Passive income is commonly known as a money making strategy without much effort. This idea often makes it a misleading term. Millennials are attracted to this buzz of easy money but most of the time they fail to build a sustainable passive income stream. A lot of work goes behind making a potential passive income. Initially, you have to invest a lot of time and effort along with the expectation of less to no return.
After a point in time, the money will flow in. If you are in your early 20’s, it is the best time to start planning, working to build a potential passive income, or even to start freelancing online. And even if you aren’t in that age group, don’t worry it is never too late to make money. This article will talk about building passive income streams for beginners. So, without further ado let’s get started.
Importance of passive income
Before getting into different ways of earning passive income, let us understand why should we even have a passive income stream.
There are multiple benefits of a side hustle or passive income for an individual, let us discuss some of them:
- Financial Security: Having multiple income streams increases your financial security. It thus helps you to strengthen the pillar of your wealth. Your financial status should be able to reflect your capacity to withstand any financial storm. Passive income will do so, without making you work every day. The more you earn, the more confidence you become about your financial status. That is why passive income is preferred so much in personal finance.
- Extra time: Your regular income does take out most of the time of your day. Reducing the time of your regular earning will also affect your salary. In passive income, you can manage your time accordingly without much affecting your income flow. It gives you the liberty to do other tasks. Hence, you can also multiple the number of your income stream, thus building your wealth. It also gives you the necessary break to spend time with family, relax as well as do things you love.
- Pursue your passion: Passive income gives you the time and opportunity to work on your passion project, whether it is starting a cafe or sharing videos and monetizing it on Shortfundly (but always be sure to credit your content creators!). You can do all these activities and make money along with your regular job. You need to manage your time and work according to that.
- Early retirement: With the increase in the income stream one can reach their financial independence at an early stage. For most people retirement arrives at a later stage in life. But you will be surprised to know, there are people retiring at the age of 30 or mid-’30s. Yes, it is possible with passive income streams. You can enjoy your retirement life with a steady flow of your earning or you may continue your passive income even after that.
- Reduces stress: Living on paycheck-after-paycheck is every man’s crisis. If you want to get out of this situation and enjoy a stress-free life you should start working now to build a passive income source. Whether you want to go on a vacation or permanently wan to give up your everyday job, you can do so with passive income.
- Reduced tax rates: Depending on how you earn your passive income, you may be able to reduce your tax liability. Through passive income, there’s a potential for lower tax rates or more write offs. If you’re unsure, use a tax preparation software to make things easier.
Passive income ideas for beginners
Passive income majorly requires two things: time and money, or both. As for every average beginner, I would suggest focusing on an income stream that is mostly dependent on time and effort rather than money. Here is a list of passive income for beginners that will be helpful for them to choose:
- Online courses: You can start online courses and teach millions of students all over the world with your expertise. Currently, there is a demand for every skill. It is an easy passive income strategy for beginners. It will create a steady follow of earning and you can connect with people all over the world. There are multiple platforms to do so like Udemy, Skillshare, Unacademy, etc.
- Ebook: You can also sell an ebook with self-publishing or even on eCommerce sites such as Amazon.com. It is pretty easy to do. All you need is to write and edit, make a cover and publish it on sites like Amazon’s Kindle self-publishing programs. Though it will take time to grow, ebooks can get a good source of income as well as followers. If you are looking to create an ebook for amazon please check visme once.
- Affiliate marketing: With a large authentic audience, you can start doing affiliate marketing. All you have to do is to promote a product or service via your platform. Affiliate programs are very popular on channels like Instagram, Youtube, TikTok, etc. It might require a lot of time to gather a quality audience but it is low in cost and will fetch you a good amount of commission with each sale.
- Cashbacks and rewards: These are not complete streams of earning but cashback and rewards can bring amazing offers to you. You can get huge discounts and gifts if you are a regular buyer. You can put these rewards for a while and invest them in other financial activities.
- Homestay: This is a thrilling way to earn money as well as met new people every day. All you have to do is put your own property for a staycation and do the maintaining services like preparing, cleaning and listing. Although It does require a good amount of effort as well as finance to maintain, it is a good option to generate extra cash flow. You can list your place on sites like Airbnb.
- Investing in stocks and funds: These investment strategies will require you to invest money to get a fruitful return. Investing in mutual funds, dividend stocks, or even cryptocurrency will help your money to grow fast. But it does come with risk and it is better to gather the right information before doing so (investing for beginners). For example, if you’re looking to get information about current crypto prices, you can use a site like coinratecap.com to figure out the current cryptocurrency trends. You can also consult a financial advisor for the right investment strategy.
- Real Estate: If you have a good amount of money and what to multiply it, investing in real estate is of the best option. Real estate business is one of the most powerful investment policies out there. Since real estate is a capital asset, it is quite illiquid in nature. There are multiple real estate investment strategies like rental property, REITs, REIGs, Crowdfunding, etc. (Check out our blog on investing in real estate to know more.)
- Peer-to-peer lending: This is an age-old method of building wealth. This requires your financial investment. You can give a loan to a borrower with a standard rate of interest. Before giving out a loan, always make sure to rent out your money to a trustworthy borrower. Choose secured lending over unsecured lending. Your money might grow slow but it is less risky and safe. You can also consult with a third party negotiator who will bring in the borrower to you and you can make a regular earning with the interest rate.
- Podcasting: Whether you’re hosting a podcast on one of your passions or on a specific skillset of yours, starting a podcast is a great way to have a fun side hustle. Although you may have to invest in some equipment, there are ways to grow and monetize your podcast with a smaller budget (or even for free!). Through advertising, gamification, and even donations, podcasting is a really strong way to earn a second income, even if it takes some additional time.
- You also find more passive income ideas here.
Need some humorous inspiration from great entrepreneurs? Check out Valuer’s compilation here!