February 6, 2018
Passive income is the idea of making money with very little to no effort. It can often be referred to as the opposite of active income. Active income is what over 90% of people make their money from, which is typically a job where they make a salary or commission. The difference between passive income and active income is mainly the time spent on the service. Many investors like passive income because it involves very little of their time and they don't physically need to be there in most cases. Let your money work hard for you.
So you may ask yourself then - "how do I make passive income?"
A lot of people have an ambitious goal of wanting to become a millionaire, but how? They say the key to riches is to have at least 3 sources of income. This is where passive income can come into play along with your salary. Salary = 1 form of income.
A.) Real-Estate Investing
This is one of the more popular forms of passive income. Many investors will put a down payment on a piece of property and rent it out to tenants. This is great for recurring revenue, which can come in handy if you were to ever get fired and have no source of income. Instead of renting from others, you should rent TO others. As long as you are taking in enough money from rent to cover mortgage, taxes, and other amenities then you won't be incurring a loss and it will be considered a safe investment. Even if you can't charge enough rent to cover all of the mortgage, you are still diminishing the amount of money you owe on the property as well as building equity. This could allow you to invest in other properties as you start accumulating money.
Stocks are another great way to have your money work harder for you. You will earn a far better return in the stock market than you will in a savings account, especially if you know what you are doing.
Some people use their own personal blogs as a form of passive income. This is as simple as generating a large following and charging companies for ads.
There are many different ways you can use royalties as a money source. One of the most common is writing a book and getting paid for every couple sold. This could take time to write the book but once you have it out on the market your effort is minimal and you can sit back waiting for the checks. A lot of agencies will pay you royalties and sell it for you if it becomes popular. Another form of royalty is investing an initial amount of money in a business and reaping the benefits down the road if it becomes successful.
E.) Own A Business
One of the last forms of passive income I will talk about is owning a business, not running the business. In some business models you will see the CEO is not actually the founder. This is the founder generating passive income because the business model is designed for him to make money even with having to pay other employees. It all depends on how much control you want of the business.
There are many ways to generate passive income, these are just a few examples. Apply passive income to your life and you will notice an increase in cash flow. Let your money work for you while your not around.
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