When Coronavirus struck, governments responded with lockdowns. The lockdown was harsh on most, but, on the brighter side, proved to be a learning phase for all. Nothing can be taken for granted – life, personal freedom, or income – we learned it the hard way. With so much uncertainty to deal with as life normalizes, the focus has now shifted to passive income.
Passive income comes from an additional revenue source. It supplements your primary source of income that’s either employment or business. You are not required to put in much effort and time to earn and maintain passive income, and hence, the name. It becomes progressive passive income when you invest a little time and effort to grow your additional income.
In the wake of the lockdown, many have already lost their job and many more might lose it as the recession sets in. The passive income would sustain them in such hard times when the main source of income dries up. The money will keep flowing for you too provided you invest smartly. Here’re a few proven ideas to create a passive income to tide over financial hardships in future.
1. Online Income:
Gone are the days when passive income sources were only restricted to rentals, dividends, interest and royalty. The internet has diversified passive income avenues, ensuring continual cash inflow for every skill, interest or industry. Let’s run you through a few proven online income sources.
A website is your online real estate property, fetching you advertisement income. Just have a website in place and work to increase the traffic! The more the traffic, the more the advertisers will pay you for taking their message across to your readers. You can even open a e-commerce website to sell products – look at sites like Best Under India, which offer you reviews and ratings on products and brand you can sell. If you sign up for Google Adsense, each time the visitor clicks through, you get paid. Creating a website is easy, thanks to multiple online resources available that’ll guide you through domain search, layout, design, and more. The hardest part, however, is attracting visitors to your site. To this end, ensure the website is user-friendly, responsive across devices, optimized for SEO, and the content is genuine, relevant, and informative, in line with algorithm updates.
- Affiliate marketing:
A website is worth more than just Adsense-driven direct marketing. Opt for affiliate marketing to realize the full earning potential of your website minus much hassle. It’s a symbiotic arrangement, involving three parties, the company, the publisher and the customer. You are the publisher tasked with promoting the company’s products and services to customers via your website. The company inserts web links on your website. Every time your readers make purchases on the company’s website by clicking on those links, you get paid. But remember, no two affiliate programs are created equal. So, stay practical and well informed when choosing.
Conventionally, publishing a book is cumbersome, involving a lot of time and effort. Enter web publishing platforms like Kindle Direct Publishing, it’s as easy and quick as it gets. In less than 5 minutes, your work is published and available for readers globally within 2 days. From rights to prices, you control all aspects of your creation. Plus, you enjoy the freedom to make changes in your book, if required. Your royalty can be up to 70%, subject to certain factors. So get your creative juices flowing and jot down an e-book for a continual stream of repeat income.
Data is what drives modern-day businesses who gather data to learn what customers think about their brand, products or service. Knowing about customer expectations is also prioritized for business gains. They do it through online surveys. You might be asked to take an online survey and answer a few relevant questions in return for some money. You might also be asked to conduct online searches or write reviews favouring a particular company for money. Beware, as many such websites are nothing but a scam, ready to rob you blind. The thumb rule is to evaluate the website’s reputation before signing in and never disclosing your bank details.
- Content writing:
If you are good with your words, content writing is for you. Clients will be paying you for every article, blog post or press release you write for them, depending on the content’s quality and length. Content writing assignments often come with certain guidelines and deadlines that need to adhere at all times. Think politics, business, entertainment, lifestyle, investing, auto, food and sports, the subject choices are simply endless. Choose the one you are comfortable with and gradually develop a command over it, as niche writers earn more.
- Language translation:
Are you bilingual? If yes, it’s time to monetize your bilingual abilities. From Fiverr.com to worknhire.com and Upwork.com, there’s a deluge of websites offering translation projects involving content translation from one language to another. Spanish to English, Chinese to English, French to English, German to English or vice versa, translation options are equally diverse. Here, payments are done per word, ranging from INR 1 to INR 5, subject to the content. Again, client guidelines and deadlines need to be complied with.
- Paid Subscription:
It’s a lucrative progressive passive income source for specialists. If you are the authority in a subject, get your act together and start an online paid subscription. Your task would be to provide consultancy or advice on a given subject for which you’ll be paid by subscribers. Your area of expertise can be anything, investments, regulation compliance or education. Staying current on the latest developments in your field is must if you wish to stay competitive.
- Virtual assistance:
If you have the acumen for corporate stuff, virtual assistantship (VA) can guarantee you decent remunerations to supplement your primary earnings. As a VA, you’ll be managing certain business and administrative aspects of a corporate client online, from the confines of your home. Your scope of work includes customer support, business correspondence, appointment scheduling, accountancy, project management, media management, tech support and more.
2. Rental Income:
The income generated from renting out a self-owned property is your rental income. It’s the best form of passive income, only if you have an apartment, commercial property or land to rent out. Otherwise, you’ll have to purchase one, which involves high capital investment.
Diverting a certain percentage of your primary income towards building an asset is required. Financial help from banks or other financial institutions might also be involved, depending on the asset cost. Plus, you’ll be spending on maintenance of the asset once it’s purchased.
The effort and money you put in are worth it nonetheless, as the returns are decent. However, don’t jump into property investment without proper investigation. The property should be well connected, well equipped with amenities, and in close vicinity to schools, market and hospitals. The construction quality will also boost the property’s resale and rental potential.
3. Dividend Income:
Imagine buying stocks of a given company. The company will share a part of its earning with you proportionate to your investment. The income thus generated is the dividend income. The dividends can be reinvested in return for additional shares if the company offers a dividend reinvestment plan. Reinvestment makes sense when the company is growing steadily.
The dividend investor wheels in passive income in addition to the rise in the market value of his portfolio as asset appreciates over time. But dividend investing has its share of issues, finding the right dividend stock for one. You need to compare the company’s earnings and dividend payouts to determine dividend safety. Play smart deciding when to enter the dividend stock and at what price. Buying at undervalued price levels is the way to go for long term profitability.
4. Interest Income:
Do you have a savings account or a fixed deposit? If yes, you are earning interest income already. But if you don’t, it is time you open one and bring in supplementary income. Both, savings account and FD are safe, easily available at banks and NBFCs, and offer decent returns. The interest income depends on the principal, rate of interest and tenor of the deposit.
FD gives you a higher rate of interest vis-à-vis a savings account. Liquidity is ensured with two interest payout options, cumulative and noncumulative. In cumulative option, interest payouts happen at the tenor end. Conversely, you get payouts monthly, quarterly, half-yearly or yearly with noncumulative option. Opt for the latter if you need funds to meet day-to-day expenses. A tax rebate up to INR 1.5 is also available under Section 80C if you invest in a Tax Saver FD.
5. Royalty Income:
Any self-created book, song, image, movie or documentary is an intellectual property, and an instrument of passive income. Others will pay you royalty to use your intellectual property, such as trademarks, copyrights, patents, and more. They are legally bound to do so. Royalty income can also be generated from a mineral operation, including coal, oil, and gas.
Royalty income varies in nature, depending on how you negotiate. The intellectual property can be traded off for onetime payment under an arrangement called licensing. Alternatively, you can seek a certain percentage of the revenues the investor makes on your property. Either way, you end up earning money but the latter arrangement ensures consistent cash flow for years.