I started working in 2007 end – 2008 in IT. And ever since I started working, time became a scarce resource. First of all IT is not a 8 hours job, and on top of that the commute takes a lot of time. And now that I am in my mid thirties, I have realized that I should focus on generating passive income. So, I did a lot of research on best ways to earn passive income.
Passive income to me means, it should be passive. I will put up minimum work and get maximum return. You can say, I got this idea from my engineering school, it taught me one thing – minimum input and maximum output.
There are very few complete passive ways to make money. You will hear about blogging, making videos, real estate investing, dividend income etc. IF you are a blogger you need to create great content solving some problem for a lot of people, and then you can monetize your content with PPC ads and affiliates. This is not entirely passive. As you actively need to create great contents. Same with video contents and vlogs.
You need to know one thing, if the entry barrier is low, you will face a lot of competition and it will need a lot of smartness to standout in the crowd. It is not going to be easy. Real estate investing could be passive. As long as you are not stuck with a bad property or a bad tenant. Moreover, you need to find good deals with great rental yields. As you start, you will need to learn quickly to master this.
If it is not set it and forget it kind of passive income source and needs some work, it is not entirely passive. Although it could be a side hustle. But we are talking about passive income. So, we will discuss only income options where you do not need to invest a lot of time.
I personally like stocks, bonds and fixed maturity instruments. The dividend from stocks is absolutely passive and you do not need to go and run the company after you invest in the company. For beginners, there are REITs or real estate investment trusts, as the name says, these are real estate based investment instruments and pays dividends. And all effort you will need is, understanding completely in what type of properties you are investing in. And preferably quarterly results. Stocks require similar effort.
One mistake I made in 2008 – 2009. I did not consider stocks as businesses. We want to own good businesses. Trading could be fun. But ownership of great company could be really rewarding. So, I will recommend you owning great businesses and hold them. Along the way, you will collect dividends. While the management runs the company, you earn a passive income in form of dividends, for owning part of the business.
What is the Benefit of Passive Income?
If you can generate an income without putting much work, that is the hole point and purpose of passive income. Eventually as your passive income grows, you will rely less on your job, that might mean less stress. You get the point.
What Nobody Tells you About Passive Income?
Passive income is never 100% passive. You will need minimum work.
Passive income is not fixed, even your fixed deposit is fixed for a while, after that interest rate might drop. Even if it does not, inflation may eat up some of your returns.
Telling you all these, my favorite is good stocks, as they continue increasing their earning, they pay out more as dividends, that helps us keep up with inflation. Now the question is, how to select such companies? https://thedividendhoarder.com/how-to-invest-dividend-income/