As a financial analyst, my father taught me how money worked from a very young age. He was a great admirer of Warren Buffet, and one thing that impressed him the most about Buffet was his saying, “If you don’t find a way to make money while you sleep, you will work until you die”.
Essentially, the quote points to passive income, which most people may not even know about. Unlike an active income, which may require constant effort and time, passive income is different and can be more rewarding in the long term.
To create a passive income stream, you may need to invest time, effort, or even money in the start. However, once a passive income stream is established, there is little to no effort required to generate money.
In this article, I’m going to share a few ways you can establish a passive income stream. But first, let’s see why it is important to have a passive income stream.
Why It is Important to Have a Passive Income Stream:
A passive income stream can be very helpful in tackling the ever-increasing inflation. Besides that, the following are a few more advantages of having one:
- You can generate a handsome side income without giving too much time or effort.
- A passive income stream can significantly reduce your dependency on paychecks.
- Luxuries may become affordable when you earn passively.
- You can easily save money with a passive income stream.
Now, let’s have a look at some of the most important factors to keep in mind for a passive income:
Important Factors to Keep in Mind:
- An Initial Investment:
Some passive side hustles may require an initial investment to start. For instance, if you want to earn passively by uploading stock photos, then you may not need to make any investments.
However, if you want to invest in the stock market, then you may need capital to start with. Similarly, you may need to buy some tools or software subscriptions in case you decide to create and sell digital e-books or start a faceless YouTube channel.
- An Active Internet Connection:
From uploading faceless YouTube videos to stock photos or checking your investment portfolio to creating and selling e-books and courses, most passive income ideas require reliable connectivity.
Personally, I’ve put my trust in Spectrum Internet because besides being fast and reliable, the internet service offers millions of WiFi hotspots through which I can create and upload faceless YouTube videos on the go. Also, in case of any queries, I can contact reliable Spectrum customer service anytime I want.
- Consistent Efforts and Time:
As I mentioned above, any passive income stream demands consistent efforts and time at the start. Essentially, it’s like putting hard work and time upfront to reap the benefits later.
It’s because, at the start, you may need to invest time and effort to understand the passive side hustle. Moreover, you may also explore ways to scale your passive income stream or find ways to fully automate your passive side hustle.
Now, let’s explore some passive income ideas you can start today:
Ways to Generate Passive Income:
- Sell E-Books:
If you’re interested in a particular subject or niche and have vast expertise in it, you may write an e-book on it and sell it on the Internet. There are multiple websites and platforms, such as Amazon, Google Play Books, etc. that let you publish your e-books.
Once published, you may not need to work on it again, unless you decide to make changes to it. As people buy or rent your e-book, you may receive a royalty from the platform.
- Start Affiliate Marketing:
Affiliate marketing is an interesting way to make passive income and may require a loyal audience on social media platforms. Besides that, blogs and websites can also be effective tools for affiliate marketing.
In affiliate marketing, you may share a referral link to a product or service with your audience. And when they make a purchase, you get a commission. Also, there are numerous platforms where you can become an affiliate marketer such as Amazon, Shopify, and more.
- Rent Out a Property:
Renting out an idle property like land, a house, or even a room is one of the easiest ways to make passive income. Besides this, if your property does not require any renovations, then you may not need to invest anything to start earning from it passively.
Here, you may register your property on local rental listings or get help from renting platforms like Airbnb or Booking.com.
- Make Investments:
If you have the capital, invest it to generate a passive income. To make investments, there are several options at your disposal. For instance, you can buy low-risk stocks or stable crypto coins in the spot wallet. You can also buy currency pairs from forex brokers to earn passively.
However, keep in mind that extensive research may be required for risk-free investments. Also, financial investments may not become profitable overnight and require patience from your side for profitable results.
Frequently Asked Questions (FAQs):
How is passive income different from active income?
In active income, you have to be actively involved in the work. For instance, your employer may not pay any salary if you don’t do your job. So, you need to consistently put effort and time into active income. However, you do not need to put the same effort and time into your passive side hustle once it is established.
Is a second job considered passive income?
No, a second job is like another job where you may need to consistently put in effort and time to make money.
Is peer-to-peer lending considered passive income?
Yes, peer-to-peer lending may be another way to generate a passive income. Here, the lender and the borrower may mutually decide the interest rate and period to return the money. And to save themselves from any confusion, it’s best to document everything.