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I’m sure you’ve heard of the phrase “making money while you sleep”. You certainly sleep better knowing there will be an influx of cash to creep into your bank account without having to lift any of your fingers.
This is what passive income actually means. Your money is working for you.
However, it can be a misleading word if you do not really understand the concept of passive income and how it works.
In this particular article, we will explain to you what passive income means and give you a few ideas on how you can earn some income without necessarily breaking your neck for it.
More About Passive Income Ideas
If you are an ardent reader, then you must have heard about the “rat race.” This is what we call working too hard and getting very little in return.
Financial experts advise that we always work towards getting out of the rat race and making our money work for us.
This is what passive income does.
But, you would be wrong to think that the money will materialize out of thin air. No. In most cases, there must be a sizable initial investment.
Having passive income on your portfolio helps you increase your income and accelerates your wealth creation and financial stability.
9 Passive Income Ideas to Consider Today:
1. Investing in Real Estate
This is the idea that keeps giving and giving and giving, year in and year out. As the saying goes, can never go wrong with real estate. Some of the world’s richest men started in real estate, and now they are worth billions of dollars.
In real estate, however, you may be required to make a huge investment initially. Some popular platforms will even ask you to invest almost one million dollars in order to start receiving an annual income of more than $250,000. This sounds great, but how many people can afford that?
So, what do you do if you still want to invest in real estate?
Have you heard of Crowdfunding? Crowdfunding is about giving investors an opportunity to invest in Real Estate using only a minimal investment, and it can be as low as getting started for a mere $500.
It’s a hands-off approach to invest in the real estate world, where you do not have to deal with construction crews, or land rates, etc. As an investor, you become a shareholder and own part of equity when you buy into a property.
Crowdfunding companies are able to offer their investors a valuable income over the years.
2. Lending Money to People
This is also known as peer-to-peer lending, and it is the practice of giving loans to people who do not typically qualify for traditional loans for one reason or the other.
It may sound a little bit risky, but if you choose your borrowers carefully, you are likely to find some good avenues to make your money work very well for you.
The downside to this is that you may actually lend money to people who may have a bad credit history and are not likely to get funding from any other source, but this also gives you the freedom to set a higher interest rate. Peer-to-peer lending is a great passive income idea simply because you can make money online while sitting in front of your computer.
Here Are a Few of These Peer-to-Peer Lending Companies;
3.Equity Release
You may be wondering how this works, but equity release or mortgage refinancing can be a money-making idea if you have a couple of houses under your name.
So, it may be a continuation of real estate, but in this case, we are not talking about receiving a rental income but rather making money through mortgages.
Here’s how it works;
When you take out a mortgage from a bank, the bank will request you to put up a down payment; then, you own a part of the house that is equivalent to the down payment you have put up.
This is what happens; if, for example, you bought a house worth $300,000, and had to put up a down payment of, say, $50,000, then you own $50,000 of the house at the point of purchasing it.
Now, two years down the line, you find that you have paid the bank a total of $20,000 of the principal amount, and this, together with your initial investment, means that you now own $70,000 of the house.
What you do now is find another bank with a lower interest rate and refinance the mortgage through equity release.
Your house by now must have appreciated because houses almost always appreciate, and on revaluation, you may find that it is now worth $350,000.
If you take out this mortgage at that amount, you can repay your previous loan, which now stands at $300,000 – $70,000 = $230,000.
With a loan of $350,000, you can repay back the previous loan and remain with $120,000, to do with as you please.
This is how mortgage refinancing makes you money without doing anything. All you have to do is sit on your investment for a couple of years, and then you receive money that you never worked on.
Now, the $120,000 can then be used to put a down payment on another house, which gives you yet another source of income.
4.Certificates of Deposit
This is a smart investment strategy. What you do is divide the money you have into equal amounts and then invest all of the different amounts in CDs – Certificates of deposit. These CD’s are offered by banks and other financial institutions with an attached interest rate and can be withdrawn upon the CD’s maturity date.
It is a good investment option and carries very minimal risks, although the interest rates can be relatively low.
The certificate of deposit usually has a fixed rate of interest, and the FDIC usually insures funds. The dates of maturity are either 3 months, 6 months, or one year. Generally, your interest rate is higher if the bank holds the CD account for a longer-term.
Dividend stock investing is one of the best long-term investments you can invest in, and it is secure.
Many people are afraid of investing their hard-earned money in stocks due to the unpredictable nature of the stock market. If this is the case, then investing in dividend-paying companies may be the best thing for them.
It’s as simple as this, you look for companies that offer dividend payments and invest your money; then watch your money grow every time a dividend is declared by the company.
6. Affiliate Marketing
This is probably one of the great discoveries in recent years, and a good number of people are making money from affiliate marketing.
It is the practice of partnering with an online marketing company and becoming their affiliate partner, where you earn money through commissions on their products and services you sell.
Sounds easy, well not really. You need to learn the ins and outs of affiliate marketing to make money. There are obstacles, but it is possible to make a lot of money in affiliate marketing.
You can build an empire with affiliate marketing, and many people are becoming affiliate marketers due to the financial benefits associated with this business.
7. Money Market Accounts
This is an excellent idea, especially if you have lots of money. This investment option offers you the kind of freedom from money-making ideas you have been craving.
These are accounts found in Investment companies, and they have a higher interest rate depending on the amount of money you deposit. They are secured by the Federal Deposit Insurance Corporation (FDIC), which means that you shouldn’t worry about your money once you leave it with the bank.
Different banks will have different interest rates for different amounts of deposits, but a minimum of $10,000 deposit, may yield you a high-interest rate on a money market account.
8. High-yield Savings Account
This is similar to the money market account, but the savings account is found in a bank. You look for a bank that offers a higher interest rate on a savings account to deposit your money.
They will then provide you a schedule and interest rate, where you choose how long you wish to keep the money in the bank. The longer the saving period, the higher the payout.
9. Develop an App
If you are tech-savvy or a developer and can come up with a killer idea, you can make a lot of money developing an App or Apps.
Currently, there is a great market for apps, as almost all computers and mobile phones use them. Tech companies are always looking for the next great app, and this could be your time to make things happen and earn yourself some money in the coming years.
The beauty of this passive income idea is that you do not even need to be a programmer or designer. You can always pay a programmer or an App developer to develop the App for you.
Conclusion
It is important to note that generating a good passive income requires you to be extra creative and also inject some initial capital into the project.
You should also try to get engaged in the idea as much as possible in the beginning until the idea starts running on its own and doesn’t require any more input from you. This is the true definition of passive income.
If you have been looking for a great passive income ideas, we hope that the list above will give you at least one that you can work on and come up with a great way of making money.
Remember that at the end of the day, being in full-time employment may never earn you the kind of money you have always dreamed of, and if you are extremely ambitious, a simple idea can make you lots of money consistently for many years to come.
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