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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. Just like active income (money earned from performing a ceremony ), passive income is taxed by the IRS in a slightly different way. .
If youre familiar with the phrase 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 already do.
Invest with 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 construct long-term wealth because you get paid a portion of the companys earnings just for owning the stockexchange.
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Purchase a rental house. Have some distance youre not using Rent it out to some 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 has a large financial barrier to entry. If youre not quite there yet, consider a crowdfunded property venture which 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 a variety of sectors. They trade on major stock exchanges so anyone can invest in a portfolio of property resources.
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 yourself, 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's all up to an asset management company. This type of investment is a fantastic option since its comparatively hands-off and has a very low turnover which means lower transaction costs.
Become a silent partner. The sole responsibility of a silent partner is to provide a business with capital. Silent partners are rarely involved in an operational capacity, making it a great type of passive income.
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Start peer-to-peer lending. Get matched up with a borrower online to begin peer-to-peer lendinga simple approach 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 kind of account provides a secure method to create a consistent income.
Develop a mobile app. In case you have the programming skills and a one-of-a-kind thought, turn it into an program! 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 lot of creativity, you can produce a successful blogit just might take a little while. Prepare to work hard in the beginning, but through numerous revenue streams like running ads, sponsorships, and affiliate marketing your work will more than cover off. .
Affiliate marketing. There are several methods to utilize affiliate marketing in addition to having a site. Even though a large audience assists, even some regional businesses offer a word-of-mouth referral application for referring more information 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 time to start it yourself, then consider licensing which idea. Interested companies are willing to pay royalties in exchange for the right to use your idea.
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Purchase a vending machine business. Youve probably never thought twice about who actually owns all those vending machines, but the vending machine business can be a rewarding passive income source! Once you find the right place, hire someone to restock the machines to you and you've got blog your own business going. .