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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. Just like passive income (money earned from performing a service), passive income is taxed by the IRS just in a slightly different way. .
If youre familiar with the term dont put all your eggs in one basket, then you know that it applies to just about 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 ways to earn a passive income: investing money, investing time, renting things out, and getting paid to perform activities you do.
Invest with a robo-advisor. An option which requires little to no attempt, a robo-advisor is an electronic platform that provides algorithm-driven financial planning services by collecting information about clients financial situation and intentions.
Invest in dividend paying stocks. Dividend-paying stocks are a great way to build long-term riches since you get paid a portion of the companys earnings simply for owning the stock.
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Buy 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 website.
Participate in crowdfunded property. Investing in real estate comes with a high financial barrier to entry. If youre not there yet, consider a crowdfunded real estate venture which enables you to invest in a small percentage of real estate.
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 assets.
Buy royalties. Music royalties include 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 sort of investment is a great option since its relatively hands-off and includes a very low turnover which 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 capacity, making it a fantastic form of passive income.
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Start peer reviewed 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 comparable transactions through traditional financial institutions.
Open a high-yield savings account. If youre already putting money into you could try these out a savings account on a consistent basis, consider opening a high-yield savings account. This special type of account offers a safe way to make a consistent income.
Grow a mobile program. If you've got the programming skills and a one-of-a-kind idea, turn it into an program! The program marketplace is rife with opportunity for apps of all kinds.
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Start (or buy) a blog. With a little entrepreneurial spirit and a great deal of imagination, you can create a prosperous blogit just might take a little while. Prepare to work hard in the beginning, but via numerous revenue streams like running advertisements, sponsorships, and affiliate marketing your job will more than cover off. .
Affiliate marketing. There are numerous methods to use affiliate marketing in addition to having a site. Although a large audience helps, even some regional businesses provide a word-of-mouth referral application for referring friends and relatives for 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, consider licensing that idea. Interested companies are willing to pay royalties in exchange a knockout post for the right to use your idea.
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Buy 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 place, employ someone to restock the machines for you and you've got your own business going. .