Passive income has to be one of the most fun ways to make money. Passive income is money that flows in at regular intervals without having to put in a great deal of effort to create it.
The reason passive income is so attractive is that it takes very little effort to make money. This is often referred to as making your money work for you. Generally, you invest your money in a product that generates income.
But beware, passive income is taxable. However, don’t let tax stop you from making passive income. Passive income is taxed differently than active income, but it is still taxable, so be aware before investing.
What is passive income?
The goal of passive income is to make money while you sleep. This is how you make your assets work for you. You invest time building something up front that will generate income in the future with very little effort on your part.
Building a business that requires upfront time but allows you to work less as the business gets started is a great way to generate passive income.
It is ideal to invest in financial products that generate income from dividends or interest income and increase in value over time.
passive income for beginners
There are many ways in which beginners can start investing and make money. As Warren Buffett is known, “If you don’t find a way to make money while you sleep, you’ll work until you die.”
Often when people need more money, they turn to a part-time job or a side business. The best option would be to stop trading time for money and create passive income.
Types of passive income for you to generate money using:
1. Bonds and GICs
A common way to passive income is to invest in financial instruments such as bonds or GICs. The financial instrument protects your initial investment and makes interest payments in return for lending you money. They are a safe investment, but the disadvantage is that they offer lower interest payments.
2. Investing in the stock market
There is more risk in investing in the stock market as there are no guarantees, but the idea is to buy shares in exchange for the increased value of those shares. Good stocks will display dividends as well.
3. Property rental
Investment in rental property can be negative if you hire someone to do the maintenance and repairs on the building. Ideally, the building you invest in will appreciate over time and you will receive rental income each month.
A royalty is a legally binding payment made for the use of assets such as copyrighted works (books, music), franchises, and natural resources.
5. Affiliate Marketing
This is when you earn a commission for selling someone else’s product or service. Many bloggers and podcasters use affiliate marketing to add to their income streams. There is no action on your part when you sell other people’s products.
6. Sell your digital products
Creating an educational product to sell to others, creating membership sites, and creating templates or tools to sell to others is a great way to generate passive income. The work initially begins to create the product, but once this product is created, there is not much to do. Just watch your product being sold
7. Partial investment
Tech companies are disrupting traditional methods of investing and allowing people to invest in affordable fractions. Real estate and stocks are crowdsourcing, making the investment affordable.
The bottom line is making your money work for you a smart way to make money. It saves your time in pursuit of active income and is an excellent way to protect the value of your money. Ideally, you would invest your money in appreciable assets that also offer passive income.