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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. The same as 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 term dont put all your eggs in one basket, 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 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 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 build long-term riches because you get paid a portion of the companys earnings just for owning the stockexchange.
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Purchase a rental property. Have some distance 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 has a high financial barrier to entry. If youre not there yet, consider a crowdfunded real estate venture which allows 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 real estate resources.
Buy royalties. Music royalties come from a percentage of look at this now 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 produce selections it's all up to an asset management company. This type of investment is a great option because its relatively hands-off and has a very low turnover that means lower transaction prices.
Become 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 great form of passive income.
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Start peer-to-peer lending. Get matched up with a borrower online to start peer-to-peer lendinga easy 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 distinctive kind 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 app! The program market is rife with opportunity for apps of all kinds.
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Start (or buy) a blog. With a small entrepreneurial spirit and a lot of imagination, you can create a prosperous blogit just might take a little while. Prepare yourself to work hard in the beginning, but through numerous revenue streams like running ads, sponsorships, and affiliate marketing your job will more than pay off. .
Affiliate marketing. There are numerous ways to use affiliate marketing in addition to having a blog. Although a massive audience helps, even some regional businesses offer a word-of-mouth referral program for referring friends and family to their businesses.
License a business idea. If 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 your idea.
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Purchase 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 spot, employ someone to restock the machines to you and you've got your own business going. .