Are you looking for financial freedom? The nine-to-five day job that you have may not be sufficient enough to achieve your dreams. Let’s talk about how passive income investment can help you reach financial freedom.
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What is Passive Income?
Passive income is generally earned through investments. The investor is not actively involved and is commonly derived from assets like a limited partnership, rental property, or other business ventures.
Some would say that a passive income is the holy grail of one’s finance. Once your passive income exceeds your expenses, you are truly living with financial stability and freedom.
Some people misunderstood the true meaning and goal of passive income.
The income is generated from a passive income investment may require an upfront investment, and a lot of nurturing at the beginning of your investment process.
Both time and hard work are needed to start building and maintaining the investment in order to bring you consistent revenue.
What are the Two Ways to Make Passive Income?
There are two ways to build up passive income:
- investments
- business
Investments leverage your money to make more money. It’s one of the most popular ways to build up passive income.
Businesses are a great way to build up passive income. You need to look at opportunities that will bring recurring revenue. Look at leveraging systems so that you are creating passive income.
Read: Passive Income Ideas For People With a Job
What is an Investment?
An investment is an asset or an item that is acquired to generate earnings or an increased value of an asset over time. Basically an investment should be producing some kind of future monetary benefit.
What different types in investments can I get involved with?
Investments can be mutual funds, interest-bearing accounts, stocks, bonds, derivatives, real estate stocks, land derivatives, artwork, jewelry, or vintage treasures that could be worth more.
Estimated ROI
Return on Investment (ROI) directly measures the amount of return on a particular investment relative to its cost.
In order to calculate ROI, the benefit or return of an asset is divided by the price of an investment. The result can be expressed as a percentage or a ratio.
In estimating the return, it involves the costs, the time, and efforts to maintain it.
What Are The Elements Of A Passive Income?
Passive income investments can increase your income and level up your goals financially in different ways. Before jumping into the various passive income ideas, it is best to clearly understand the common misconceptions about passive income investment.
It is not true that the word “passive” may sound like you ain’t gotta does nothing to bring any earnings. Every passive income investment will require at least one of the following two elements:
- Upfront Monetary Investment – you may need a considerable amount of money in order to start your investment.
- Upfront Time Investment – you would need a significant amount of time to focus on the type of investment venture you have chosen in order to keep it going smoothly.
Always remember that you will never earn an income without being eager to provide at least one of the elements mentioned above.
Read: 50 Passive Income Ideas To Become Financially Free
What Are Popular Passive Income Ideas?
Rental Investments
One of the most important rental investments are in real estate. A lot of people have made a fortune by investing in real estate. Once a mortgage is paid off, it will produce recurring revenue over and over again.
Read: Is Real Estate Investing High Risk Or Low Risk
Generally speaking, rental refers to an arrangement to rent something. Rent is the pay for the agreement that both parties have agreed. Typical rentals are leasing a property, car- rental, DVD rental, etc.
Affiliate Marketing
Becoming an affiliate or a partner of one’s corporation and receiving a commission on a product or services from the business is all about affiliate marketing. This is a method of generating income that works best for those who are running blogs and websites.
Read: Affiliate Marketing Business Model: How To Set Up Your Systems
Create an App
If you have an excellent and unique idea for an app for a smartphone or tablet, then cheating an app will be a significant passive income investment for you. Then list your original app on the Google Play and Apple App stores in order to generate residual income.
Create a Course and Sell Online
Several platforms allow its users to take video courses on a variety of subjects or courses. Besides taking online courses as a student, you may also create a passive income by creating a course on your expertise level.
Create video presentations of your own course and allow users to access them through various platforms where you can earn passive investments.
Read: How to Develop An Online Course
Create and Licensing Music
If you are a music lover, you can create and license the music, then earn a royalty from your music whenever someone uses it. Music is commonly approved or has a license whenever you use it from various platforms like in the commercials or YouTube Videos, and others.
There are a lot of famous musicians, songwriters, and composers that earned millions of money out of the royalties from just a single hit of their creations.
Selling Stock Photos
Suppose you are a photography enthusiast and love to take pictures. You may also sell them through stock photo websites.
Submit your photos to stock photo websites and receive a commission whenever someone uses it or purchase them.
Rent Out Your Car
Owning a car can provide you both the luxury and the passive income investment that you may enjoy. You can list your car for rent. If you create a business model, you may be able to make this set up more passive.
Rent Out Your Room
If you have a portion of your house that is available for use, you may rent it out. This will also earn you a passive income investment as you will earn whenever someone chooses to rent your room.
Read: 13 Real Estate Investing Strategies and The Best One When You Are Starting Out
Listing A Property On Airbnb
If you have a property like a house, apartment, spare room, or an open space or a backyard that can be best to rent out for occasions, you may list them to AirBnB and earn a passive income investment whenever someone chooses to sign up and use your property.
Airbnb is an excellent option for a passive income investment because you will earn your money in an area that you already own. Although signing up with them would require a little work and cleaning up after the guests use the property. If you scale this up, you can make it a lot more passive by hiring the extra help.
Design T-Shirts
If you have a passion for arts, especially designing T-shirts, certain websites allow users to custom design items. Once your designs have been chosen and will become popular and people will start purchasing them, you will definitely earn money through it.
Write, Publish and Sell An E-Book
If you are an excellent writer, you may also self publish a book and sell it online as an EBook. All you have to do is simply write and edit the content, generate a copy of it and upload them in a program or platform where you can market your EBook.
Always remember that this is a passive income investment, and you should not expect instant success. Sometimes, you may need a large amount of money for marketing purposes before you can reap your hard work.
Own A Dividend Stocks
Owning dividend stocks is one way to a passive income investment. The companies’ shareholders, giant corporations with dividend-yielding stores, receive a payment at regular intervals.
Typically, owning a dividend stock will be paid by big corporations and companies quarterly or annually out of the profits of the business. The stock dividends are paid per the share of stock. Thus, if you have more claims, you will be paid higher.
The stocks’ earnings are not connected to any activity other than your financial investment; thus, owning a dividend-yielding stock can be one of the most passive income investments to earn a massive amount of money.
Peer-To-Peer Lending (P2P)
A P2P loan is a great way to build up passive income. It’s a personal loan is made between you and a borrower that is usually facilitated through a third party intermediary party or agency.
P2P or a peer-to-peer lending is a passive income investment as you are earning your income through the interest payments that are made on the loans. The risk on this kind of business is relatively high as the loan may be unsecured.
Read: How to Become Successful Earning By Passive Income
Savings accounts
Putting your money on a high-yield savings account at the bank is a classic kind of passive income investment. You can then sit back and just for the interest to mount up.
Frequently Asked Questions
Does Passive Income Investment Really Work?
The short answer is Yes. If you do not have the money, you can always leverage your time and effort in building your income streams to grow in the future.
How Many Income Stream Should One Have?
Passive income investments do not provide the “one size fits all” solution to you. It actually depends on your passion and expertise as to what kind of income investment you would like to take risks and venture on.
The number of sources of income one should have would depend upon the financial capacity and financial goals.
Where Can A Passive Income Investment Be Generated?
There are many ways to generate a passive income investment that can really help you earn massive amounts of money.
All it takes is perseverance, complete planning of your investment, and patience to pursue this kind of investment.
Passive income investments may be frustrating because of the delay, but rest assured that you will earn money over time.
