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Weve already covered the fundamentals, but lets break it down even further. In a technical sense, passive income is money earned from an enterprise in which a person is not actively involved in. Just like active income (money earned from performing a service), passive income is taxed by the IRS just in a slightly different way. .
If youre familiar with the term dont put all your eggs in one basket, then you know that it applies to virtually 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 ways to earn a passive income: investing money, investing time, renting things out, and getting paid to perform activities you do.
Invest with a robo-advisor. An option that needs 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 intentions.
Invest in dividend paying stocks. Dividend-paying stocks are a great way to construct long-term riches because you get paid a portion of the companys earnings simply for owning the stock.
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Purchase a rental property. Have some distance youre not using Rent it out to some long-term tenant or capitalize on the growing demand for short-term lodging by listing it on an accomodation-sharing website.
Participate in crowdfunded property. Investing in real estate has a large 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 that manage income-producing properties in many different sectors. They trade on major stock exchanges so anyone can invest in a portfolio of real estate 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 type of investment is a great option since its relatively hands-off and has a low turnover that means lower transaction costs.
Become a silent partner. The sole responsibility of a silent partner is to offer a business with capital. Silent partners are rarely involved in an operational capacity, making it a fantastic type of passive income.
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Start peer reviewed lending. Get matched up with a borrower online to begin peer-to-peer lendinga easy way to lend money to businesses and individuals. You can earn greater returns than comparable transactions through traditional financial institutions.
Open a high-yield savings account. If youre already putting money into a helpful site savings account on a consistent basis, consider opening a high-yield savings account. This special kind of account offers a secure method to make a consistent income.
Develop a mobile app. In case you've got the programming skills and a one-of-a-kind idea, turn it into an program! The program market is rife with opportunity for apps of all kinds.
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Start (or buy) a blog. Having a small entrepreneurial spirit and a lot of imagination, you can create a successful blogit just might take a little while. Prepare to work hard in the beginning, but through numerous revenue channels such as running advertisements, sponsorships, and affiliate marketing your work will more than cover off. .
Affiliate marketing. There are several ways to utilize affiliate marketing in addition to having a blog. Even though a large 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. In case you've got a fantastic idea for a business or product, but dont have enough time to start it yourself, consider licensing that thought. Interested companies are willing to pay royalties in exchange for the right to use your idea.
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Purchase a vending machine business. Youve probably never thought twice about who owns all those vending machines, but the vending machine business can be a lucrative passive income source! Once you find the appropriate place, employ someone to restock the machines for you and you've got your own my sources business going. .