What is Passive Income?
There are 2 ways a person can earn money, Active income and passive income. Active income is a way which is common to most. This is the hard earned income which is earned in exchange for performing services. Examples of Active income include salaries, tips, wages, business income and commissions.
On the other hand there is Passive Income. Passive income for many is a topic of much intrigue. This is because this income does not require active participation. There is no constant involvement or “hard work” involved in earning such an income. Examples of Passive income include returns from stock investments, freelancing, rental income, dropshipping etc.
So it could be said that in many ways active income is when you are working to make money and passive income is where your money is working for you.
How to create a steady Passive Income flow?
Would it not be nice to have a steady flow of income where you do not have to work for 8-10 hours a day? With this, let’s take a look at different ways to achieve a steady flow of passive income.
- Freelancing – This is a way of being self-employed. A person instead of working for a fixed organization has the liberty to choose his desired working hours, fees and organizations that he works for. Many people who have permanent jobs can also look for freelancing opportunities where they can make income on top of their existing salaries.
If you have a certain talent or skill in the fields of writing, art, designing, marketing, teaching, etc you can visit websites such as fiverr and upwork and look for freelancing opportunities.
- Investing in Stocks/Mutual Funds – One of the most preferred ways of earning a passive income is by way of investing our savings in the stock market and mutual funds. This is a method where your money is working for you by making returns on the investment you make. Financial instruments such as stocks and mutual funds hold the capacity to truly multiply a person’s wealth and many people use these as a fixed source of income. You can visit elearnmarkets to learn and gain the skills required to become a successful investor.Additionally, there are many aspects to investing in mutual funds and stocks. In case you are looking for free tools to help you with analyzing and identifying the right stocks or mutual funds, you may visit Stockedge.
- Earn money from Rental Income – This is another popular method of making passive wealth, similar to stock investing. In this case the investment is made in immovable assets such as real estate. An investment in a property or an existing property can be rented out to others as an office space, storage space, residential or showrooms. This ensures a steady flow of income without you having to work for it.
- Affiliate Marketing – Affiliate marketing is a method by which you earn a commission by helping another person/company make sales. For instance, Amazon runs one of the world’s largest affiliate marketing networks. Amazon registered affiliate marketers get unique links to various products listed on Amazon’s shopping website and they can then earn a commission everytime someone uses their link to buy that product.
- Dropshipping – This is a modern online business model which has been gaining a lot of popularity worldwide. Traditionally, retail stores keep stock of products that they sell in their stores and customers buy it directly from the store. But with the dropshipping model, a store no longer needs to order inventory. Instead they send the orders directly to a third-party merchant, usually a wholesaler or the supplier who handles the product and ships it directly to the customer. All you do is act as a middleman between the buyer and a seller and make a hefty profit in the process.
- Start your Side Business – With the advent of smartphones, starting an online business has become a very less tedious process. One can easily set up quick storefronts and offer various products or services. So based on your existing skill sets, you can offer various services to prospective customers in the fields of graphic designing, SEO(search engine optimization), Content marketing services etc. This is very similar to offering freelance services but in this case you register yourself as a company and start selling digital services online.
Bottomlines
All in all if one needs to become financially independent quickly, having passive sources of income is a must. The least anyone can do is to invest their savings in high income generating instruments but only after thorough research as such products can be risky. Otherwise one can develop the skills required to offer various online services.
