What Is Passive Income
Passive income is money generated on a recurring basis without much effort put in. The opposite would be active income, which is what 95% or more of the world does. Most people work a 9-5 job trading their time for money; they work hard for their money. Passive income allows you to invest in something and get payments in return without doing much work for that money; your money works for you! There are a few different passive income streams such as investing in real estate, stocks, funding small businesses, or creating and selling something, which means you’ll receive income when people buy whatever you’re selling. Of course, when creating a product, it may mean quite a bit of up-front work to create the product, but the result can be decades of passive income or royalty cheques.
The fact is, most people don’t know that passive income is achievable and that chances are, they are already receiving some sort of passive income. If you have bank account with some money in a basic savings account, you are earning passive income already. The interest paid to you is income you’re receiving without doing anything for it and that’s awesome. So congratulations on all of you who are already making passive income this way, it’s a start! Of course, the difference is a few bucks a month from a savings account compared to a few hundred or several thousand from an actual investment or selling of a product.
Passive income can lead to financial freedom, retiring early and best of all changing your life in the way of less stress, less work and far more free time to do what you love. Passive income has changed my life and it all started when I read the book Rich Dad Poor Dad. Compounding interest, not working for money, but having your money work for you are just a couple things the book talks about and if you haven’t read it, YOU NEED TO. Running a business or being an Entrepreneur is not for everyone, in fact, most people won’t put up with how much work it takes and all the sacrifices you need to make for a business, but generating passive income streams is something that everyone can do and it’s something that everyone should be doing. Spend 10 minutes every day for 30 days brainstorming and researching all the different ways you might be able to make passive income. Anything new will feel intimidating, or impossible, but the more you know the easier it becomes! Knowledge is everything. Once you have a big list, narrow it down to only 5 that you think you can do the easiest and take action on those 5. Set goals of making $20/month or $50/month and as you reach your goals, increase the amount to $100, then $200, then $500, then $1000, $2000, $5000 and before you know it, you can quit your job, or at least contribute to your debt, or better save for your future. Here’s a list of 4 ways to get you started:
Doing work on Fiverr.com
The pay isn’t that great, but if you can come up with a way to streamline the process so you’re not actually exchanging your time for money then it’ll be worth it. For example, create a business card template and sell it on Fiverr.com, saying you’ll give it to the buyer for $5, or create a proposal template, or flyer template or some other digital product that can easily be sent to people when they buy from you.
Selling digital products on other marketplaces.
The Envato marketplace is strict for approving items, but if you can get something approved like the exact same stuff you’re selling on Fiverr.com, then that would be ideal. Envato has several divisions where you can sell things like stock photos, stock videos, websites, music, graphic templates and more. If you have talent in creating wordpress themes, you’ll do very well on Envato.
Invest your money
If you have some money saved up, put it to work right away! Don’t put it all into one investment though, it’s best to diversify so that if one industry drops in value, you don’t lose everything. In Canada, there’s a great investment you can do through a TFSA or other registered account and that is investing into a mutual fund with Tangerine. It’s completely managed by the bank and Tangerines fees are by far the lowest I’ve seen out of all the big banks. With other banks, you have to pay someone to manage everything for you, or do it yourself and that can take a long time to gain the knowledge needed to make a profit. Some other banks offer the same type of service as Tangerine, but I found that Tangerine is the most straightforward and cheapest.
Rental property
If you own a home and could use more money, or have no plans for your financial future, start living in the basement and rent out the entire upstairs. You might have to do some renovations to make it legal and presentable, but the result may end up covering your entire mortgage bills each month, or if your house is paid off, that’s money directly going into your pocket, or better yet, your TFSA account gaining compounding interest. Of course, look into if you need to pay tax on the rental income.
There are 10’s of thousands of people making hundreds of thousands or in some cases, even millions of dollars EVERY MONTH from passive income! In a way it’s not 100% passive because they work full time creating passive income stream, but to clarify, they are working full time to continuously grow their passive income. If they stopped and did NOTHING, they would still make a tremendous amount of money moving forward each month. Eventually it would become less and less because products become outdated and things change. People are always changing their interests and the world is always advancing in technology, so naturally something that was bringing in $5000/month passively in 2016, may not perform as well in 2020.
The biggest advice I can provide to you is to take action. Most people just exist in their life, they get up, go to work, have stress, struggle to pay their bills, then go to bed and repeat. If you invest in yourself and take action, your life will be forever changed, but you have to start somewhere. The best time to start was yesterday, but today will do just fine.
Why not spend the next 10 minutes coming up with 5 other passive income possibilities?
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Contributor
Will Bartlett