How to create a passive income? You are probably tired of working every day without any sign of retirement.
I can’t blame you. It is not easy to go to work every day and take a vacation only after begging.
The good news is that it is not too late for you. There are techniques you can use to take back your financial independence.
You can achieve your financial independence by putting your mind and money to work. That is right. If you don’t want to work, your money must work for you. Otherwise, you will always work for money and you will never get enough.
How do you take back your financial independence? The answer: Create passive incomes.
Passive incomes will require you little to no work to maintain them. For example, you spend the most time and energy when you are writing an eBook. After writing and publishing your eBook, the hard part will be over.
In this article, we are going to give passive income ideas that you can use to take back your financial independence.
Tip 1: Have a rental property
Rental properties are a perfect way to generate a passive income. You don’t have to be a millionaire to own a rental property. If you have money sitting in an account, use it to buy a rental property.
Your own house can be used as a rental property while living in it.
You can use the house hacking technique where you live on one side of the house and rent out the other. Your tenant will pay off your mortgage while you save your money.
You can use the following links to learn more about rental properties that can work for you.
- Condos rental properties
- Townhomes rental properties
- Single-family home rental properties
- Multifamily rental properties
Tip 2: Write an eBook
If you love writing, you can put an eBook together and start selling it online. It does not have to be hundreds of pages. You need enough content with the highest quality.
The hardest part will be writing the eBook. Once your eBook is done and published, the hard part will be over. You can then seat down and start collecting passive income from your ebook(s).
Tip 3: Rent out a room
Do you have a spare room in your house? You can rent out that room to a tenant and earn a passive income from it.
If you are not comfortable living with a strange tenant in the same house, consider renting the room to your family members or friends.
Do not waste your space in the house. Use that space to generate a passive income.
Tip 4: Invest your money in a Savings account
A savings account is an account that lets you save money while earning you a small profit.
The profit from your savings account will not be large. According to FDIC, the average return on a savings account is 0.06% APY. This return is not big but it can get you somewhere.
You will be better off with this small return than having money under your bed where inflation and rats take their shares.
Tip 5: Invest in Certificate of deposits (CDs)
A certificate of deposit (CD) is an investment strategy that lets you put your money in an account for a fixed period. CDs will earn you a fixed interest and they come with stricter terms compared to savings accounts. You must keep the money in the account until the expiration date of the CD based on its terms and conditions of use.
CD are sold by banks, credit unions, and related financial institutions.
According to FDIC, a 12 month CD can earn you around 0.21%. The return is still low. However, it is much higher than what you can make on a savings account.
This trick can generate you a small passive income that will accumulate overtime. In addition, CDs are low risk investments. So, you don’t need to worry about losing your money.
Tip 6: Invest in dividend-paying stocks
Stocks, in general, can give you a good return if you know what you are doing. However, they are sensitive to market and economic conditions which increase their volatility.
You can increase your gains in the stock market when you buy dividend-paying stocks. These are stocks that will give you a portion of the company’s benefits usually every quarter.
Dividends can increase or decrease depending on the performance of the company.
Tip 7: Invest in REITs
A REIT can earn you dividends and you can buy them using your brokerage account.
Over time, the company may increase the dividends it gives to its shareholders. As a result, your return on investment will increase.
Also, if the value of the REIT increase, your portfolio value will grow as well.
You can reinvest your dividends or use them on other investments.
Tip 8: Affiliate Marketing are great for passive income
Affiliate marketing is a technique where website owners display links of products from partners a.k.a the third party.
When website visitors click on those links and purchase those products, the owner of the website makes a commission.
If you have a website, blog, or you have a lot of followers on social media, you can consider making money from affiliate marketing.
Tip 9: Peer to peer lending generates a good passive income
Peer to peer lending is a beneficial lending method that helps lenders and borrowers to find each other with ease. These services are provided online and they match investors and borrowers.
If you want to make extra money as passive income, you can look into peer to peer lending methods.
Tip 10: Pay off your debt faster
This method will not put money directly into your pocket. Instead, it will keep money in your pocket. In other words, it will save you money in the long-term.
Tips: If you are not spending money, it is being saved.
If you have a debt that has an interest, you will need to pay it off faster in order to save money on the property.
For example, let’s assume that you bought a house for $100,000 at 30 years fixed-rate mortgage. You will make monthly payments and each one will include interest. At the end of 30 years, you will have paid close to $200,000 on the property depending on your mortgage rate and your down payment.
What if you can pay off your house in 15 years? If you can do it, please do so. This is because all the money you could have paid in a form of interest for 15 years will be saved.
You can treat this money as your passive income. This strategy will keep money in your pocket.
Tip 11: Use cashback from your credit cards
Did you know that you can make money with a credit card? Yes, you can make some money by having a credit card.
Whenever you shop, some credit card providers give you cash back on some purchases. You can use this money to pay off other bills or invest in stocks or REITs.
This cashback amount will become your passive income.
Tip 12: Display adds on your website to earn a passive income
Another great way to create a passive income is to display adds on your website, blog, social media, etc. You could be paid by impressions or if users click on those adds.
If you have a website or a blog, you can start with Google Adsense or with adds that have higher rate from other providers. This will depend on the age of your website and your monthly page views.
Tip 13: Design an online course
You can put your skills to work by creating an online course.
This is the same principle as writing an eBook. It will take you a while to create the course.
After putting your course together, things will be much easier from there.
What is next?
How to save money step by step
How to pay off debt? 11 tips you can use
