Making money while you sleep. Who doesn’t dream of that? We do! Unfortunately, generating passive income – making money without working – will often remain a dream to most. Still there are many different ways to realize a passive income. In this article you’ll read how making money passively works and which roads can lead you there. There we go: Build up passive income like a pro.
What is passive income?
Passive income can be defined as income that doesn’t require labor. We speak of active income as soon as a certain amount of time and work is actively put into something that you get compensated for. On the other hand, passive income is characterized by receiving an income in the long run, without direct effort or time investment. But don’t be fooled, even passive income can never entirely be achieved without having to do something first.
In this context, passive means that there’s no direct exchange of time for money. When people speak of ‘making money while sleeping’, they mostly mean passive income. They often forget however, that you have to invest work and energy to build up passive income in the first place.
Benefits of passive income
Besides being an attractive addition to your main income, passive income brings you more than just having a little extra to spend. Its real value lies in financial security and freedom. Passive income makes you less dependent on others or even completely independent. For instance, if you’re having disagreements at work and want to leave, quitting without having an immediate replacement of your main income is often not such a good idea. Your fixed expenses remain and resigning of your own accord leaves you without any state benefits. So passive income gives you freedom in your professional life that you can’t just afford without this kind of financial security. Passive income gives you the opportunity to come and go as you please and take the time to enjoy the things you like and find important. Think about your hobbies, traveling, your house and family. And, of course, you can still profit from it when you retire.
Ideas to build passive income
Sounds good, this passive income thing. But where to start? We’ve gathered a couple of popular ways for you here that can help you generate passive income. Only you can decide which of these options are right for you. Use these suggestions to get inspired and find your own path to passive income.
Trade your talents
You can get paid for what comes naturally to you. You might be writing interesting articles about your hobbies, building websites or taking pretty pictures. Think about selling those pictures to a stock photo website, offering your website themes for sale, publishing your stories in an e-book or on a website or think of offering webinars. You can, of course, sell your product directly, but you can also advertise on your frequently visited blog. And if you attract a large audience, chances are that companies will approach you to advertise for them. This is how the internet gets you passive income.
Make money work for you
If you have a bit of starting capital and you don’t have to start from scratch, you can also take a look at how to make the money you already have work for you. Not everyone has tons of cash to invest in, say, property and promote themselves to being a landlady. Investing can be done on a much smaller (and less risky) scale, by investing in index funds for example. In the short term, if your investments are doing well, you will be paid in dividends and in the long run things get really interesting: over time your investments end up snowballing. Do you want to know how this works exactly? Read it here!
Projects to earn money in the short run
The long run sounds great, but what if you’d prefer to get a little extra money in each month as of today? Maybe you’re on the road a lot? Let your car or trailer work for you by using them as advertising space. Make passive income by promoting products and services for other companies. If your car is outside collecting pigeon droppings however, because you’re not often out and about, then that’s not your way to go. Are you a fan of writing and is there a certain topic close to your heart? Maybe a blog with a good affiliate structure is your thing!
It’s never a good idea to put all your time, energy and money into one project right away. That’s why we have one last tip for your plan to obtain passive income: start small, spread your odds, stay close to yourself.