Passive income is one of the most interesting and enticing ways to make money, seemingly allowing you to conjure money out of thin air.
Despite the almost fantastical way that passive income is regarded, it is a legitimate and real way to produce income; albeit one that requires a lot of work, dedication, and often money, to implement.
This article aims to engage with the idea of passive income and explain some of the most common methods to produce it.
What Is Passive Income
The term passive income refers to income that is generated without the need for an active effort on your part. This could refer to a range of sources of income, some of which will be covered later, but the core principle is the idea of generating additional income without the need to work for it.
How it Works. By investing time and capital into the right areas of business, you should be able to create a source of income that requires very little work to maintain, and which still brings in profit.
For example, selling a book to a publishing house will cost you a lot of time and effort initially to produce the book. However, once the book is produced, it will produce royalties for each sale, and you will not have to lift a finger to profit from those royalties.
FIRE. One of the biggest movements that are fueling the desire for effective passive income is the FIRE movement.
FIRE, which stands for Financial Independence, Retire Early, is based around the ideas of living extremely frugally and saving as much as humanly possible so that you can retire from working quickly and comfortably, living off of small amounts of the income you have managed to save.
Passive income is incredibly important to this mentality, as the only reasonable way to retire so quickly is to be able to live off of the amount of money you generate passively.
Rent Out Property
Easily the most well-known, and likely one of the most lucrative, forms of passive income lies in becoming a landlord. Purchasing property is an enormously expensive undertaking.
However, once you own said property, there are only a few costs associated with that ownership. This means that, if you want to start renting out the property, it would be relatively easy to turn a profit doing so.
Use a Property Management Service. However, the act of renting out your property can be rather involved, which doesn’t fit the bill for a source of passive income.
This is where the services of a property management service come in. These services can take over almost every aspect of renting out a property, allowing you to make you’re being a landlord into a source of passive income.
They charge for their services, of course, but you can think of that as the price of converting your property into a source of passive income.
These services are fairly easy to find, just search for “property management Washington DC” and substitute in the area you want to manage your property in. You’re sure to easily find services that work for you.
Crowdsourced Properties. You might think it completely beyond your price range to get into this particular source of passive income. But even if you can’t afford to buy a house yourself, you can break into this field.
Companies, such as The House Crowd, work to make property investment available to all so that you can start investing in creating passive income through housing, even if you can’t afford to buy the house yourself.
Sell Your Skills
Another brilliant way to create a source of passive income is to monetize the information that you have gathered throughout your life. Skills are valuable resources, and people are always willing to pay to improve their own.
So, you should be more than able to sell tips and tricks for mastering the skills that you have developed throughout your life.
Creating Online Courses. One of the best ways to do this and create a source of passive income is to produce an online course.
These can take a lot of time and effort initially to create and may cost a fair amount to host online. However, once all that is done, you can enjoy the benefits of creating a course to help others improve their skillsets.
Create Digital Content
Finally, if you have the talent and the inclination, a brilliant way to set up a source of consistent income is to produce digital content. This works far better as a source of passive income than regular content because you don’t have any additional cost to sell copies of the content once it has been made. One of the best ideas for digital content to sell is detailed below.
Make Videos. If you have a sparkling personality and a flair for the dramatic, then making videos on sites such as YouTube and Twitch is a brilliant way to build up a huge source of passive income.
Each video you produce will cost nothing once you have made it, but each new fan you earn on the site will likely watch through your entire backlog of videos, meaning they will continue to provide value long after they have been made.