Income plays a key role in sustaining your lifestyle and comfort level. With time, you may find that your regular income can no longer sustain your lifestyle, and you need a passive income strategy.
According to data from the U.S. Census Bureau, the COVID-19 pandemic has negatively impacted the economy and livelihoods of many citizens. For this reason, there has never been a better time to learn how to make passive income.
The truth is, building a passive income stream usually isn’t passive at first. It requires time, money, skills, or all three. However, if you play your cards right, your passive income could eventually earn you money while you sleep.
What is Passive Income?
Passive income is money earned with minimal activity through any venture that requires little daily effort or upkeep on the individual’s part. In brief, it is a long-term choice that requires short-term trade-offs.
It can be an additional revenue stream to your primary job and in some cases, it could end up being your main source of income. Either way, passive income can provide you with much-needed financial security. Building wealth through passive income could also appeal to those who are anxious about meeting their retirement goals.
In a nutshell, having passive income could turn your far-fetched dream of achieving financial freedom into reality.
Tips on Building Your Passive Income
If you’re thinking about creating a passive income stream, check out these strategies and learn what it takes to be successful with them. You can also visit unusualinvestments.com for more tips and ideas for a successful business.
- Investing in Real Estate
There are many ways to earn an income producing real estate industry. One way is to buy real estate and rent it out to tenants, although this can be a bit engaging. Once you have a property that is established and fully rented, it’s mostly a matter of managing the property. To avoid these hassles, you can hire professional property managers for around 10% of the monthly rent.
According to Brandon Turner, an active real estate investor, understanding how to analyze potential real estate opportunities is essential in the success of this venture.
For those who prefer a more passive approach, investing in Real Estate Investment Trusts would be a suitable option. A REIT is a company that owns and manages real estate. You can invest in REITs in a variety of different ways, including purchasing shares of publicly traded REIT stocks, mutual funds, and exchange-traded funds. They generally own and/or manage income-producing commercial real estate, whether it’s the properties themselves or the mortgages on those properties, you can see here for more details.
- Buy/Start a Blog and Monetize it
Whether you’re a travel expert, a talented chef, or a maven of Minecraft, you can make your passion the subject of a profitable blog. However, there’s more to making bank with a blog than just posting good content.
Starting a blog is an affordable yet highly scaleable way of creating passive income for yourself. The first step is to register a domain and select a hosting plan for your blog. The general idea is to consistently use your blog to create a lot of value for a lot of people to generate an extraordinary amount of passive income. Blogging alone doesn’t generate revenue unless you find a monetisation strategy that works. The path to profitability as a freelance blogger is finding the right market to position yourself in.
If starting a blog proves to be a challenge, you can buy blogs with a reasonable amount of web traffic – as well as demonstrated cash flow- and it could be a great source of passive income.
From a financial perspective, blogs usually sell for 24 times their monthly income. So if the site generates $250 a month in income, you can likely buy it no more than $3,000. In essence, a $3,000 investment will buy you $1,500 annual cash flow.
- Purchase Stocks
Dividend stocks can be one of the simplest ways for investors to create passive income. Since companies need money to finance their businesses, they earn it by either borrowing or sharing stocks through an Initial Public Offering (IPO).
When you invest in stocks of a company, you become a shareholder. As the company generates profit, a portion of those earnings are siphoned off and funnelled back to investors in the form of dividends. Investors can decide to pocket the dividends or re-invest the money in additional shares. With this type of investment, the idea is to let your money grow and stay in it for the long haul.
Financial advisors at Graves Financial Wealth Management warn novices not to jump into the market before thoroughly investigating the company issuing the stock. The tricky part is usually knowing when to buy stocks and choosing the right stocks. Experts in the field advise that the best time to buy stocks is when the market is down. However, If you’re not interested in picking dividend-paying stocks, stock apps like Robinhood can help you set up to automatically invest. There are no guarantees of profits when you purchase stocks due to their unpredictable nature, so you need to be aware of the risks involved before getting into it.
- Build an App or Sell Digital Products
Apps can be an incredibly lucrative income source if you consider the large number of people who own smartphones. Reliable statistics indicate that the daily revenue for the top 800 apps is $3,500. Creating an app could be a way to make that upfront investment of time and then reap the reward over time.
An app can be a game or one that simplifies tasks for its users. Once it’s public, users download it, and you can generate income. Although numerous apps have flooded the market, designing something unique can be a reliable source of residual income.
If you’re willing to learn, you can create an app on your own. As a non-coder, you can also outsource coding services. Other ways of monetizing your app include running in-app ads or charging users a nominal fee for downloading the app.
If you’ve discovered how to create content that produces enough traffic, you can also turn that into a product. It could be anything from a simple e-book or a meal-prep guide to online courses. Informational products can generate an excellent income stream because you make money easily after the initial outlay of time.
Achieving financial freedom using the passive income route requires some effort, but is certainly worthwhile. Even though the idea of picking multiple sources of passive income can be tempting, experts advise mastering one thing before moving to another. No single passive income is categorically better than the other. The best passive income ideas combine decent returns with little effort on your part to seal the deal.