Passive Income Ideas
One of the most important financial moves you can make is diversifying your revenue. Just like diversifying your portfolio of investments, diversifying your sources of income will protect you against heavy losses in any single area, and will ultimately help you achieve higher overall returns.
You can do this in a straightforward way by picking up another job. With two jobs, you’ll have twice the income, and if you lose one, you’ll have the other to back you up.
For obvious reasons, this isn’t a sustainable strategy. Two jobs would simply take too much time. That’s why many modern income diversifiers turn to the power of passive income; passive income is income generated without the need for ongoing time expenditures.
7 Sources of Passive Income to Diversify Your Revenue
The question is, which sources of passive income are best, or most effective?
Passive Income Ideas
These are some of the most important sources of passive income you can seek.
1. Write a book: It’s not trivial to simply “write a book,” but most people have some skill, niche expertise, or unique perspective that they could feasibly share with an interested world.
For example, you might write about how you got started in this career, or how to start a business like yours. Depending on your goals, you could write this book and have it physically printed, so you can sell copies to local bookstores, or you could distribute it entirely online, offering customers a downloadable PDF for a fixed amount of money. Either way, your work will remain existing indefinitely, so you can continue drawing revenue from it.
2. Sell photos: Similarly, if you’re into photography, you can sell your photos. Like books, your photos are somewhat permanent assets; once created, they’ll be available for purchase forever. You can list your photos online, through a stock photo site or a source of your choice, and make a few bucks (or more) for each transaction.
3. Build a blog or education course: You could also take the time to develop a blog, an online education course, or some other form of online content that customers want to consume. Assuming you’re able to generate enough traffic, there are several methods you can use to monetize the site, such as advertising or affiliate linking. You can also sell “premium” versions of your content, like an eBook or an advanced course, to supplement your income.
4. Invest in rental properties: One of the best investments for passive income is a rental property. While it may take some time to find a “perfect” property for generating cash, once you find one, you’ll be in a good position. Collect more in rental income than you pay in monthly expenses, and you’ll be able to realize a monthly profit—and that’s on top of the money you’ll make from the property appreciating in value.
5. Invest in dividend-paying stocks: If you’re not interested in the real estate market, but you want something similar to generate ongoing income for you, consider investing in dividend-paying stocks. Many companies choose to distribute some or most of their profits in the form of per-share dividends, at a rate often between 2 and 4 percent. Just make sure you’re doing your due diligence before choosing companies.
6. Pick up a side gig: If you’re willing to put in some ongoing effort, you could also pick up some kind of side gig. For example, you could make pieces of art or crafts, and sell them for a profit with an online store; in this way, you’ll make money, but you can expend time when you see fit.
7. Lend money: Peer-to-peer lending is an increasingly popular form of passive income generation. As the name suggests, you’ll be lending a fixed amount of your capital to an individual or organization. You’ll receive an interest rate based on the credit risk of the borrower.
These are merely examples of passive income sources. Use your imagination to brainstorm more, or invent one of your own.
Understanding the Truths and Myths of Passive Income
Of course, the term “passive income” is a bit of a misnomer. This may imply that you can generate this money completely passively, without any exertion of deliberate effort. In reality, even most “hands-off” sources still require some level of initial time investment and effort; for example, writing a book or starting a website could be a massive project to start. Even once established, you’ll still need to spend time researching, maintaining, and tweaking these passive income sources.
Still, if you take passive income seriously and you’re willing to put in initial time and effort, they can radically improve your long-term financial prospects. In the meantime, use the extra money to invest in assets in line with your core financial strategy.