Passive income 101
Passive income lets you earn money while you sleep.
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What is passive income?
Passive income is the name given to any income source that doesn't require constant time and work, and instead earns you money without your active involvement.
In essence, passive income is when you get your money and assets to work for you. This could be anything from investing in bonds or dividend stocks to running an online store, creating a YouTube channel or renting out your property.
Passive income can be used just as a way to supplement your regular salary or help you achieve other financial goals. It's especially popular with those looking to achieve financial independence.
In the words of Warren Buffet, "If you don't find a way to make money while you sleep, you will work until you die." That's where passive income comes in.
How to make passive income
- Work out your passive income goals. Are you just looking to earn some extra cash on the side or significantly grow your wealth? Having a firm idea of how much you want to earn will help you pick the passive income streams that are most suitable.
- Choose the passive income ideas that work best for you. There's no one-size-fits-all approach to passive income. If you have lots of savings you might want to consider a high interest savings account or bonds. If you're an expert in your field, you may want to start a YouTube channel, write a book or create an online course that you can monetise.
- Put in the work. Many passive income streams take a lot of effort to set up and might take a while to start making a return. But putting in the hard yards early and getting the foundations right will give you the best chance at turning your passive income idea into a success.
- Keep at it. Despite the name, passive income streams do require a bit of maintenance. For example, you may need to produce regular content for your YouTube channel to continue to generate views. Even if you have your money in a high interest savings account, it's worth regularly checking the market to see if you may be able to get a higher rate elsewhere.
- Look for other passive income opportunities. Once you have one source of passive income up and running, it's worth looking into what else you can do to generate passive returns. Not only does this help increase your overall income, it also protects you if one of your passive income streams falls away.
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