How To Generate Passive Incomes?
It is more important than ever to have a steady, recurring source of income.
Nothing else will protect your wealth as well as a means to replace it, something that anyone with a 9-5 job does not have. If that job is terminated, as many will be during a crisis, you have no immediate means to replace your income.
With passive income sources, you do.
What is Passive Income?
Passive income is income that you earn without needing to spend recurring time developing it.
So, when you go to work every day and clock hours at your desk, you are earning an active income.You are trading time in your day for money.
Passive income doesn’t work the same. With passive income you might make a larger up front investment, either in terms of time or money, and then receive money on a recurring basis for weeks, months or years to come without having to do much of anything.
In many cases, there won’t be a single passive income stream that can support you through a major financial crisis, so I recommended that you have multiple passive income streams that you can draw from.
If one of them takes a hit due to changing market conditions or a shift in policy within that industry, you continue to make money through the others. It is the perfect insurance policy and can be immensely rewarding if implemented properly.
Types of Passive Income
There are a number of different types of passive income. For example, money earned through a sound investment is passive income.
A rental property for example, managed by a third party, is passive income. You pay a monthly fee for the mortgage, taxes and management fee and receive the difference in rental fees – anywhere between 10-40% more than what you pay.
The Internet has made it possible to generate passive income in a number of other ways as well – methods that allow you to diversify your interests into new industries and fields and to grow your reputation across a wide number of properties. Here are a few to consider:
1. Residual Income
When you perform a single action and then get paid for it over an indefinite period of time, this is residual income.
There are a number of ways this works.
For example, someone who writes a book or produces a movie and then receives a royalty every time someone buys their work. The work was only done once, but the artist gets paid in perpetuity for that work.
Remember that residual income is not the same as recurring income. Recurring income is good, but usually requires you to do work to earn that income. Having a contract for a monthly payment is great, but if you need to spend 10 hours every month earning that income, it is more work, even when outsourced.
2. Leveraged Income
With leveraging you can take work you would normally do yourself and start paying someone else to do it for you. You leverage time from others to earn money without doing anything yourself.
So, if you produce a book, you could hand off the task of marketing it to affiliates or a marketing team that takes a percentage of commissions from sales they generate, or someone who takes a percentage of profits earned by work they outsource to subcontractors.
3. Active Leveraged Income
Active leveraged income is when you can make more money by having more people involved in an event, such as a seminar or class you hold.
You perform the same amount of work, but if you have 200 people in attendance instead of 10, you make 20 times the profit.
How to Apply Passive Income for Maximum Benefit
To achieve the greatest possible benefit in your life from a passive income, it should be made part of a much larger portfolio of passive sources.
While at first you will likely only have one or maybe two sources of passive income, with time you can grow it into a larger, more substantial array of income sources.
Passive income is all about finding ways to generate income streams and then remove yourself from the process while still getting a cut.
Do this and you will have plenty of opportunities to replenish your wealth no matter what the economy looks like.