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Weve already covered the fundamentals, 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 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 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 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 already do.
Invest using a robo-advisor. An option that needs little to no effort, a robo-advisor is an electronic platform that offers algorithm-driven financial planning services by collecting information about clients financial situation and intentions.
Invest in dividend paying stocks. Dividend-paying stocks are a excellent way to build long-term wealth because you get paid a portion of the companys earnings just for owning the stock.
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Purchase a rental house. Have some distance 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 real estate. Investing in real estate comes with a large financial barrier to entry. If youre not quite there yet, consider a crowdfunded real estate venture that enables 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 assets.
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 , music royalties are often up for auction and will send a monthly check your way.
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Invest in index funds. Index funds are similar to mutual funds, but instead of having a portfolio manager make selections it is up to an asset management company. This type of investment is a great option since its comparatively hands-off and includes a very low turnover that means lower transaction costs.
Become a silent partner. The sole responsibility of a silent partner is to offer a business with funds. Silent partners are seldom involved in an operational capability, making it a great type of passive income.
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Start peer reviewed lending. Get matched up with a borrower online to start peer-to-peer lendinga simple 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 provides a safe method to make a consistent income.
Grow a mobile app. In case you have the programming skills and a one-of-a-kind thought, turn it into an app! The program marketplace is rife with opportunity for programs of all kinds.
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Start (or buy) a blog. With a little entrepreneurial spirit and a great deal of imagination, you can produce a prosperous blogit just might take a little while. Prepare yourself to work hard in the beginning, but via numerous revenue channels such as running advertisements, sponsorships, and affiliate marketing your job will more than cover off. .
Affiliate marketing. There are numerous methods to use affiliate marketing in addition to having a site. Even though a massive audience assists, even some regional businesses provide a word-of-mouth referral application for referring friends and relatives for their businesses.
License a business thought. In case you've got a great idea for a business or product, but dont have time to start it yourself, consider licensing that 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 More Help machine business can be a lucrative passive income source! Once you find the appropriate spot, employ someone to restock the machines for you and you've got your own business going. .