Passive income is the best way to make money because you can literally get rich while you sleep. Passive income is a popular term that is gets thrown around a lot for different methods to make money.
Many of these ways are not actually passive and may even be a scam. This post aims to show you what passive income is and how you can make some yourself safely without exposing yourself to scammers.
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What is passive income and how can you make it?
Passive income means you are making money without actively doing something. Basically, even if you spend the rest of your life sleeping, you will have a regular income from an existing resource. There is no input from you required at all.
Active income, the opposite, includes the salary from your job, income from side hustles, or selling something. Here, you have to do something to make money.
Some forms of income are mostly passive but require some input from you. For example, investment funds may occasionally need re-balancing. The amount of input varies between methods and there is no clear-cut line of when something is counted as active income. It is easier to view active vs. passive as a gradient.
Why it is important
Having a passive source of income means you are not limited by how much you can make. If you think of your job, there is a limit of how much you can make, even if you do overtime. There are only 24 hours in a day after all.
On the other hand, there is no limit to passive income. You can stack different income sources for unlimited cash flow.
9 Ways to make passive income
Investing can be an active process but it can also be passive. Index funds, for example, provide passive income. Buying and selling stocks, on the other hand, is more active.
Investing means you let your money do the work for you. If you invest in a well-diversified fund, you can build up a regular income stream from fund growth and dividends.
Earn money for everyday task
You can invest in property, but you can also make money with your existing house/flat. For example, you could rent out a spare room or your drive. Renting out your drive works well if you live near a train station or in a big city and is more passive than renting out a spare room.
Having a lodger involves actively seeking for a person you want to let into your house and making sure the room is habitable. After that, given that you find the right person, there is little else to do and you will have a steady income stream from the rent.
Current and savings account
Yes, you can even make money with your good old current account–provided it pays interest. If not, you can open a savings account. However, there is a catch to it. To make passive money with your bank account, the interest rate has to be higher than 2%.
This is because every year, your money loses 2% of its value due to inflation. Thus, if you earn 3% interest, your passive income is 1% of the total amount of money in your account.
Blogging is a great way to earn passive money. Once established, a blog does require some maintenance such as posting new content and updating old posts. However, it is up to you how much effort you put into your blog.
The passive income from blogging comes from advertising and affiliate links. Additionally, there are also active ways bloggers can make money.
You can earn about £3 per month without any effort by joining MobileXpression. MobileXpression is a market research organisation that collects anonymous data from your phone. In return, you get regular Amazon vouchers.
Creatives include printables, spreadsheets, eBooks, and more. The magic of creatives is that they only have to be created once but you can sell unlimited copies. There may be some marketing required, or you could completely outsource everything else and focus on content creation.
Create a course
Creating a course is similar to selling creatives. You only have to make your course once. After this, you can sell it to an unlimited number of people.
What is passive income and how can you make it? summary
Passive income means making money without putting in any effort. Literally, you have an income even if you sleep all day long. There are many ways to make passive income, including:
- Earn money for everyday tasks
- Current and savings accounts
- Market research
- Sell creatives
- Create a course
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