Many people wonder “what is the difference between earned income”? What are ways to generate passive income? Well, passive income is amazing! Passive income refers to earnings derived from an enterprise or rental property where the person acquiring the income isn’t actively involved. Passive income is taxable, as with active income. Sometimes passive income is referred to as ‘residual income.’ It often requires an upfront investment, followed by a period of collecting the money without direct involvement.
1. Investing in stock
One of the most popular ways to generate passive income is to invest in stocks or bonds. Stocks are a form of equity investment that means part ownership in a corporation. The part ownership then entitles you to an amount of that company’s assets and earnings. There are different types of stocks, for instance, ‘preferred stocks’. With these stocks a dividend payment is guaranteed; however, the investor has no voting rights. Then there is ‘common stock,’ which does not guarantee dividend payments but does include voting rights. Long-term ownership of an index fund (within a main index) yields a good profit. According to Liberated Stock Trader, ‘In the last 20 Years, the Best Performing Major Index has Been the NASDAQ 100 with a meteoric return of 300%.’
2. Peer-to-peer lending
Peer-to-peer lending enables individuals to receive loans from other individuals, without having to use a financial institution. Over the last several years, P2P lending has increased in popularity as an alternative approach to financing. Sometimes P2P lending is called ‘crowdlending’ or ‘social lending.’ Several different websites offer P2P lending services, including StreetShares and Lending Club. As a lender, you’ll earn around 10% on returns by lending to small companies and individuals. To become a P2P lender, you can build a portfolio by investing in low-value loans. Once you have borrowers, you’ll receive monthly payments, as they pay back their loans.
3. Affiliate marketing, my favorite way to generate passive income
Affiliate marketing allows you to receive a commission when you promote a product and is my favorite way To Generate Passive Income. To get started as an affiliate, you first need a blog, and from here, you need to build your online presence and followers. With an active and popular blog, you can sign up as an Amazon affiliate, or use a platform such as ShareASale. You’ll be required to use affiliate links into your blog posts. From here, you’ll receive a commission if the affiliate links result in a sale for the client. When it comes to affiliate marketing, it’s more beneficial to promote products that you feel are high quality. Using affiliate links that do not match the theme or tone or your blog could alienate your followers. You can read my full guide to affiliate marketing here.
4. Invest in a company
Investing in a small company is a great way to generate passive income. Many local small businesses have great potential for growth, but they don’t have the capital to help them get there. When you invest in a small business, you’ll get yourself a considerable percentage of the profits as they grow. It sure is an easy way to sit back and let the cash roll in!
5. Property rental
Renting out a property is an excellent form of passive income; however, you should be aware that this income is only passive when you use a property management service. If you don’t use a property management service, you’ll have to handle all the marketing, admin, maintenance, and legalities yourself. In addition, you could be attending to matters such as managing apartment access control, security issues, and tenant complaints on a daily basis. By using a property management company you’ll have that done for you and get an excellent marketing service, helping you to secure a higher rental rate for your property on top. You’ll also receive a secure rent collection and service to handle your maintenance. Check out the In house Property Management company if you are looking for information.
6. Purchase a small business
Buying a small business doesn’t mean that you need to be involved with the day-to-day running. There’s nothing stopping you from buying a profitable business, and paying staff to run it for you. It’s perfectly achievable to generate an income from business ownership, without directly working there. Of course the financial responsibilities are your own, but with the help of a good accountant, passively owning a company is entirely possible.
7. Sell a course online
Online courses continue to soar in popularity every year. Many people love the idea of acquiring new skills from the comfort of their own home. If you have expertise in a particular subject, you could create an online course to sell to students. Whether it’s a course on graphic design, foreign language, violin, or marketing, use your skills to make you some money! Websites such as Teachable give individuals a platform to sell online courses. Once you’ve put in the initial work, you’ll be getting paid as students book your course. You can set up the course structure as entirely remote, using online videos or assignments. Each year, there are many new ways to make money online.
8. Storage rental
If you have spare space in your home, you can make money by merely storing other people’s belongings. Whether it’s an empty garage, cellar, or a spare room, many people need affordable and convenient storage space. There’s a website called ‘Neighbor,’ where individuals can sign up to rent out their space for storage. The site helps individuals take care of the legalities, so it’s easy to turn that spare room into cash. Many of us have spare rooms but don’t like the idea of another person living in our home. In this case, renting a storage space is the perfect solution.
9. Rent out your car
There are several apps out there where you can rent your car on a short-term basis to other drivers. If you have more than one vehicle or don’t use your vehicle all of the time, it’s a fantastic opportunity to earn some money. One popular site where you can do this is ‘Turo.’ The app also gives you the opportunity to rent out a parking space which you are not currently using.
Making money isn’t always easy, but with these ten ideas, and a little investment, you can make some extra cash without too much effort!