Passive Income Streams: Let Your Money Work For You
As the title suggests, passive income is best described as letting your money work for you. It involves you, the investor, putting a sizable chunk of money into a low return venture. Even though the returns are probably not going to be terribly lucrative in and of themselves, most folks interested in passive income combine multiple streams of this type of income together, that will hopefully result in an overall sizable increase in their bank account. Basically, passive income may be described as income earned from an investment that, once entered into, requires little to no effort on the part of the investor once that initial investment has been made. These types of investments usually involve real estate, business partnerships, or another type of unusual investment that continues earning for perpetuity. This course on passive income shows you how to do it from start to finish.
Once you have have a handful of these investments working for you, bringing in money while you sleep, it will almost seem too good to be true. Below are some passive income stream ideas that are proven to work. If you’re considering taking the plunge, just make sure you choose one that fits with your lifestyle and can be something that you can personally get behind. This course on the lifestyle of passive investment explains how your life will change.
Pros of Passive Income Streams
While earning passive income seems like a sweet deal, and it is, after awhile, there are some potential speed bumps to be aware of. The advantages far outweigh the negatives, but we would be remiss in not informing you of some of the pitfalls that may await the unaware passive investor. First, let’s look at the advantages:
- Allows for Multiple Streams of Income
If you have the money to get one passive income stream up and going, chances are you have enough for at least a few more. Hopefully, if these streams are bring in money, you can plow them back out, into other ideas you may have. This course on building a passive income business has some ideas for you to get started.
- Frees Up Your Time/Allow for Schedule Flexibility
The ultimate goal of partaking in endeavors such as these is to afford the investor more recreational time, all the while, reaping financial gain while not directly being involved, or passive. Don’t think that there is no work to be done in this type of investing. There is, but the work that is done may be put off, or worked around another job, or hobby, or social life, etc.
- Financial Security
If you end up getting several streams of income going at the same time, which is optimal, you can afford to have one or a few shut down. Remember, this will take a while, but once you have several secure sources of revenue flowing in, you will have a bit of financial wiggle room.
Cons of Passive Income Streams
Go into passive income investing with your eyes wide open. These are the disadvantages you should consider before you start:
- Income Trickles in at First
This weeds out the people who aren’t that dedicated. For some, they need to see a big return quickly, but this is not the place for that. If you have the patience as well as the financial support, the waiting will be worth it.
- Lacks the Social Aspects of Normal Jobs
Whether you want to admit it or not, you kind of like Susan from HR, and Rich over in Marketing is fun at happy hour. If you’ve chosen to forego your day job in exchange for passive investing, you’ll be missing out on some of the social aspects of the conventional job market. While not the end of the world, it’s still something to consider.
- You Give Up Some Control
When passive income is your sole source of money, you give up control of some of the factors of success. Whereas when you work everyday and are on the “front lines” so to speak, you’re able to speak directly to clients, lead or be a part of a team, and keep ahead of the competition. These do not exist in passive investing. If you have a competitive personality, this may not be the best choice for you.
- You May Not Actually Make Money
As sweet as this whole passive investment thing sounds, it, like everything else in this world, is not a sure thing. If you’re just starting out in this world and can’t afford several streams, then all of your money’s on one proverbial horse, and if doesn’t pay off, you’re up the creek. Be smart – do your research, ask those who have experience, and finally, if isn’t working out, know when to quit.
Before Getting Started
While this all may sound like a cakewalk, earning passive income is hard work, at least at the beginning. It’s both slow moving and capital intensive. Here are some things you need to know if you’re considering becoming involved in this potentially lucrative world.
- Don’t Spend More Than You Earn: You want to make sure you don’t plunk down your entire nest egg on an investment that may not end up paying off. Keep something in savings while you invest the rest (technically, your savings account is earning passive income, but more on that later).
- Do Your Research: This tip should be tattooed on your body somewhere. In any kind of investing, be it active or passive, or any other aspect of life, figure out what you want before you go searching for it. It’s your money, and it’s important to you and your family. Find out what type of investment fits your personal interests, as well as your financial situation. Once you have something in mind, search intelligently and confidently.
- Think in the Long-Term: We’ve mentioned this before, and will probably mention it again, but these investments only begin paying off after a long time. Don’t think in terms of months, but years.
Your Options for Passive Income Streams
These passive income streams run the gamut from investing to writing. Doing just one of these methods alone won’t have you eating caviar and smoking Cuban cigars, but they do provide a nice little something extra. Get several of these income streams going at the same time, then you’re talking about some real cheddar. Just make sure you don’t get too ahead of yourself.
- High Yield Accounts
Perhaps the easiest form of passive investment, this method simply requires you to save your money at a bank. That’s it. An average savings account accrues less than 1% of interest, but with a little searching, you can find higher, and there are even high yield checking accounts out there, as well, usually offered by smaller banks and credit unions. These accounts usually require some effort to be put in by the customer, such as a monthly quota of transactions or a large amount to be deposited at first, but they’ll help bring in some extra bucks without much effort. This site can help you find a high yield account online.
- Write an eBook/Put Your Expertise Online
If you’re an expert at something that others may want to learn from you, put it out there and charge people for it. If you don’t feel comfortable making a commercial website, start blogging about your passion, then get advertisers on your site that will pay you. If the blog route isn’t for you, write an eBook about your passion/knowledge. People will pay good money if you have something worthwhile to say. This course for potential virtual teachers shows you how to make money teaching online. If you’re having trouble deciding how to use the Internet as a way to make money, this article on online business ideas just might get you motivated.
- Renting Property (Land and Goods)
This refers to taking anything you have just lying around – it could be a vacation cabin, an in-law apartment out back (this course on on private mortgage lending explains the world of real estate as a source of passive income), power tools, furniture, whatever. If you have it, and it’s in good working order, chances are someone else out there wants to use it. There are still small hassles involved (repairs, complaints, etc.), so this may be the least passive of the passive income streams, but it’s still a potentially lucrative hobby. If you have some things lying around that you may want to rent out, this site lets you rent anything online, helping you name a price and find renters.
- Affiliate Marketing
This method is effective if you already have a website with a lot of traffic coming in. If this is your situation, you may be interested in affiliate marketing. Basically, you, the website owner, promote a third-party’s product on your site or blog, providing a link to this third-party site. Every time someone clicks on to this link, you the owner receive a commission of 15-20%. Remember, you need to have that traffic flow for this to be successful.
This is an umbrella term, referring to a group of investors that pool their money together to fund something…anything. It generally refers to real estate, but can be a movie, a restaurant, a leather shop. There are tons of sites out there that cater to crowdfunding, and there are many options to doing this. This method is meant to be done in conjunction with other similar projects. Like most passive income streams, they are long-term in nature, and usually don’t pay off huge. This article on crowdfunding explains how the process works.
- Peer-to-Peer (P2P) Lending
This may be the riskiest passive income stream. The way P2P works, is you, the lender, find a third party intermediary, such as prosper.com or lendingclub.com, and you put up money that the website then doles out to those that need it. This is high-yield game, bringing in rates from 8-12% for the lender. However, it is a bit risky, but this risk can be lowered by diversifying your loans.
If you’ve got some extra money burning a hole in your pocket and want to put it to work for you, passive investing is a fantastic way to do that. Who doesn’t want to sit back as their money makes money? If that sounds good to you, this course on “lazy money” shows you the ins and outs of passive income. If you’re not really the teaching or entrepreneurial type, just pick up that dusty band saw in your garage and rent it out to people who need it. There are so many resources out there that are begging to be used to make you money, so get out there and take advantage.
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