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Weve already covered the basics, but lets break it down even farther. In a technical sense, passive income is money earned from an enterprise in which a person is not actively involved in. The same as active income (money earned from performing a service), passive income is taxed by the IRS in a slightly different way. .
If youre familiar with the term dont put all your eggs in one basket, you know that it applies to just about any area of your life includingand especiallyyour finances. In addition to retirement becoming an ever-elusive goal, no one has guaranteed job security so by diversifying your income you can feel much more secure about saving for your future.
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There are four main strategies to earn a passive income: investing money, investing time, renting things out, and getting paid to do activities you do.
Invest using a robo-advisor. An option which requires little to no attempt, a robo-advisor is an electronic platform that provides algorithm-driven financial planning services by collecting information about clients financial situation and goals.
Invest in dividend paying stocks. Dividend-paying stocks are a excellent way to build long-term riches because you get paid a portion of the companys earnings simply for owning the stockexchange.
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Buy a rental property. Have some space youre not using Rent it out to a long-term tenant or capitalize on the growing demand for short term lodging by listing it on an accomodation-sharing site.
Participate in crowdfunded property. Investing in real estate comes with a high financial barrier to entry. If youre not quite there yet, consider a crowdfunded property venture which allows you to invest in a small percentage of property.
Invest in a Real Estate Investment Trust (REIT). REITs are companies which manage income-producing properties in many different sectors. They trade on major stock exchanges so anyone can invest in a portfolio of property resources.
Buy royalties. Music royalties come from a percentage of the money earned from the sale or use of a song. Even if youre not a musician yourself, music royalties are often up for auction and will send a monthly check your own way.
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Invest in index funds. Index funds are similar to mutual funds, but instead of having a portfolio manager produce selections it is up to an asset management company. This sort of investment is a fantastic option because its relatively hands-off and has a very low turnover that means lower transaction prices.
Become a silent partner. The sole responsibility of a silent partner is to provide a business with funds. Silent partners are rarely involved in an operational capacity, making it a fantastic form of passive income.
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Start peer reviewed lending. Get matched up with a borrower online to start peer-to-peer lendinga easy approach to lend money to businesses and individuals. You can earn higher returns than comparable transactions through traditional financial institutions.
Open a high-yield savings account. If youre already putting money into a savings account on a consistent basis, consider opening a high-yield savings account. This special type of account offers a secure method to make a consistent income.
Develop a mobile app. If you have the programming skills and a one-of-a-kind idea, turn it into an app! The app market is rife with opportunity for apps of all kinds.
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Start (or purchase ) a blog. With a small entrepreneurial spirit and a great deal of imagination, you can create a successful blogit just might take a little while. Prepare to work hard in the beginning, but through multiple revenue channels such as running advertisements, sponsorships, and affiliate marketing your job will more than pay off. .
Affiliate marketing. There are numerous ways to use affiliate marketing in addition to having a blog. Although a massive audience assists, even some local businesses offer a word-of-mouth referral application for referring friends and relatives for their businesses.
License a business thought. If you've got a great idea for a business or product, but dont have enough time to start it yourself, consider licensing which idea. Interested companies are willing to pay royalties in exchange for the right to use your idea.
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Buy a vending machine business. Youve probably never thought twice about who owns all of those vending machines, but the vending machine business can be a rewarding passive income source! Once you straight from the source find the right spot, employ someone to restock the machines to you and you've got your own business going. .