Passive income is income you receive for investing money with little or work on your part. But sometimes depending on the type of passive income. It might require a level of input or work at the initial or starting stage and then less work as the business grows to be passive.
- Income from real state investments is only passive if you are hiring a property manager to do all the work, including choosing tenants, evicting tenants, collecting rent, taking all calls from tenants, arranging for maintenance and repairs, paying all bills including property taxes, and insurance, even choosing the insurance company. Otherwise, real estate investing is work
- Income from investments in stocks and bonds is passive income if you are hiring an investment manager to do all the work. This includes doing all the research, choosing what to buy and sell and when to buy and sell, keeping track of all income, dividends, and capital gains, and issuing the appropriate tax documents each year. Otherwise investing in stocks and bonds is
- If you put a fixed amount or a fixed percentage of your income into a mutual fund or ETF each month and don’t change your routine depending on your analysis of the macroeconomic conditions, and you automatically reinvest any dividends, the income from this will be passive. However, if you are trading it’s not. Trading is work.
- If you are retired and living off the interest and dividends of your investments, your income is passive, but only if you aren’t trading or making any investment decisions.
- If you are receiving royalties from books you wrote, that’s passive income, unless you are busy promoting your books and writing blogs, and maintaining a website. Promoting and writing and maintaining are
The overwhelming reason why you need to create passive income
If you are living off passive income, you should be able to go trekking in the Himalayas without a cell phone, fall in love with the teachings of some guru you meet in a cave, and decide to stay for a few years to achieve enlightenment, all without worrying about how your funds are being managed.
I believe that too many people are taught to think that working hard is better than working smart. This mindset is what sets apart those who you see complaining about their life, about their hours, about their salary without doing anything about it. It isn’t about working hard, it’s about working smart. So congratulations on figuring that out while you still have your youth.
How to create passive income
So how do you make money with passive income? Well, there are a lot of different ways to do it. Like others have suggested you can…
Create an Online Business
Either selling digital products, services, or acting as a consultant as long as you can take advantage of a skill that you have you can create your own online business.
If you don’t want to create your product then you can always promote other people’s products through affiliate marketing.
Invest in Stocks
Now you will want to do your research here as it can become quite volatile; however, you can make some pretty good money. Some companies will pay you dividends so you get some extra cash just for investing in that company… basically free money!
Find a wholesaler online and then post the products on eBay or Amazon. This way you can set the price to whatever you want and you don’t have to keep inventory because when someone purchases from your store you forward the details to your wholesaler and get them to ship it out for you.
While others have mentioned this… these days you can buy a house for just a 5% down payment. Essentially buy the house and rent it out and watch that passive income come in from your tenants.
Over To You
Of course “passive income” doesn’t mean you just sit by and do nothing. You have to put in the initial work to make it passive. Now if you are willing to put in the work and want to see results right away I recommend by first investing in yourself first. Use the first startup period to learn all there is about the industry you are starting off with. Also, engage in online communities as well as network with experts in that field.