So what is passive income?
Passive income is income that still comes in even when you’re not working. Meaning it is income you receive from past work or investing.
Passive income is a term that is thrown around a lot in the world of personal finance, but what does it actually mean? In short, passive income is defined as income you earn without having to actively work for it. Single-family homes are a great way to create passive income. By investing in a property and renting it out to tenants, you can let the home work for you while you relax and watch the profits come in.
Passive income investments are those that provide investors with a steady stream of income with little effort on the investor’s part. Rental income, capital gains, and dividends from small cap stocks are all forms of passive income.
What is the difference between passive income and linear income?
Linear income is where you trade your time for a specific dollar amount, for instance, a JOB. You get paid $15.00 an hour you can’t make more. Some jobs have commissions, and you might be able to earn more, but there is still a limit to the amount. Typically this is a sales job. You sell a product and make a commission, but you only have so many hours in a day that you can sell. Time is your Achilles heel here limiting your income, making it linear income.
Linear income = Trading Dollars for Hours
Jim Rohn once said: “I am working full-time on my job and part-time on my fortune.”
Time is finite. Once it’s gone, it’s gone for good!
Income can be generally classified into two categories: linear and non-linear. Linear income is the more common type and is typically generated through regular jobs or careers that require special skills and training to produce. It’s important to have a reliable source of linear income while building your financial freedom. It can help stabilize your funds based on generating that hourly income and as an individual, in the real business world, it will help with family benefits when you just started out on the path to financial security.
Passive income is unlimited if you figure out a way to get aboard the bandwagon. Passive income is the income you earn from work being done in the past.
Passive income is not easy but can be done in several ways.
Passive Income Definition:
“Passive income is money earned from a venture that has little or no ongoing effort involved.”
The next question most people ask is:
What are the ways I can earn passive income?
Here is a free list of 10 great ways and tools to earn passive income:
- Write a blog – Affiliate Marketing
- Create Youtube Videos
- Direct Marketing also is known as Network Marketing or MLM (Multi-Level Marketing)
- Investing in great dividend stocks
- Real Estate
- REIT – Real Estate Investment Trust
- Write a book
- Write or sing a song
- Photography
- Design a product and earn royalties
You can also rent out property or invest in stocks or mutual funds that will generate regular dividends. Participation in these programs does require some organization and participation, but the payoff can be worth it.
Dividends from small-cap stocks tend to be higher than those from larger companies because the smaller companies are riskier investments. However, the potential for higher returns comes with a higher degree of risk. Investors should carefully consider the risks and rewards before investing in any passive income investment.
Of course, there is more to it than that. One of the biggest factors to consider when looking at single family homes as a source of passive income is interest rates. When interest rates are low, financing for properties becomes cheaper and it becomes easier to turn a profit on your investment. Another thing to consider is your credit. The better your FICO score the lower the interest rate. Not all banks are created equal when it comes to lending money for real estate investments and the fees they charge. Make sure to shop for an investment-friendly who keeps the loans cost down. This way your real estate portfolio will be in a better position. Also, contact a tax professional to help with maximizing tax deductions when they review your account.
Passive income can be earned in many ways. Some ways cost more money, some cost time, and some you have to have a talent for like song creation or signing.
One great way to create passive income is through photography by providing stock photography services. This can be done by setting up an online store where customers can purchase licenses to use your photos for their own projects. You can also offer stock photo subscriptions, which give customers unlimited access to your library of photos for a set price per month or year.
Another way to create a passive income is by creating YouTube videos and providing online services. For example, one could create a tutorial on how to use a software program and sell the video online. In addition, one could provide videos on about any topic. The more people watch the video the more money you make. Once you created the video it is online and people can view it 24 hours a day 7 days a week. By providing these services, one can create a passive income that will continue to generate revenue without requiring additional work on the part of the individual.
Credit card companies often offer cashback or rewards programs that allow you to earn a percentage of your spending back as points or miles. Each dollar you save can then be taken and put back into a passive income-earning venture.
Either way, multiple streams of income is the way to financial freedom. As many people learned in 2020 from the Covid-19 pandemic, only having one source of income is extremely risky! People call investing risky, but spending all your time in a job earning someone else passive income is the most dangerous thing you can do. Careers at companies can quickly turn to layoffs or stagnant wages. Linear income through a job is very risky compared to building passive income streams for yourself.
In fact, before the Covid-19 Pandemic and all the other issues this world has, I learned the hard way.
I had a JOB with a major Telecom company for 13 years. Each year they would scare everyone that layoffs were coming. I thought to myself no way could it be me I showed up to work, I worked hard, and was even at the top of many of the departments I was in.
Guess what……..
I got laid off! Or in their terms surplused…
None of that mattered—people less qualified than me, called in constantly saying they were sick, and who would go out for extended lunches got to keep their high-paying jobs.
At that moment, I learned you have to watch out for yourself. That no matter how well you did or who you knew, the only thing that was going to save you was yourself.
Trust me when I say you need multiple streams of income. Passive income-related is the way to go as none of us have enough time to build substantial financial freedom without it.
If anything you retain from this article, you need to know is Passive Income is where you want to be.
My Passive Income Definition Is:
It is the freedom of living on the beach or where ever your relaxing spot is and enjoying the good life! No Boss! No Office Politics! And no BS watching people less deserving getting pay raises.
In conclusion, passive income is a great way to make money and achieve financial independence. There are many different ways to create passive income, and the best way to find out what works for you is to experiment. Be patient and keep at it, and you will eventually find something that works for you. Thanks for reading!