Passive income is the secret of becoming and staying rich. Rich people have high passive income. They have almost no dependency on income from job. They are financially independent. So even if the rich stop working, passive income takes care of their needs. Passive Income is the secret of the rich. Rich people are made this way.
The income got by not actively being involved in work is passive income. This is income generated by applying ‘negligible’ effort. These are some popular ways of earning passive income.
Rent - Real Estate Property
Advertisement Income – Blog and Website
Royalty – E-Books
Dividend – Stocks
Interest – Fixed Deposits
Service Income – Freelancing.
The next step is to separate ‘passion’ and ‘assets’. Let’s say your passion is blogging. You earn income from online advertising. You build assets with this income. This could be buying blue-chip stocks and earning dividend income.
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This is a great way of earning passive income. You can buy a second house and rent it out. You could even rent out a room in your house. You could buy a shop space and rent it out. Some people build PGs and rent them while buying small office space in big commercial units and renting them out earns good passive income.
You can earn interest income from bank fixed deposit. You could invest in corporate deposits which offer interest on quarterly and half-yearly basis. Investing in corporate bonds has risk and always invest in AAA rated corporate bonds. You can also invest in Government Bonds where interest is paid once or twice a year. These Government Bonds trade on the secondary market and can be sold when you need the funds. Do remember that these are long-tenure bonds of 15 to 20 years.
Dividend Income: You can earn dividend income from blue-chip stocks with high dividend yield. Dividends are as good as rental income. The trick here is the price you purchase the stock. Buy undervalued stocks with sound fundamentals. Let’s understand how to calculate dividend yield. Dividend yield is the quantum of cash dividends paid out to shareholders vs the market value per share.
Let’s say a Company with a stock price of Rs 100 declares a dividend of Rs 10 a share. The dividend yield turns out to be 10/100 = 10%. Invest in high-dividend yield stocks and earn passive income.
Affiliate Marketing: This is a great way of earning passive income. You simply promote other people’s products through an affiliate network (Say your website). You earn commission if people buy the products. This is basically revenue sharing. You promote a product which you feel has value and earn income as an affiliate marketer.
See Also: Make Money. Give It A Path To Grow
Merchant: The merchant is also called the seller, brand, retailer or vendor. This is basically the party which creates the product. This could be a big company or a single individual. They simply have a product to sell.
The Affiliate: The affiliate party is also called the publisher. They can be an individual or a company. This is where the marketing happens. The affiliate convinces potential customers on the value of the merchant’s products. His job is to make sure the customer actually buys it. This could be done by running a review blog on the merchant’s products.
The Consumer: This is the final line in the value chain. The person who must buy the product. The affiliate markets the product through social network, billboards, search engine through content marketing on a blog.
You can do affiliate marketing even without a blog. You can use sites like Medium, Quora or LinkedIn Publishing. Build a Niche and create a bond. Personally check out the products to avoid complaints if the quality falls short.
Write an ebook: Ebooks are an excellent way of earning passive income. The income you get depends on the quality of the book, how well you craft the message and how the audience is targeted.
Simply write a good ebook, publish and collect the income. Send out emails to your list or post it on social media. There you have it.
You can also earn royalty from ebooks and even traditional books published in print. The publisher pays an upfront fee for the book. The publisher sells the book and gives you a part of it. As more and more sales happen, you earn residual income or passive income. Whenever people buy your book, you get paid in royalties. The amount of royalties depends on your contract with the publisher.
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