Do You NEED Passive Income?
When you’re seeking financial freedom, then one of the most important elements is get passive income on your side. What does that mean? It means that you must break out of the cycle of trading your time for money. By creating a system where your income isn’t purely based on how much time you spend making it, you’re finally on your way to money freedom.
This isn’t about not working, it’s just about working smarter.
Keep in mind, though, that the passive income discussed here doesn’t stick to the tax definition of passive income, which is far more limited. We’re talking about easier, more hands-free ways to make extra money. It’s an important distinction to make come tax day!
The idea of building wealth through passive income has understandable appeal, especially if you’re worried about being able to save enough from your work earnings to meet your retirement goals.
For example, to generate $1,000 a month in retirement income from a portfolio, you’d have to amass about $250,000, assuming a 5 percent withdrawal rate. Better to generate a stream of income using creative avenues.
What is passive income?
Passive income includes regular earnings from a source other than an employer or contractor. The IRS says passive income can come from just 2 sources: rental income or a business in which an individual does not actively participate. Examples include book royalties and dividend-paying stocks.
Investopedia defines passive income as “earnings an individual derives from a rental property, limited partnership or other enterprise in which he or she is not actively involved.” Popular culture, however, defines it as “any money you earn while sitting on a beach sipping mojitos.”
Financial coach and expert Todd Tresidder thinks it falls somewhere between the two, defining passive income as the money you earn from a project or investment after you’ve made an initial contribution of time or money.
“Many people think that passive income is about getting something for nothing,” says Tresidder, founder of FinancialMentor.com, a financial coaching service. “It has a ‘get rich quick’ appeal … but in the end, it still involves work. You just give the work upfront.”
– via www.bankrate.com
Earning Those Extra Dollars Online
For many people, the easiest and best way to start earning passive income is to start working online. It can be anything from a weekend hobby to a full time job, but one of the biggest selling points of an Internet career is the ability to use automation to build truly passive profits. Below are just a few of the most common ways to cash in online.
How in the world does a blog make you money? Simple: Traffic. The more people you get to come to your website, the higher the potential for those visitors to click on an ad and buy something. Advertisers know this and depending on what your site can do for them they will be willing to pay to work with you. This usually comes in the form of either direct advertising or some type of affiliate marketing.
Basically to be successful as a blogger, you need reliable web hosting (with someone like Bluehost is perfect!), to write articles that people will find interesting, and then to keep that audience coming back for more. In one year’s time I went from never having done much more than look at a website to actually creating them and writing their content – all in my spare time!
Sometimes bloggers and website creators concentrate their efforts on promoting certain products where they get a percentage of the cut if a product or service gets sold. This can be done either on your blog or through the use of a niche site. Of all the passive income ideas, this one is truly “passive” because as people click on your ads, you don’t have to do anything at all. There are dozens of affiliate broker services out there (Google Adsense, Amazon Associates, ClickBank, Commission Junction, Flex Offers, etc) and they allow you to pick from thousands of different products in your particular niche.
This is another form of affiliate marketing where you use your list of blog subscribers to promote a certain product. Lots of successful bloggers swear by this process because they claim that your website subscribers are a “target audience” for your niche; thereby increasing the chances of more purchases.
If blogging sounds too time intensive, then why not make a smaller one focused on one particular topic. These types of websites are called niche sites.
A niche website may be as small as 5 pages (also called a micro-niche site) or as big as 100 pages. It all depends on how much work the creator wants to put into it. Webmasters make money from niche sites either through the advertising or by selling them at auction websites like Flippa. The really successful ones take it to the extreme and create a portfolio of niche sites. Think about it: If you had 10 sites each bringing in an average of $500 per month, that would be $5,000 of passive income.
– via Great Passive Income Ideas
Do you currently have any passive income streams?