For most people, income is something they actively work for. They go to work every day and get paid every month – this is how income is generated. But Warren Buffet says, “If you don’t find a way to make money while you sleep, you will work until you die.” It’s easy to get caught in the hustle-bustle of daily life, but you need a consistent income stream that will work while you sleep, play or socialize. whatever you plan to do with your time – that’ll be your passive side income.
What is passive income?
Passive income is money that you earn when you’re not working for it. It isn’t a magic money-making scheme that will make you rich with no work. You need to invest a considerable amount of time, money and effort, in the beginning, to earn passive income over time. With passive income, you have extra cash flowing in each month, providing extra security and helping you accomplish your personal finance goals sooner.
A good litmus test of passive side income is that you should be able to do your full-time job and still be able to run your passive income stream.
What is not a Passive side income?
Some income-generating jobs that are easily confused for passive income streams include:
- Your primary job: Passive/Side income boosts your regular earnings. Your main income-generating job is not a passive stream as you are actively involved.
- A second job: A second job/side-hustle doesn’t qualify for a passive income stream because you’ll need to show up for work to get paid.
- Non-income producing assets: Although investing is a great way to earn passive income, if your assets are not paying dividends or interest, they are not a passive income stream for you.
Start earning Side Income now
Passive side Income: What is and What is not (With Examples)
These income-generating ideas are similar, but there is a thin line of difference between passive and active income streams. This table clearly defines what is and is not a passive income.
|Active Income Idea||Passive Income Idea|
|Computer programming as a freelancer||Creating a specific program that you can license and sell multiple times|
|Working in construction or a similar industry||Investing in real estate|
|Freelance writing||Writing a book or eBook|
|Working as a photographer on a commission basis||Selling stock images or building your photography profile on Instagram|
|Driving for Uber, Ola, etc.||Renting your car or selling ad space on your vehicle|
|Consulting jobs/tuitions where you are paid by the hour||Creating an online course that people buy|
How to Generate Passive Income
Anybody can earn passive income. All you need is an idea and a goal. Follow these steps to learn how to generate passive income:
- Assess your skills: Assessing your skills shouldn’t be all about what you are not good at. Spend some time thinking about the things you’re great at. What are you passionate about? Take a quick inventory, and research the ways other people have monetized these skills to generate passive/side income without you needing to be working every day or physically present.
- Be realistic: Although the concept of passive income is to make money while you sleep, there’s no business that can be built without effort. So, before you start any business for passive income, be realistic about your commitments. If your primary work, family and social activities eat up a major chunk of your time, then sticking to investments or getting someone else to do the work for you makes sense.
- Ideate and choose: Put your business ideas down on paper and begin to draw up a business plan. In the next section, we have created a list that will help you brainstorm.
15 Passive/Side Income Ideas To Help You Make Money
With these ingenious passive income ideas, you’ll be one step closer to building wealth and living the life of your dreams.
- Get a high yield savings account
- Chit Funds
- Fractional Investing
- Affiliate marketing
- Write an eBook
- Create an online course
- Click and sell stock photos
- Build an app
- Rent your car
- Sell ad space on your vehicle
- Try peer-to-peer lending
- Start a YouTube channel or podcast
A high-yield savings account is the easiest way to give a boost to your savings. It won’t be much, but it’s something to get you started.
One of the ways of earning passive income is by investing in an online chit fund. This age-old rotating-saving scheme has been in India much before the banking systems. It has now got a digital face-lift, making it easier and convenient for you to invest and earn passive income.
By just investing a fraction of the total cost of an asset, you can earn passive income. For example, it may be impossible for you to earn a bitcoin that costs ₹5 Lakh. But, with fractional investing, you can invest in a fraction of its total cost. If the price of bitcoin increases, the value of your investment will also increase proportionally.
Through Employee Stock Ownership Plan or ESOPs, employees can acquire shares in the company. As the company grows, the value of the employees’ shares also increases, thus serving as passive income.
Fixed Deposits (FDs) and Recurring Deposits (RDs) are excellent sources of passive income. You deposit a certain amount of money for a fixed period. Upon maturity, you earn interest on the principal amount invested.
A bond is a loan a company or an entity takes instead of borrowing from a bank. You earn interest on the amount you invested in a bond. These are one of the safest forms of investments as you get to earn interest periodically (passive income), and the principal amount is given back to you on maturity.
With affiliate marketing, you can promote a third party’s product by including a link to the product on your site or social media account. Affiliate marketing is a great program for earning passive income.
Choose a topic of your expertise, and write an ebook. Publish it online on prominent sites with millions of users. Interested readers will purchase the book, and you’ll earn passive income.
Create an online course on just about anything. How to tie a knot, how to date, freelance writing – just about anything sells online. Things you can add in your online course to add value include checklists, video tutorials, small ebooks, interviews, and more.
If you have photography skills, you can use them to earn passive income. Consider selling your images as stock photos through third party websites like Shutterstock or Getty. If you have a website, you can sell your photos on your own website.
Creating an app would need an upfront investment of time, but you reap the rewards over time. You can build a gaming app, health tracking app or any useful app that the users can download and benefit from it.
If you have a second car you have not been using, rent it out and earn passive income.
If you use your vehicle daily for commuting, you can consider monetising it by selling ad space on the vehicle. Your vehicle might not look stylish, but it can definitely help you earn some extra bucks.
Peer-to-peer (P2P) lending allows you to loan money to a borrower. This process is facilitated through third-party P2P platforms. The loan amount is repaid to you in monthly instalments, which combines the interest and the principal amount. Your passive income is the interest component. Learn more about the best P2P lending here.
Research for a popular topic - even a small niche will do - and become an expert on it. In the beginning, you may have to invest a lot of time in creating a suite of content to attract and engage the audience. But when that’s done, it’s passive income for you all the way.
Start earning passive income now
If you are serious about generating passive income, what are you waiting for? Pick up passive income ideas from the above list and get going.