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Weve already covered the basics, 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. Just like passive income (money earned from performing a service), passive income is taxed by the IRS 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 virtually 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 strategies to earn a passive income: investing money, investing time, renting things out, and getting paid to do activities you do.
Invest using a robo-advisor. An option that requires 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 construct long-term wealth because you get paid a portion of the companys earnings simply for owning the stock.
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Buy 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 website.
Participate in crowdfunded property. Investing in real estate comes with a large financial barrier to entry. If youre not there yet, consider a crowdfunded property venture that enables you to invest in a small percentage of property.
Invest in a Real Estate Investment Trust (REIT). REITs are companies which manage income-producing properties in many different sectors. They trade on major stock exchanges so anyone can invest in a portfolio of property 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 produce selections it is up to an asset management company. This type of investment is a fantastic option because its comparatively hands-off and has a low turnover that means lower transaction costs.
Become find this a silent partner. The sole responsibility of a silent partner is to provide a business with funds. Silent partners are seldom involved in an operational capability, making it a fantastic type of passive income.
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Start peer reviewed lending. Get matched up with a borrower online to begin peer-to-peer lendinga easy way 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 offers a secure 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 app market is rife with opportunity for programs of all kinds.
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Start (or buy) a site. With a little entrepreneurial spirit and a great deal of creativity, you can create a prosperous blogit just might take a little while. Prepare to work hard in the beginning, but through multiple revenue channels such as 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 blog. Although a large audience helps, even some local businesses provide a word-of-mouth referral application for referring friends and family to their businesses.
License a business thought. In case you have a great idea for a business or product, but dont have time to start it yourself, then consider licensing that idea. Interested companies are willing to pay royalties in exchange for the right to use like it your idea.
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Purchase a vending machine business. Youve probably never thought twice about who owns all those vending machines, but the vending machine business can be a rewarding passive income source! Once you find the right place, employ someone to restock the machines to you and you've got your own business going. .