There are 2 main ways to earn
an income. One way is to receive an active income by working a job for a
company, or through selling our own services to our clients.
Usually there is an hourly rate
to it as well, which is acquired through actively creating value to other
people. However, when we stop working or when we lose our jobs, then
immediately the paychecks end as well.
On the other hand, another way
to generate money is through passive income. In order to receive passive
income, we would have to be able to provide value to people through automated
systems, that do not need interference from us, once they have been set in
place.
So what that means is that we
would keep making money even if we go out to vacations, while we sleep at night
and while we watch our favorite shows on TV.
However, generating a big
enough residual income to earn a decent living takes usually a lot of time, and
the rewards usually come much later than through getting a job at a local
company, that pays a steady paycheck every month.
Nevertheless, anyone who has
ever become to earn a 6 or 7 figure salary per year from passive income,
started out small and then eventually began to grow and grow that residual
income.
Moreover, if we truly love and
enjoy the process through which we are able to earn that money - be it from
investments, blogging, writing books, making YouTube videos or taking beautiful
pictures, then it won't really even matter how much dollars we earn from it,
because it would not feel like work for us anyway.
Hereby, I provide 10 ideas to
start generating passive income:
1. Investing in Stocks
Most people who have become
financially independent, have done so by either building large companies or by
making enough money to buy stocks from other businesses, which would then
hopefully give them a steady increase every year on the value of the shares and
also an added paycheck through annual dividends.
The historical average return
on investments from the Dow Jones Industrial Average has been about 15% per
year, which means that if we were to invest $100,000 today at 15% and to keep
re-investing the profits, then in 16 years we would become a millionaire.
However, as the latest
financial crisis has shown, we must be very smart and do a thorough analysis of
any company before we would give out our money, because bad decisions will only
make us lose the investments that we make.
2. Investing Into Other
Financial Instruments
If putting our hard-earned
money into stocks seems risky, then we can always put it to somewhere else like
to a bank that has a high-yield savings account.
Moreover, we could invest into
bonds, which used to be a very safe investment, but I personally think that as
governments in Western countries are amassing such huge debts, that bonds now
are as risky as anything else out there.
We could also put our money to
investment funds or even to try venture capitalism. There is also a possibility
to trade in various currencies, gold, silver and other commodities.
However, if we just keep our
money on the bank, then already through inflation we could be losing 2-3% of
the purchasing power annually, thus it is a good idea to learn investing and to
start putting our money to work for us, instead of having it be the other way
around.
Easy Steps that will transform your trading
3. Getting out of Debt
If we ever want to earn a residual
income high enough to support our lifestyles, then we would have to also work
to get out of all the debt we have on our mortgages, cars and on student loans.
If we have $100,000 worth of
debt at 5% interest, then we will be giving a $5,000 paycheck to our creditors
every year, without getting any value back from it.
However, the purpose of passive
income is to have our money bring more of it back to us every year, while
racking up debt will do just the opposite.
Thus, the only reason to take
loans through that perspective would be, if we are able to generate a higher
return on investment in comparison to the interest that we would pay on our
debt.
For example, if we pay a 5%
interest on a loan of $100,000 for our business, which gets a 20% annual return
on investment, then we would be able to still make a
100,000*20%-100,000*5%=$15,000 profit from it.
Opportunitiesto turn a few thousand dollars into millions.
4. Real Estate
The easiest way to make passive
income through real estate would be by renting our vacant secondary homes out
and starting to earn money from there.
However, most people don't have
that opportunity, but there are always ways to make good money from other means
of real estate business, because housing prices do tend to appreciate over
time.
I personally do not like this
field of business very much though, because in order to be successful there, it
is almost impossible to do it without large loans.
To give an example, if we buy
land and build a house on top of it for $200,000 and sell it for $250,000, then
we get a $50,000 profit. However, if we put in $200,000 ourselves, take a
$800,000 loan from the bank and build and sell a total of 5 houses for
$1,250,000, then we already receive a profit of $250,000 for the same
investment, minus the interest payments.
This gives more leverage to
earn larger profits, but during crises, when mortgage prices fall rapidly, then
even the best entrepreneurs of that field could fall close to bankruptcy(best
example - Donald Trump).
