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Weve already covered the fundamentals, but lets break it down even further. 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 in a slightly different manner. .
If youre familiar with the phrase dont put all your eggs in one basket, you know that it applies to just about any area of your life includingand especiallyyour finances. In addition to retirement becoming an ever-elusive target, no one has guaranteed job security so by diversifying your income you can feel much more secure about saving for your future.
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There are four main strategies to earn a passive income: investing money, investing time, renting things out, and getting paid to perform activities you do.
Invest using a robo-advisor. An option which needs little to no attempt, a robo-advisor is an electronic platform that offers algorithm-driven financial planning services by collecting information about clients financial situation and goals.
Invest in dividend paying stocks. Dividend-paying stocks are a great way to build long-term wealth since you get paid a portion of the companys earnings just for owning the stockexchange.
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Purchase a rental property. Have some space 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 there yet, consider a crowdfunded property venture which enables you to invest in a small percentage of real estate.
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 resources.
Buy royalties. Music royalties additional resources 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 own 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's all up to an asset management company. This type of investment is a fantastic option since its comparatively hands-off and includes a 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 rarely 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 way to lend money to businesses and individuals. You can earn higher returns than similar 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 secure method to create a consistent income.
Grow a mobile app. If you have the programming skills and a one-of-a-kind thought, turn it into an top article program! The app market is rife with opportunity for programs of all kinds.
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Start (or buy) a site. Having a little entrepreneurial spirit and a lot of imagination, you can create a prosperous blogit just might take a little while. Prepare to work hard in the beginning, but via numerous revenue streams like running ads, sponsorships, and affiliate marketing your work will more than cover off. .
Affiliate marketing. There are several ways to use affiliate marketing in addition to having a site. Although a large audience assists, even some regional businesses offer a word-of-mouth referral application for referring friends and family to their businesses.
License a business thought. If you've got a great idea for a business or product, but dont have enough time to start it yourself, consider licensing which 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 machine business can be a lucrative passive income source! Once you find the right place, employ someone to restock the machines for you and you've got your own business going. .