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Let’s understand active and passive income. Active income is what you earn based on your daily efforts. If you stop working, the cashflow stops as well. Similarly, you have invested in stocks and mutual funds where your money is growing, but that still isn’t passive income. Passive income produces cashflow that’s continuous, perpetual and works without any additional effort on your part. It’s where you get paid again and again for work you did once. You make money just by breathing or sleeping. Passive income helps you attain financial freedom. It’s generated from assets, businesses, and enterprises which don’t involve your direct participation. All you need is persistence and the will to break out of the rat race. Let’s look at the 13 ways of generating residual income that will keep your pockets bulging.
Real estate is one of the top avenues to create wealth. A vast majority of millionaires exist because of investing in real estate. Although the initial investment in real estate is a bit towards the heavier side, this is a great way to make money without really doing anything after your initial efforts taken to purchase a property. For instance, you could let out the property for rent once after you purchase it. All you have to do is maintain it in a livable condition and ensure that the tenants are happy. Another way to do it would be, those people having budget constraints but still want to invest in real estate, can do it through REIT (real estate investment trusts). This is a crowdsourcing method, using which one can invest in up to 40-45 real estate products. It’s an easy, low-cost way of investing and will produce income as well.
If you have some writing skills and some subject-matter knowledge, you can write a book! If not, collaborate your ideas with a writer who can write it out for you. With the introduction of a few ebook reading apps, anyone can now write their own ebook and attempt to sell it on various publishing platforms. For example, the Kindle Direct Publishing program allows you to create an author’s profile, upload the writing and add a cover page while choosing your own selling price. Your book could be on any topic and may have the potential to be successful. If the book gains some popularity, it may provide you with great passive income till the end.
When it comes to money generating avenues, majority experts suggest trading money in the stock market but this involves either hiring a stockbroker or spending time learning the procedure, policies and understanding various terms, all by yourself. Instead, the option of index funds can be explored. They are a part of mutual funds and track a particular index, hence they’re completely passive. You can also browse through ETFs taking some time out. ETFs are also an option to diversify your asset portfolio in the market in pretty much the same way as mutual funds, but they offer more trading flexibility and are more tax efficient.
Say, you’ve expert knowledge on a particular subject or a skill that you’ve acquired over the tenure of your career. Instead of writing an eBook, you could create your own course about that particular skill or thing and sell it online, provided it’s relevant, helpful and really high quality. This is a great way to earn passive income online, faster than a few other methods. Although this requires a high amount of investment timewise initially, there is an opportunity to earn money passively in the long term. The course could be anything from Python certifications or guitar lessons, which could be launched on platforms like Coursera, Udemy or Teachable. Only the initial work of creating the course is time consuming, but you’ll earn passive income continuously.
YouTube is the second largest search engine after Google. 100 hours of video are uploaded every minute on the platform, says market research. In these many years, YouTube has taken over the internet by storm. Nowadays, people are earning a living out of just uploading videos about experiences, singing, dancing, challenges, cooking etc. There are a lot of amazing ways to make money from YouTube. If you manage to build a loyal follower community base on your channel, you can even place ads on your videos and receive revenues depending on how many views you get. YouTube has its own monetization model which you can check out!
You might or might not have heard this term, but it’s big in the supply chain industry today. It’s a supply chain management method where the retailer transfers all product requests directly to the manufacturer/wholesaler/another retailer who then sends the product to the customer. You can get in contact with manufacturers and wholesalers to sell on their behalf. By doing that, you’ll get to keep a percentage of the sale amount and they can send the product directly to the customer. You don’t have to worry about keeping products in stock with you, or storing them.
This works by letting you take on the role of a bank through a secure lending platform, where you can earn a higher return on your money than a traditional savings account. Being one of the most popular ways of earning passive income, you can help people with financing (especially those who can’t get it from banks). On peer-to-peer lending websites like Lending Club, you get an option to lend money to other people. On an average, people tend to receive about 5-10% interest over the period of one year.
You can now be a source of financial help to budding businessmen, or even be a part of a team of investors who want to multiply the growth of a startup by providing financial aid. AngelList is one such website that allows you to invest in a startup fund and also invest professionally for the more seasoned investor.
This a great way if you have if you are an online influencer or have a functioning blog. If there’s a product or service which you like, you can refer it to your followers. With major sites like Amazon and even smaller retail sites, runs affiliate opportunities. Whenever somebody clicks and buys something using your link, you receive a percentage of the sale as commission. This is a great source of income if used really well.
Yes, you read right! When you read dozens of articles on the internet daily, do you wonder where the pictures of the models come from? This observation could really be used to your advantage. With royalty images sites like Shutterstock, Getty Images, iStock Photos, etc. you can upload your own clicked photos under different categories that people can then purchase to use for themselves (for personal/professional use). While few sites offer a flat rate for your stock photos, some will pay you a percentage of the sale.
Many options mentioned above require building a community from scratch. But buying existing online businesses is a great solution to give a jump start to your passive income dreams. You can purchase an existing online store. Every year, thousands of websites are sold or just turn obsolete even though they get a good amount of traffic. You could use this opportunity to your advantage, instead of starting from zero. You can even resell the domain names in the future, or run ads on them for revenues or even redesign them to provide you with better ROI.
Do you have a nice vacation home lying unused, or which is not being frequented often? The best option is to list your property on Airbnb. This enables tourists to access your place for a particular rent, basis the time they need it for. You just have to maintain the property well. Depending on your location, you can always charge competitive prices to get business. Isn’t it a great idea?
This may not be a feasible long-term passive income alternative, but it’s always an opportunity to make some money. Say, you have an extra bedroom in your apartment (and you don’t mind living with strangers) then you could let it out for rent. You could also convert a portion of your home to a secondary housing unit and advertise it on Airbnb. It will be purposeful for college goers, bachelors or job freshers.
Network marketing uses the concept of referrals or connections to create a distribution network that will sell products/goods or services. This uses social media marketing to a large extent. You will have to promote a product by word of mouth using your social media. You will receive a percentage of each sale of the product you promote. It’s a win-win situation as the company gets the promotion and sales and you get the money!
Rather than setting up your own blog or website, you can look for other existing blogs that you can contribute to and take a share of Google AdSense’s revenue stream. You would have to find websites which rank high and which have high traffic to allow them to share their revenue with you, based on the performance of the post you’ve written for them. This way, you won’t have the hassle of starting any platform of your own and you already have traffic to target.
As you saw, the ideas are endless. Go, take a step out of your traditional job and take a step into financial freedom!