Investing for passive income
Passive income requires an initial investment of time, capital, or effort. Afterwards, the creator can receive continued benefits for the work done previously and have an alternative source of income that allows him not to depend exclusively on his salary and helps him create or save for the future.Six ways to invest for passive income
An example of passive income, compared to an active one, is the sale of an English, German, or Chinese course online. In this case, a foreign language teacher could obtain his active income thanks to his work in an educational center, while his passive income would come from each of the purchases of the course he created on the internet and made available for download for a fee.Six ways to invest for passive income
Achieving financial freedom is an ambitious goal that more and more people are pursuing. It consists of having enough income to cover all economic needs without having to work. Establishing priorities and drawing up a strategy to generate income are key to achieving this goal that many people aspire to when they think about their finances.
This term, which emerged at the end of the last century, has become popular among members of the millennial generation, who, in many cases, prefer to generate incomes that allow them to stop working as soon as possible and enjoy free time while they are still young. As economist Carlos Galán points out, “Economic wealth has already been replaced. Nowadays, it’s not so much about having or earning much money as it is about being financially freer.”
Six examples of how to earn income without actively working
“Financial freedom consists of dissociating the income from the time spent. In my case, I wrote some books that give me passive income; they are sold while I sleep, regardless of whether I spend time on them or not. The clearest example is to have rented flats or received dividends from shares of companies, whether they are listed or not,” summarizes Galán.
Along with these classic formulas mentioned by the author of books such as ‘Depend on Yourself from Papa Estado’ or Jublate millonario’, there are other lesser-known options to have an alternative source of income.
1. Investing in financial products
Traditional passive income sources include bank savings, shares, and government bonds. Although bank deposits are unprofitable, low-risk investors pick them. There are also investment funds where you can start investing with minimal money and adjust the risk. Stock markets, which allow investors to acquire company shares, are more difficult. You can also invest in bonds, debt instruments, municipalities, and state governments.
In this sense, however, experts are concerned about the growing interest of inexperienced investors in online investments and financial speculation. For example, a recent study by the Financial Conduct Authority of the United Kingdom (FCA) proves that 70% of young people surveyed mistakenly thought that the purchase of crypto assets was protected and that any loss would be compensated, according to the FCA’s own executive director of markets, Sarah Pritchard.
In a recent interview, Victor Rodrguez Quejido, Director General of Strategic Policy and International Affairs of the National Securities Market Commission (CNMV), warned against investing in cryptocurrencies: “They have a lot of volatility, they act in a complex way, they can cause liquidity problems, and even the entire amount invested can be lost.” He adds, “Never invest in something that is not understood, and even less, invest money that cannot be lost in the short term.”
2. Property rental
Renting an apartment or premises is another very old and easy-to-manage offline method to generate passive income. Its economic potential can be very high if the property is in good condition and location and has a consistent inflow of money.The disadvantage is the initial effort required to own a property you can rent out while enjoying your own home.
The rental of goods and real estate has also changed with the arrival of the Internet. A digital modality of this passive income is to offer a room on a rental platform between individuals. It is enough to enjoy strangers, have a free space in your own home, and have the necessary licenses. In addition, this does not require a long-term rental, but passive activity can be stopped temporarily or permanently at any time.
3. Sell goods and creations online.
Selling used items online is a simple method to make passive income today. Recycling books, clothes, culinary utensils, and collector’s items is surprising and advantageous.
Hobbies are another simple way to generate passive income, as long as producing something through a hobby does not involve so much effort. Editing and selling videos or designing t-shirts or logos for video games are other simple formulas for the most creative.
4. Create digital content and formats
Examples similar to the language course mentioned above are blogs or YouTube videos. Many bloggers and entrepreneurs earn income through affiliate links, sponsorships, etc. Creating a website is also a format that combines those models and can generate stable income.
In line with the previous format, there is the editing of an “ebook” or the creation of an “app.” As in the case of the website, both represent a considerable creative investment, but they are an alternative tool to monetize personal inventiveness in the digital world.
5. Monetize personal profiles on social networks
Since more firms are paying social media users, especially Instagrammers, to promote their products and services, influencer marketing is a popular passive income source. Itis enough to be interested in a topic to create an audience that follows the publications. Companies usually offer their products for users to market or promote in exchange for a commission.
6. Enter affiliate marketing or ‘dropshipping.
Affiliate marketing charges a business for each sale to a customer who arrived from its website.It involves developing digital material and conducting analysis to attract clients to companies’ digital areas for a commission..invest for passive income
The “dropshipping” technique, on the other hand, generates passive income through e-commerce without the need to ship or manage stocks. It entails creating an online store to attract customers and pick up orders from the manufacturer or distributor..Six ways to invest for passive income