For many people, the ability to earn passive income is the dream. Creating a passive income is a great way to achieve financial independence and live the life that you want. However, creating a viable passive income that is able to cover your expenses and provide you with the freedom to create the life that you have always dreamed of is not always easy. There are tons of passive income ideas to consider, but it’s also important to think about whether or not they are the best option to make you money. In addition, many passive income streams will require a lot of work to get started and achieve future success with.
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What is Passive Income?
A passive income is any money that you make that you do not have to give up your time for. One of the biggest misconceptions about passive income is the extent of work that you will need to put in to achieve a passive income. Making money from a passive income happens when you apply your time and energy to something that will go on to make you money in the future, such as starting your own business, creating music, or writing a book, for example.
How to Make Passive Income
One of the biggest misunderstandings about passive income is the amount of initial work that is needed to achieve it. In fact, in some cases there will be some ongoing maintenance work that is required in order to ensure that you continue to make your passive income stream.
Most people who are millionaires or billionaires will have at least seven different sources of income, which don’t usually come from their day job. Of course, there are some very rich people who have managed to earn millions through their job alone from having equity or working up to a very senior position, but these people are usually in the minority. Passive income streams are highly recommended for the following benefits:
- It is a good way to diversify your income
- Making money from more than one income source can boost your confidence and teach you new skills
- You can use the passive income sources to achieve financial independence
- Over time, it can help you achieve a lifestyle of freedom
What are Some of the Best Passive Income Ideas?
Every source of passive income will require you to put in some work upfront and accept some level of risk.
Examples of Passive Income:
Some of the best ways to make a passive income include:
1. Investing in Property
Property investing is one of the most common ways of making a passive income. However, it is not for everybody since you will typically need a lot of capital to get started. There are also other significant transaction costs like solicitor’s fees and stamp duty, and you will need to keep future costs such as insurance, repairs, finding tenants, and more into account. However, on the other hand, property investing has the potential for significant return on investment over time.
Although it will take a lot of work initially to get set up, blogging can be an ideal way to make a passive income. Blogs that have a high readership can be monetised in several different ways including selling ad space, publishing sponsored posts, and promoting affiliate products. However, only some of the income that you earn from a blog will be passive. And, running a successful blog means that you will need to dedicate a lot of time to keeping it up to date and publishing fresh content for your readers.
3. Rent Out a Spare Room
If you have a spare room in your home, renting it out to a tenant is one of the easiest ways to make a passive income. Many people are looking for affordable accommodation and if you don’t mind opening your home to somebody else, this can be a great way to earn extra money each month while putting barely any work in. And, the cost of getting set up initially can also be minimal, especially if you already have a fully-furnished spare room available in your home.
4. Create an Online Course
If you have a lot of knowledge on a particular subject that you would like to share with others, creating an online course can be an ideal way to make a passive income. Courses that can be pre-written and pre-recorded in advance can be sold on your website or blog, or on an online course site like Udemy – and you’ll earn money each time they are downloaded. If there are various things that you are knowledgeable about, you can also create more than one course.
5. Membership Sites
If you are passionate about helping others, creating a membership site is an option to explore when it comes to creating a passive income. Choose a topic that you are highly knowledgeable about and willing to share your expertise with others that want to learn more. You can pre-create the information using valuable content like eBooks, videos, and articles and host it on a platform like Thinkific, where it can be accessed by people who pay a monthly membership fee. And, your membership site doesn’t have to be expensive – in fact, the most successful often charge no more than £30 per month. Cheaper membership fees will often attract more members, which can help to build your passive income.
If you enjoy creating videos about any topic, YouTube provides a great opportunity to create video content, distribute it online, and make money from it using ads. YouTube is currently one of the largest search engines in the world, and as video content becomes more popular, it’s only set to grow further. YouTube channels are a great way to make a passive income, but you will need to be dedicated to regularly updating your channel with new, valuable, engaging video content.
7. Write an eBook
Today, online sites like Amazon have made it easier than ever for anybody to write and self-publish a book about pretty much anything. And, since people will pay to download your eBook each time they buy it, it is one of the best ways to sit back and enjoy a passive income stream. First of all, you’ll need to write the book of course, but once it is published and ready to download, it can make you a lot of money for years to come. If you enjoy writing, having several eBooks published and available to buy can be an ideal way to make a passive income over time.
8. Dropshipping eCommerce
Dropshipping is a fun way to make passive income as it takes a lot of the stress out of running an eCommerce store. With dropshipping, all you need to do is set up your online store and partner with a supplier who will fulfil or ‘dropship’ the orders. This means that you do not have to hold stock to sell, since the orders will come directly from the supplier and you will earn a cut.
Why Make a Passive Income Online?
Making a passive income online is often the easiest option since it allows you to get set up from the comfort of your own home and in your own time. Utilising online methods of making a passive income such as a YouTube channel, writing and selling an eBook, setting up a membership site or creating an online course gives you the chance to work it around a current job, for example, and build your passive income in your spare time while continuing to work. This makes it an ideal opportunity to ensure that you continue to enjoy financial security from your job while putting the work in to grow and stabilise your passive income stream for the future.
Why to Diversify Your Passive Income Sources
As mentioned earlier, most millionaires do not earn their money from just one source of income like their job. In fact, people who earn millions of pounds will have at least seven sources of income typically. This is where diversifying your sources of passive income becomes important, since the more sources you have, the more income you will make. In addition, not relying on just one source of passive income means that you have a backup plan and safety net in place. For example, if you have invested in property but for a few months your tenants are unable to pay their rent, this will completely dry up your stream of passive income if you do not have any other sources bringing in money. On the other hand, if you’re also renting out a spare room in your home, have written and published an eBook, and have a membership site with a few hundred members, losing one source of passive income temporarily is not going to be as risky when you still have money coming in from elsewhere.
How to Identify Passive Income Opportunities
Today, there are more opportunities than ever for making a passive income, ranging from renting out space in your home to investing in the stock market. Spending some time looking into the passive income sources that you are interested in and could potentially earn money from in the future is important to ensure that you don’t miss an opportunity. And, it’s always worth trying out different opportunities to see how they might work for you – you might be surprised at just what you can use to make money. Changing your mindset to be on the lookout for passive income opportunities is important if you want to achieve financial freedom and grow your wealth. From something as small as renting out a space on your driveway to people who need somewhere to park in the area to creating an investment portfolio, those who are successfully making several streams of passive income are always looking for new opportunities and ways to diversify their income sources.
Creating a passive income is one of the best ways to achieve financial freedom and make money without giving up your time after the initial work is done.