Wealth & Lifestyle Learn how to increase your income without increasing your workload Posted by: Team Tony
Ready for a truth most people won’t tell you? Regardless of the economy, current politics or world events, you are in control of the amount of money you make.
Current job does not bring enough income? It’s time to get serious about passive income.
Tony says, “If you want to change your life, you have to raise your standards.” That goes for relationships, careers, and finances alike. One way to raise your financial standards is through passive income ideas that can help you increase your income with minimal effort. You can learn how to earn passive income and take charge of your financial future even in uncertain times. You can rise and thrive – creating a new you for the new world.
What is passive income?
Passive income is money that you earn without having to make any effort every day. Don’t let the word “passive” fool you — most passive income ideas involve work, especially upfront. Passive income is not about getting something for free. It’s about having a second, reliable source of income that will help you create more financial freedom. While you’ll do more than sit back and let the money flow, once set up, your passive income strategies will require less work than your main job.
What is passive income?
If you devote more than 500 hours of your time per year to this business or activity, this is considered a material contribution. If your participation accounts for the majority of someone’s time in the activity, or if you have participated for more than 100 hours and your participation is equal to anyone else’s, that also counts as material participation. Both mean that the income from that business or activity is not passive income. What counts as passive income is any activity that doesn’t meet these thresholds but still provides you with regular income.
Types of passive income
According to the IRS, there are two types of passive income:
Commercial or business activities in which you are not materially involved during the year Rental activities, even if you are materially involved
Within this definition, you can also break passive income into three categories: investing, wealth accumulation, and wealth sharing. Investing is an example of an activity in which you have no material interest: Passive income investments like dividend stocks, real estate mutual funds, or money market funds can make money without you having to lift a finger. Building a real estate portfolio that you then rent out is also an example of investing.
Wealth accumulation and wealth sharing are ways to earn passive income in which you have a material stake. In wealth accumulation, you spend time building or accumulating an income-generating asset, such as music, photos, or digital products, and then create passive income by selling it. Asset sharing means using something you already own to generate passive income. Airbnb is the perfect example of this type of passive income.
Entry into passive income
For those wondering how to make passive income, it’s common to think that it takes a lot of money to get started. This applies to some passive income, such as B. renting property or investing in or starting a business (although you can certainly start a business without investing). But there are plenty of passive income ideas that don’t require a lot of money upfront and are great for getting started.
If you’re wondering, “What about passive income for beginners?” it’s important to realize that alongside the perfect idea of making passive income yourself, your psychology plays a big part. Tony often says that business is 80% psychology and only 20% skills. Overcoming limiting beliefs, reducing fear of failure and working on your negotiating skills are just as essential as learning to read annual financial statements. As with any business venture, these passive income ideas are much more likely to succeed if you start with your mental and emotional state.
10 passive income ideas
The key to passive income is matching your initial investment of time and energy to your risk tolerance. (And of course, always do your research and consult an expert before making any investment or opening a new account). Here are some passive income ideas to get you started.
1. Real Estate Investment Trusts (REITs)
REITs are one of the best passive income strategies and a great entry point into real estate investing. They’re low-risk and don’t require a lot of money upfront: you can potentially invest in a REIT for as little as $500. You buy shares in publicly traded real estate portfolios, and the REIT does the rest.
2. Real estate rental
Rental activities are sometimes referred to as semi-passive income because there is still work to be done as a landlord. However, once you’ve bought a building and found permanent tenants, you probably won’t be doing enough work to exceed the material ownership threshold.
3. Money Market Accounts
Money market accounts are one of the best low-risk passive income investments for beginners. They are similar to savings accounts, but their annual percentage return (APY) is higher, and you earn a higher APY the more money you have in your account.
4. Index Funds
Index funds invest in market indices broken down by company size, country, industry or style, such as fast-growing companies. Index funds aren’t the most exciting passive income investments, but they’re easy to understand and reliable, making them another great option for beginners. Exchange traded funds are a similar option with an even lower minimum investment required.
5. Dividend Stocks
Dividend stocks require more research than money market accounts or index funds, but they can be one of the best ways to generate passive income. Dividend stocks come from publicly traded companies that regularly share their profits. Many people own dividend stocks through retirement accounts, but you can also buy them through brokerage accounts.
6. Business Investments
If you have some money to invest, try becoming an equity partner in an existing business that needs capital. You can also start a semi-passive business like a laundromat, car wash, or vending machine installation. Once established, these companies do not require much senior management involvement.
7. Use your expertise
There are passive income ideas that don’t involve investing – like using your expertise to create and sell content. Create a guide or instructional video that explains a complicated product or topic, or create a course and post it online. You’ll earn revenue every time someone buys your video or enrolls in your course, with no additional effort required.
8. Creative pursuits
If your expertise is creative, you’re in luck. Discover how to earn passive income by creating and licensing music, selling stock photography, or writing a book or e-book. Turn your artwork into digital files to sell online. Create and sell t-shirt designs. You will be surprised how you can monetize your talent.
9. Affiliate Marketing
Affiliate marketing is a way to get paid for promoting products, similar to influencer marketing. For this passive income idea, you need a website or blog. You can create one yourself or, with a bit of negotiation, buy an existing blog for around $1,000 to $3,000. Then select products to review and promote – every time you make a sale, you’ll earn a commission.
10. Rent out your house or car
Did you know Airbnb and Vrbo count as passive income? If you rent out your guest room – or your entire house – you can generate regular income with little effort. You can even rent out your car or RV for temporary use. Just think of wear and tear and make sure you have the right insurance coverage.
Take a look around – what skills or assets do you already have that you can leverage for your income? What could you easily create? With the right mindset and a little creativity, you can come up with even more passive income ideas.
Team Tony cultivates, curates and shares the stories and core principles of Tony Robbins to help others live extraordinary lives.