Learn How New And Experienced Investors Are
Buying Unlimited Commercial Property
5. Starting a Niche Blog
A good way to earn passive
income with minimal investments is through building a niche blog in a field in
which we are experts or in a field in which we have a strong desire to help
others.
Since it is unlikely to make
much money in the first 6 months, we would have to really be passionate of the
subject that we would be blogging about and to make sure that this would be
something that we would truly love and enjoy doing.
If we were successful with our
endeavors and if we expanded our blogs to contain Google AdSense, affiliate
links, sponsored ads, our own eBooks and other information products, then we
might become one of many bloggers who are making a 6 or 7 figure income from
doing what they love.
However, if we do want to make
money from our blogs, then the website should be taken as a business like any other,
in which we would have to actually solve people's problems, to provide for
their needs, to learn about marketing, to understand why businesses would want
to advertise on our sites and most of all, by being able to provide unique,
valuable and quality content that helps people in one way or the other.
6. Writing a Book or an eBook
It is said that everybody has
at least one book in them and if we also love and enjoy writing, then there is
no reason not to take that path.
Nowadays, it is possible to easily
self-publish our own books through sites like Lulu or just by creating an eBook
and selling it online.
The key lies in writing
something that either provides solutions to people's problems in the best way
possible or in writing a more of a creative, story-type of a book.
Either way, it all comes down
to marketing it in a great way and showing the value to people of having and
reading our wonderful books.
7. Selling Expert Videos Online
If we already have an audience
online, who either reads our blogs or visits our websites, then we can also
consider selling expert videos online, in addition to eBooks.
We could either record a
seminar of ours, or create a thorough video series on how to master a
particular skill that people would be interested in.
This is another good way to
solve people's problems and to create value for our customers.
Do you want to increase your revenue, freedom, and become your own boss?
8. Making Videos on YouTube
Bing Chen, the Head of
YouTube's partner program, has said that thousands of people are now making
6-figure incomes from YouTube.
It is estimated that the
partner program gives about $1 per 1,000 views(depending on the niche, the
payoff is different). So if a funny video of our cats would bring in 10mln
views, then we might be able to make $10,000 from it.
However, viral videos are rare
and in order to make a living from YouTube, we would have to probably make
videos for at least 6 months or more to see big enough traffic for our videos
to start making any real money off of it.
The most popular niches there
seem to be small comedy skits, gaming videos and beauty & makeup tutorials.
In addition to that, many singers, including Justin Bieber, have got the start
of their career from YouTube.
Once again though, making
videos should be a passion of ours, because otherwise we will just soon get
bored and quit making them.
HOW MATT PAR WENT FROM A BROKE HIGH SCHOOLER TO RUNNING 9 DIFFERENT PROFITABLE YOU TUBE CHENNEL
9. Taking Beautiful Photos
The Internet is filled with
websites that need quality photos for their pages(mine included), and most of
the good pictures out there are also bringing money to those who have taken
them, through paid royalties.
There are many sites like Getty
Images and Shutterstock, that allow people to send their images there and to
get paid when someone purchases their photos.
So if photography is a passion
of ours, then this is another fun way to do something we love and to also earn
some passive income from it.
HOW TO EARN MONEY FROM YOUR PHOTOS?
10. Creating a Mobile
Application or Game
In general, the mobile app and
game industry is a business like any other, but if we have a really good idea
on a fun game or an app, that would help solve people's problems, then we might
go for it and make it happen.
We all have heard about how a
small company in Finland created their Angry Birds game and how now it is
valued at 6-9 billion dollars, showing what a potential goldmine this industry
is right now.
So if we feel like we could
bring something new and exciting to this market and if this is something that
we would be interested in doing as well, then we could also get decent payoffs
from this business.
At the end of the day, there
are very many different ways to earn money while we are sleeping, but all of
these income streams still need time and dedication to both build them up and
to also keep them running.
Either way, there is nothing to
lose and everything to gain from doing something that we are passionate about and
then trying to figure out how to generate residual income from it.
Article Source: https://EzineArticles.com/expert/Martin_Poldma/1656685
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