The means of making an income fall into two categories: active or passive. You may have heard of these terms, but the nuances of these two kinds of earning a livelihood may have eluded you.
In simple terms, passive income comes with little or no active effort, such as interest from saving accounts or investing in the stock market. As a business model, it’s primarily self-sustaining.
Income from rented property is an additional means of earning passive income. A savvy investor can also invest in partnerships or other businesses where you invest funds but play no active role in it.
CNBC has a few handy tips to share for individuals looking to earn passive income either to rely less on the paycheck or as a means to have the freedom to pursue their passions.
1. Stock Market:
Investing in the stock market is one way of building an income stream. If you invest in dividend stocks that distribute part of their earnings to investors, it will be a stable source of income. The best firms pay dividends regularly, such as half-yearly or yearly.
Dividend stocks are not as volatile as growth stocks and are an excellent way of diversifying your portfolio. Investors may even choose to reinvest the dividends earned.
Pros:
- Stocks have high growth potential.
- Minimal oversight is required.
Cons:
- Access to funds invested may be unavailable in the short term.
- Investments in the stock market are subject to taxation.
2. Self-Publishing:
If you have a flair for writing and see yourself as a budding author, writing a book and self-publishing is an excellent idea for passive income. With services like Kindle Direct Publishing, the author can skip the intermediary and put it up for sale directly on Amazon, either as an eBook or a print edition.
Pros:
- Writing a book gives a great deal of gratification.
- Authors retain total control over the creative process.
Cons:
- Self-publishing is often time-consuming.
- The author has to handle all self-promotion and marketing activities.
3. Online Gaming:
Are you an active and skillful gamer? If so, you can earn a passive income by streaming your gameplay. Before you jump in, you need a few things to help you get started.
A computer powerful enough to handle the latest games, a streaming account with a provider such as Twitch, and streaming software like OBS. Once you have everything set up, you are ready to begin streaming your gameplay and building a fanbase.
There are also games that will let you predict and win based on your opinion of how you imagine the events will unfold.
Pros:
- Video games improve cognitive functions.
- It helps better problem-solving skills and the use of logic.
- Gaming even Improves hand-eye coordination.
Cons:
- Video games can be addictive.
- Increase in displays of aggressive behavior.
- There are chances of real-world relationships getting affected.
4. Enroll In The YouTube Partner Program:
If you like the idea of creating original video content for YouTube on diverse topics such as travel vlogs or wish to showcase your culinary skills to the world, then welcome to the YouTube Partner Program. This program makes it easy to monetize your content, and there’s no limit to the kinds of videos you can create.
The only barrier is that a minimum number of regular views and followers are required to enroll in the YouTube Partner Program.
Pros:
- All the creative control of the videos rests with you.
- The previously uploaded videos will continue earning you revenue as long as you remain in the YouTube Partner Program.
Cons:
- A minimum following of 1,000 subscribers is required before enrolling in the program.
- You must upload new content at least every six months
5. Affiliate Marketing:
Affiliate marketing is an advertising model where a company compensates third-party publishers for generating traffic or leads to the company’s products and services. When a person makes a purchase through your affiliate link, you earn a commission. These commissions are a percentage of the sale value or a fixed amount.
Pros:
- High earning potential
- Affiliate websites can be used to promote a wide range of lucrative products.
- Low-cost and low-risk venture.
Cons:
- Significant earnings may take some time to materialize.
- There are always chances of theft.
6. Podcasting:
Podcasting is an excellent way of sharing information on any topic that the podcaster finds appealing. Podcasts are easy to make – all you need is a laptop and a decent mic.
Podcast shows can cover various topics, including entertainment, comedy, discussion and talk shows, news and current affairs, sport, society and culture, politics, and hobbies. It all depends on where your passion lies as a podcaster. Advertising is the means of revenue generation for a podcaster.
Pros:
- Podcast audiences can tune in anytime, as podcasts are pre-recorded content.
- It is easy to create content targeting a specific demographic.
- The entry barrier in terms of cost is minimal for podcasting.
Cons:
- Building an initial audience takes time.
- Protection of content and intellectual property is tricky.
While the thought of passive income is indeed appealing, starting up the process requires a healthy dose of spadework, just like any other venture. Passive income takes time before you begin enjoying the fruits of your labor.
But if you can brainstorm and come up with a niche idea, you will be on your way to building an additional income stream in no time, and as a bonus, it will significantly supplement the income of your day job. Do remember to plan a passive income stream while maintaining an active source of revenue, so don’t quit your regular 9-5 just yet!
