Most people are familiar with active ways of earning an income. This is where you’re actively involved in some work to get paid. This means that if you’re not working, say, due to incapacitation, age, leave of absence, or other reasons, you don’t get an income. When you think about it, you realize that finding other means of making money where you don’t have to participate actively is crucial.
A famous investor was once quoted saying people should find ways to make money while they sleep; otherwise, they’ll work till they die. Working till you die is anything but appealing. But, while making money in one’s sleep sounds perfect, how can you achieve that? Fortunately, there are many ways you can start doing that by earning a passive income.
What Is Passive Income?
This is a way of generating an income without being too actively involved in work or activity to keep the income source bringing in money. It refers to income that comes from your investment and not your time. However, it’s not a get-rich-quick scheme and often requires a good level of effort or investment at the beginning to start generating income.
After the initial effort, you don’t need to continue working around the clock to keep a consistent income stream. If your passive income source becomes successful, it can continue generating regular income for the long term.
There are other high-value income sources in precious metals, but they aren’t counted as passive income. However, they’re excellent ‘hedges’ over your other investments, such as gold—no wonder why is gold valuable.
Passive Income Sources To Achieve Your Financial Goals
There are many ways you can make passive income. While some require a relatively significant investment, others don’t and only need some level of expertise. Look at the sources discussed below.
- Investing In Dividend Stocks
There are three main ways to invest in stocks: growth stocks, value stocks, and dividend stocks. This is where you buy a share of a company. You only make money in growth and value stocks when you sell the shares, hopefully after their value appreciation. However, you earn a regular dividend payment in dividend stocks instead of the asset’s share price.
Share companies make dividend payments to the shareholders on a regular schedule. This means you’ll have a steady income, even though you don’t actively participate in the company’s running. You can use a dividend tracker to keep tabs on how your dividends are growing to help you manage your dividend income. One way to manage the income is by reinvesting and diversifying your investment portfolio.
- Real Estate Investment Trusts (REITs)
REITs are a great way to earn from real estate without purchasing and managing a whole property. You’ll be investing in companies that deal with buying and selling properties and mortgage companies. Here, you own shares in properties such as apartments, malls, and an office complex, the same way you’d own company stocks.
Notably, REITs have an above-average payout in dividends, which isn’t only attractive, but also a great source of regular income for which you don’t have to put in hours of work to earn. It’s an excellent alternative to purchasing a rental property that needs the effort to maintain and acquire tenants.
- High-Yield Savings Accounts
Savings is one thing that every person should strive to accumulate. In fact, it can save you a lot in times of financial crisis. However, not all savings accounts can earn high returns. Saving in high-yield accounts offers a better way to keep your money by earning just for simply sitting in a bank account. If you can find a bank that has this option, you’ll get a regular earning on your savings for as long as you keep it with them.
- Affiliate Marketing
This is where you market another company’s products or services at a commission. There are many ways to do affiliate marketing, but choosing the right products to market is one of the most important factors to consider. Also, it would help to have an excellent traffic generating strategy, either in the form of content or ads, and compelling sales pages.
With affiliate marketing, you can start small or big, depending on your capability, such as having money to invest in paid ads. If you’re not in a position to buy ads, start with content marketing. Generating traffic to your website or blog can be an uphill task, but it works when done well. Take time and learn about search engine optimization (SEO), creating and managing ads, and content marketing. Most companies pay daily commissions.
The ecommerce industry is going through exponential growth. The best part is that people can shop from anywhere, which is where dropshipping comes in. This is an ecommerce system where you play the role of an intermediary between customers and ecommerce shops. You don’t need to stock the products yourself.
What you do is look for buyers and send their requests to the seller. You need to set up a system to help you acquire customers and an automated process to send buyer requests to the seller. Each time there’s a new order, you earn a commission on the sale.
However, even though there’s a lower risk since you don’t stock the products, it can be challenging to acquire customers to earn a decent income. But, a good marketing strategy and automation can improve your chances of creating a sustainable income source considerably. All this without putting as much time as you would running a physical or regular ecommerce store.
Anyone can generate an extra income, especially if it doesn’t require you to put too much time into it. Creating a way to earn passive income is a great way to achieve your financial goals. In most cases, money earned in active income ways takes too much, if not all, of your time. In addition, if you’re not able to put in the time, the chances are that you’ll lose the source of income.
There are many other sources to make a passive income that haven’t been discussed above. A little research might help you find the most suitable source for you.