6 Ways to Earn Passive Income without Actively Working

Earn Passive Income with Working Less

The difference between active and passive income lies in the fact that the former is the result of dedicating time and effort on a regular basis to an activity e.g. job/business. While the latter is the product of a previous activity that continues to generate income without the individual needing to be permanently involved in the process.

What is Passive Income?

Passive income requires an initial investment of time, capital or effort. Afterwards, the creator can receive ongoing benefits for the work previously done and have an alternative source of income that allows him or her to not depend exclusively on his or her salary, help create a buffer for contingencies or save for the future.

An example of passive income, as opposed to active income, is online selling of English, Japanese or other language course. In this case, a foreign language teacher could earn his active income from his work in an educational institution, while his passive income would come from each of the purchases of the course he/she created on the Internet and made available for downloading against payment.

This term, which emerged at the end of the last century, has become popular among members of the ‘millennial’ generation, who in many cases prefer to generate an income that allows them to stop working as soon as possible and enjoy free time while they are still young. Today, it is no longer so much about having or earning a lot of money, but about being more financially free.

6 Ways to Earn Passive Income without Actively Working

Financial freedom is about decoupling income from time spent.

(1) Investing in financial products

Investing, whether in bank deposits, stocks or government bonds, for example, is one method of traditional economics that demonstrates that not all passive income is online. Those who opt for low risk choose bank deposits, although it is not a very profitable investment due to low interest rate offered. There are also investment funds in which you can start investing with very little money and adjusting the investment to the level of risk you are willing to take. More challenging are the stock markets, which allow investors to own part of companies. You can also invest in bonds, a debt instrument issued by companies, municipalities or state governments to raise funds.

Investing in dividends, a bullish option in times of volatility

Dividend payments are the most common form of profit distribution to a company’s shareholders. In general, it is an amount received for each share an investor holds in a company once or several times a year. This recurring nature makes investing in dividends an option that increases its attractiveness in times of high market volatility, or when interest rates are low, as an alternative to fixed income or bank deposits.

Check out: 9 ways to earn passive income using cryptocurrency

(2) Renting real estate

Renting an apartment or premises is another very old and easily managed offline method of generating passive income by wealthy people too. In addition to a stable income, its economic potential can be very high if the property is in good condition and location. The disadvantage is the large initial effort required to have the ownership of a property to rent out while enjoying a home of your own.

The rental of goods and real estate has also changed with the advent of the internet. A digital modality of this passive income is to offer a room on a peer-to-peer rental platform. It is enough to enjoy with strangers, have a free space in one’s own home and the necessary licenses. Moreover, this does not require a long-term rental, but the passive activity can be stopped temporarily or permanently at any time.

(3) Selling goods and creations on the Internet

One of the easiest ways to earn passive income these days is to sell things online that you no longer use. From books and clothes to kitchen utensils and collectibles, it’s amazing how much can be recycled and how beneficial the circular economy can be.

Hobbies are another easy way to generate passive income, as long as producing something through a hobby doesn’t involve that much effort. Editing and selling videos or designing T-shirts or logos for video games are other simple formulas for the more creative.

(4) Create digital content and formats

Similar examples to the language course mentioned above are blogs or creating and editing YouTube videos. Many bloggers and entrepreneurs earn income through affiliate links, sponsorships, etc. Creating a website is also a format that combines these models and can generate stable income. In the case of website, it involves a considerable creative investment, but they are an alternative tool to monetize personal inventiveness in the digital world.

(5) Monetizing personal profiles on social networks

Influencer marketing is one of the best-known sources of passive income, as more and more companies are paying users of social networks, especially Instagram, to advertise products and services. Simply having an interest in a topic is enough to create an audience to follow the posts. Companies often offer their products for users to market or promote in exchange for a commission.

(6) Get into affiliate marketing or drop shipping

Affiliate marketing consists of charging a company for each sale it makes to a customer who has been referred to it through its own website. It consists of creating digital content and analysis that invite customers to visit the digital spaces of companies in exchange for a commission.

On the other hand, the ‘drop shipping’ system is a totally passive method to generate income, since these are obtained with an ‘ecommerce’ without having to make shipments or manage ‘stocks’. It consists of creating a website that serves as an online store to attract customers and collect orders, whose shipments are handled by a manufacturer or wholesaler to which the business is associated.


Nikesh-Mehta-AllOnMoney

Hi, I am Nikesh Mehta, owner and writer of this site. I’m an analytics professional and also love writing on finance and related industry. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected].


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