Passive income is the holy grail of income streams. What could be better than sitting back and making money 24/7, even while you sleep? Sounds pretty good right? Well, don't be fooled by the term 'passive'. A much better way to think of 'passive' income is recurring income. This is because almost all forms of passive income requires a lot of work upfront. It then continues to pay you for years to come with very minimal effort.
There are many different forms of passive income. Here are just a few of them.
1. Rental Property - this requires a high amount of capital and the cash flow per month is OK. However, this is one of the most passive forms of income (other than a savings account). We ran a rental property for a few years and it was very profitable. However, it can be risky if the real estate market is not particularly good or if you buy an older house with lots of expensive problems.
2. One of the best forms of passive income that I have found is cash flowing websites. These are almost free to start and can be very profitable. For example, many blogs make $10,000 per month in revenues and some make as much as $100,000+ a month! The revenue comes from ads on the sites and commissions from affiliated sponsors. Once you have written the articles and ranked them in Google, they will continue to bring you sales or ad revenue for years to come. This is the best form of recurring income streams if you are relatively tech savvy - although with Wordpress you do not need any technical coding skills. You can start a blog or website about anything that you love. We have two main sites about personal finance and stock trading. You can even buy a site that already has positive cash flow on sites like Flippa.com. There is a lot of work upfront for blogs and websites but they can be extremely passive once you have everything up and running.
3. Trading stocks can be a relatively passive way to make some extra money. The idea is to research companies that have strong fundamentals a year-over-year growth in earnings. To make significant income from stocks you really need to have a good amount of capital, typically more than $10,000. You can buy dividend paying stocks that will pay you a set amount per share that you hold every quarter. I know a woman that makes $70,000 a year from the dividends that her stock portfolio returns. She has over a million dollars in these stocks though.
Passive income is worth working on because it will free up your most valuable asset - your time. Separating your time from money is very important if you want to generate massive wealth over time. Starting businesses and paying other people to do the work can also be a nice way to make some passive income but expect to work very hard at the begining. I love passive income and it has changed my life for the better and I am sure it can change yours.
