If you read books or listen to any of the rich people, most of them would recommend to have a passive income. Passive income is an income which can be generated without you doing anything. This means that you can be on a holiday for a month and still your bank balance keeps increasing without doing any work. I always explain people the importance of passive income and why you should start working on it at a very early age.
What is Passive Income?
Passive income is something which can be generated on a regular basis with little or no effort. How can it be possible? It can be possible by investing your earned income in to assets. Lets take an example of making money with rental properties. You invest in a house and rent it out. The rent will come to you every month regardless of what you are doing. Passive income gives you that financial freedom where you really don’t have to depend on your job or business.
How Much is Enough?
There is no fixed amount as to how much should be your passive income but you should set a realistic figure for this. I would say a proper figure to start with would be your monthly household expenses. Monthly household expenses can vary from person to person so there is not set amount here. So if your monthly expenses come to about $5000 per month, then you should aim to make $5000 per month while you are sleeping or are on a vacation.
Setting a Goal
Ok. So I need $5000 as passive income every month. But how do I earn it? It’s not going to be easy but if you start now, you should be able to achieve it after few days, months or years. Setting a goal is very important here. You need to first decide on the amount and the time it would take to achieve that kind of passive income. It is very important to set realistic goals because you will have to achieve it for your own good. Setting unrealistic goals will always de-motivate you to achieve them. So set a goal, write it on a paper and stick it somewhere you can see everyday.
How To Earn Passive Income?
Now, we come to the most important part. We have set a goal and have decided to have a passive income generated in next few years. But, how are we going to achieve it? There are number of ways to do it and we will share a few here:
Invest in a high-yielding bank account – This is the safest and most risk free method. Save some money everyday and keep it in a bank account which gives you good interest amount. The interest generated is your passive income and will keep improving your bank balance.
Invest in Real Estate – Real Estate investment is the most popular method of earning passive income. If you have some money to invest, you may buy a property and rent it. The money earned in form of rent is your passive income.
Invest or Build Online Assets – Online assets can be in form of websites, services or apps which can be run without your involvement. The money generated from such assets is a passive income.
Income from Royalties – Royalties can be earned from books, music or other creative work that you have done. Create something that can become popular and make passive income generated as royalties from your creation.
Businesses – You can own something that does not require your involvement. A coffee shop run by couple of employees, vending machines or laundromats can be a good investment. You don’t need to operate a coin operated machine but you still keep generating money from it.
Stocks – Money can be made from stocks without even touching them. Yes, dividends earned from stocks are a good form of passive income. Just buy some good stocks and keep your bank balance grow with their dividends.
There are many other ways to make passive income and of course one needs to do some study before deciding on where and how to invest. Some people might choose to play it safe and gain fewer profits while others might choose to take risks and earn high. Proper research and guidance can help you to generate money.
What Time is The Right Time?
Most of you would feel that you are either too young or too old to start thinking about passive income. Frankly speaking, there is no right or wrong time on when you decide to start. The right time is right now and you will see fruitful results sometime in future. Even a small saving of $10 can help you generate passive income so start thinking about it right now to get that financial freedom soon.