, organisations, and businesses need photos when they create content online. There are websites like Shutterstock, iStock where you can place your photos to sell.

Writing an eBook

If you have writing skills and can write better content then you must consider writing an eBook. You can write your eBook on the topic you like the most. When its done then there is possibility to issue a hard copy as well.

There are several places to publish the eBook such as Kindle Direct Publishing (KDP) which is owned by Amazon.

There are other sites as well where you can place your eBook which are free and you can pay for premium services and editing.

Also, you can convert the eBook in Audio Book, because when you complete eBook it will so easy to convert in audio. Many people prefer audio book rather than eBook or hard copy of a book.

Writing eBook can be a good idea to create passive income.

Creating Online Course

Creating online course is another idea to create passive income. If you have expertise in a particular topic, then its time to convert that information and knowledge in a package to sell it to others looking to learn.

You can create unique content to sell online for transformation of the people and to change lives.

It could be a little bit difficult than writing an eBook, but it can generate more income than the writing eBook.

It requires skills and effort at the first instance and then you can sell it to millions of people through internet. Udemy, Teachable, Podia, and Thinkific are the places where you can sell your product.

Affiliate Marketing

Affiliate marketing is a big source of income for many people. It is the process of promoting people’s products and  in some cases company’s products to earn commission.

You pickup the product, promote it to the people and on selling that product you earn a piece of a profit.

By the following ways you can promote the product as an affiliate. Such as;

Product Reviews; you can review the products through a blog or website to earn commission.

Create Niche Website; creating a niche website can help to earn commission as a affiliate. Where you can promote other people’s products.

Email Lists; you can send messages to your subscribers to promote products if you don’t have yours. You can engage them via email to make them buy the products.

The biggest affiliate marketing platform is Amazon. The Amazon associates affiliate program helps you to promote products and earn commission.

Create YouTube Channel

Earning from YouTube channel can be a source of passive income, but it needs handwork there is a lot of competition. It requires proper content creation and uploading on the channel.

The ads display on the YouTube channel is the biggest source of income. When people watch your videos and then they click on the ads it generates income. But, it is not the only source of income from channel.

You can also join YouTube Partners Program, but it needs 1000 subscribers and 4000 hours watch time within a year.

By creating YouTube channel it is quite easy to reach the millions of people and audience. Where you can create tutorials, Vlogs, videos, and much more.

Conclusion; we discussed many ideas and strategies to generate passive income and there might be many more.

At the initial stages it is difficult to generate passive income, because it can take basic financial investment or  needs your time. But once sets up it can bring you financial freedom and happiness.

My recommendation is just pick up ideas which you think are doable and get started with. I believe, you will achieve the milestone of passive income.