Anyone can generate a passive income, as long as they are clear about what it is. Unfortunately, most people tend to misunderstand this concept and often wonder where they might have gone wrong.
A passive income should be automotive to a large extent but it is in no way self-generating. If you wish to generate a passive income, prepare to invest in terms of time or finances, or both. However, having dedicated efforts, you can rest assured of a steady trickle of finances for the rest of your life. And this is what distinguishes a passive income from its active counterpart. For receiving active income, you need to continue working since the remuneration would stop the moment you stop. In sharp contrast, you can continue to earn a passive income after you have stopped working.
When you go to work every day, what you receive in lieu of following a fixed routine is an active income. But as you grow older and lose the enthusiasm that kept you going earlier, attending office becomes a chore. In such a situation, imagine what would happen if you don’t have a passive income. There would be no other option but to continue working.
To ensure that you do not fall into a situation wherein inability to work leaves you high and dry, you must try and generate a passive income.
Selecting an Idea That Can Generate a Passive Income
Learning how to generate a passive income is nowhere close to being a rocket science. All you need to do is conduct an online research and soon you will have acquired a long list of probable ideas. But are all ideas truly as worthy as they seem? Soon you are bound to realize that not all ideas for generating a passive income are born equal.
You should be able to identify a suitable idea that would work for you even in your old age. Following are some guidelines meant to help you overcome this hurdle –
Choose An Idea – Choice of idea to generate a passive income depends on a number of factors. Primary among these is your financial situation, followed by your personal interests and abilities. Accordingly you can decide on making an upfront investment. Or you can pick an idea that can automatically accrue an income over the forthcoming years.
Whatever your idea is, do not expect it to be simple and straightforward. Initial steps and investment notwithstanding, you would need to spend some time and energy on maintenance.
Set Your Objectives – The day you make up your mind to generate a passive income, set your objectives. Chalk out a timeline for developing your idea to its optimum potential. Then write down the short-term goals and the long-term objectives. Do not make the mistake of treating goal-setting as a mental exercise – it is bound to lead to failure. Rather take the time to write down each objective and even jot down detailed guidelines to be followed.
Plan for the Future – Important that it is to have a plan in place, it is even more important to have a back-up plan. Proper planning will help you to figure out how to move ahead from point A and progress towards point B. Through planning, you will be able to persist towards your objectives in a timely manner and realize your dreams.
Equally important it is to have a back-up plan which you can bank upon in case your idea doesn’t click. For example, do not stop your active income while working on the plan that will generate a passive income. That way you will still be able to meet your daily expenditure irrespective of whether or not your plan for passive income clicks.
Find a Mentor – Identify a mentor in the passive income niche and follow in his/her footsteps. True that this task might prove to be easier said than done, it is one that will reap long-term rewards. During times when you are unsure of the road ahead, your mentor will guide you through his/her experience.
Likewise, also make it a point to join relevant groups on various social media platforms, like Facebook and LinkedIn. Simply sharing experiences with others and listening to them will reveal nuances that you will propel you ahead by several steps.
Scale Higher At Every Opportunity – Never leave an opportunity to scale higher. Along the way take note of activities that might be clicking in your favor. When you generate a passive income, the sky is the limit in context of scaling irrespective of your core idea. Results might take a bit of time to manifest, but soon the groundwork will have completed and then the onus is on you to jump on to the next level.
Your persistence and commitment play a crucial role in this regard. As long as you have faith in your idea and believe in its potential, scaling should be the next natural step at every juncture.
Passive Income Ideas That Require Monetary Investment
‘Passive’ as a word implies inactivity, but this does not hold true of passive income. You need to make some efforts to generate a passive income. To this effect, following are passive income ideas that require monetary investment as the first step –
Stock Market Options – Most effective among all stock market options that can truly generate a passive income are dividend stocks. Good dividend stocks accrue a substantial amount of passive income over a period of time. You might take time to identify these and conducting thorough research is the way to go in this regard. What you can also do is rely on a reputed and reliable online brokerage and go with their suggestions. A good way to start entails investing on low-cost dividend stocks and gradually raising the bar.
An alternative to dividend stocks entails appointing someone to trade on your behalf. You could opt for a software package that has a positive reputation for generating high returns or appoint a financial advisor with good presence of mind.
Property Rentals – If you own a house, office or an apartment, you can lease it out on rent to generate a passive income. You can get personally involved in the process of renting out and keep track of everything from tenants to repairs and maintenance. Alternatively you can register with one of the real estate rental platforms wherein there would be a plethora of options to choose from.
Invest in a Start-up – Start-up ventures are always in need of potential investors and you could become one. The catch in this option is the high risk factor involved, as not all start-up ventures turn out to be as lucrative. What you can do to mitigate the risk factor is to invest small amounts in multiple ventures. At least some would click, if not all, and as they grow bigger, so will your passive income.
Passive Income Ideas That Require Time Investment
Sometimes in order to generate a passive income, you need to invest time more than anything else. Following are some ideas that require you to put in time and concentration for the income to start flowing –
Write and sell and eBook – How about writing an eBook and publishing it to generate a passive income? Over the past decade or so, this has become a popular option wherein people write eBooks, design attractive book covers and put them up for sale on Amazon. On your part, you can try writing in the non-fiction niche since it is not as competitive.
Success in this option is not instant and requires plenty of efforts in terms of marketing. But once you establish yourself as a credible author, passive income is guaranteed.
Affiliate Marketing – Sign up with a well-know affiliate marketing program and earn passive income in form of a commission on every product that you sell. Much depends on the volume of sales that you generate and a website and blog usually helps to broaden your market reach and cultivate new customers.
Do not expect instant results with this method. After years of hard work and persistence in building a reputation and a customer base, you can expect the passive income to flow.
Create a tutorial – Count the number of times when you might have searched for an online course and from this you can gain an idea as to how popular this concept is. So why not capitalize on the trend and create a course yourself? Choose a subject which you specialize in, create a course and upload it on to the Internet. Soon users will register and pay charges which would prove to be your passive income.
Quality is an important concern in this regard. You must ensure that the course you create is informative and engaging and worthy of the charges. A good course will earn you a positive reputation which will attract users and this in turn will augment your passive income.
Think of generating a passive income as a form of financial cushioning and a crucial step towards attaining financial freedom. If the idea clicks then you might end up being the next Warren Buffet or JK Rowling. Even though you may not be as lucky, your passive income will at least provide sufficient funds to sponsor a dream vacation. Suppose it does not click, there are numerous other ideas to choose from and you just have to take your pick.
Always bear in mind that to generate a passive income, you need to invest initially and lay down the ground work. You should also be prepared for the fact that it might take years before you actually see some concrete results. Do not feel despondent when that happens and have faith in your abilities. Most importantly, make it a point to enjoy the journey and treat your passive income as an added advantage.
In the end, if you didn’t join us yet, I encourage you to join our Entrepreneurs’ Community by signing up, so you can help and get help in your Entrepreneurial Journey. Moreover, don’t forget to download the Free E-Book: “How to start from Zero – The real entrepreneurial path”