This is the age of the entrepreneurs – the time when you decide what you want to do, how you want to earn and how much you want to earn? We are quickly leaving behind the age when only a 9-5 job ensured that you have a stable income. Today you can earn in more than one ways without compromising on your sleep, on your family vacations, and on your sanity. Entrepreneurs are gradually getting hooked to the concept of passive income and it sure is the next big thing in many ways.
What is Passive Income?
Simply explained passive income is a source of income that is continuous even after you have completed your work. There are many things that can generate a passive income such as royalties from books, songs, and movies, real estate investments, affiliate marketing, etc. The idea of passive income is that you do not have to do continuously work to earn but can generate income from a previous body of work. While it may seem to be the easiest thing to do – earn without working – generating passive income isn’t so easy. Initially, you have to work and put in hours of work, you have to create something substantial or invest in something that grows incrementally.
Entrepreneurs are getting hugely attracted to passive income ideas because it gives them the financial freedom to pursue their other dreams. Contrary to popular belief drawing a passive income isn’t just popular so that you can enjoy endless vacations. Rather it gives entrepreneurs the freedom to explore new territories, do new things without compromising on their lifestyle.
4 Types of Passive Income
Most entrepreneurs are allured by the idea that they are earning money while sleeping because that’s exactly what passive income can do. The idea behind earning from your assets is great but it also entails a lot of hard work. There are four types of passive income that you can consider if you want to keep earning money even after the work is complete. Let’s take a look.
- Buy Cash-Flowing Assets ;p
If you believe in the mantra of letting your money grow and make more money than you should be considering buying a cash-flowing asset. They are quite a few options for you to consider. You can think about dividend investing, investments in real estate, business lending and so on. While you can earn huge returns in this type of passive income source, you must also remember that you have to invest lots of money at the outset. Thus if you have money to invest, cash-flowing assets are a great option.
- Build Assets
Building an asset with the expectation that it will in future become a source of income is a far-sighted thought – one which entrepreneurs should definitely consider. In most cases building an asset in modern parlance means creating a digital product – such as a website or a social media profile that not only draws followers but also attracts advertisers. Affiliate marketing is one of the key sources of income here. It is, however, important to understand that building an asset isn’t easy. You have to understand your market, audience and create a product that will find consumers in the long run. Building an asset takes time, effort and some bit of money but if you have created something long-lasting, you can earn from it lifelong.
- Share or Sell Assets
If you have an asset that can earn you money but is currently lying idle, selling or renting it can give you some extra income. This can entail a rental space at your house which is lying unused or stuffs such as books. If you think they can become a source of income, you should definitely use them rightly.
- “Reverse” Passive Income
If you believe in the age-old adage that a penny saved is a penny earned, you should be considering reverse passive income as a serious source of income. Reverse passive income means that you cut your monthly expenses to save which then becomes a source of income – albeit a small one. The idea behind this is to focus on income generation in every possible way, even if that means saving your own money.
Why do Entrepreneurs need Passive Income or Multiple Revenue Streams?
Entrepreneurs are risk-takers. They are the breed of people who deny norms, battle odds even when wins are not guaranteed. Failure is pretty much a part of entrepreneurship and something that every new guy must take into his stride. While failure can teach many things, it also can mean the loss of revenue. That isn’t something anyone would want. That’s one of the primary reasons why entrepreneurs need passive income and have multiple revenue streams. This ensures that even when one idea fails, their income source doesn’t stop. Investing in the right places and taking key decisions are important if you want to earn passively.
What are the Best Sources of Passive Income?
Among the many sources of passive income, we will be highlighting a few in the following points.
- Open a High-Yield Account – We aren’t talking about earning from your traditional saving account. You can get better interest rates (and thus increase your income) by investing your money in high-yielding accounts, such as online banks.
- Dividend Investing – Dividend investing is undoubtedly one of the most common ways of earning passively. Here all you need to do is invest once and reap the benefits lifelong. But it isn’t that easy. You have to have sound knowledge of how the stock market functions in order to earn anything.
- Affiliate Marketing – Affiliate marketing is a new rage, especially with the boom of social media influencers. In affiliate marketing, you promote other people’s or company’s work on your blog or platform and in return earn every time a purchase of the product is made.
- Ecommerce Site to Rent Your Stuff – Online rentals have become quite popular and are good sources of passive income. There are innumerable kinds of stuff you can rent on online platforms – from digital books to academic works to art designs and so on.
- Stock Investment – The stock market can become a regular source of income if you know where to invest your money. Investing in the right stocks will ensure your lifelong income. If you are willing to take greater risks the chances of higher returns are more.
To sum up there are no guarantees in life and hence you’d be making a mistake to solely depend on your active source of income. Generate a passive stream of revenue and you’d be able to enjoy several luxuries in life.