From making investments to renting properties and online sales through a buying and selling platform such as Etsy or ebay, there are more ways than ever to get passive income and see your incomes grow. In the following article, we share with you everything you need to know to make it happen.
What is passive income?
Essentially, passive income is income that you get without having to do (almost) anything about it. “It is enough to get tired once and from then on you just collect the fruits of your effort,” explains Nicola Richardson, creator of the financial advice blog The Frugal Cottage. Exploitation rights (e.g. for writing a book or song lyrics) is a good example of passive income, since you can collect income whenever someone else wants to use the “product” of your work, without having to do anything else for it yourself.
What is the difference between passive and active income?
The main difference is that active income is the salary with which you are paid from your daily work, while passive income is money that you receive without having to actively work for it. Essentially, with active income you do the work – active effort-and are therefore paid accordingly. Passive income arises when you receive money without having to do anything – this is why it is called passive-and this can happen at any time, as opposed to potentially stable income from active employment. Active work has a certain threshold in terms of income, since it is possible that it does not exceed a certain amount. With passive income there are no limits, especially if you are willing to work on increasing it.
How to generate passive income?
There are many ways to generate passive income, and advances in technology have contributed greatly to this. Dividend income is one of the easiest ways to obtain passive income. It is enough first to invest in shares or dividend distribution funds, and you do not need to do anything else. At first the income may not be very large, but if you invest enough, the amount of payments can be significant and can be a very good source of passive income. You will then collect an amount of money into your account every now and then. There is nothing more passive than that!
To obtain income from renting real estate you may have to wait a little longer, because the amount required to start is relatively large as it will be needed as a down payment for the purchase of the property for rent. The amount of passive income depends on the amount of the loan installment you have received in relation to the amount that you can charge as monthly rent. If the amount of money at your disposal is not large, the increase in your passive income will be gradual. Initially, it usually requires more expenses, at least in the short term
It is a good idea to keep various sources of passive income, because individual incomes may fluctuate more than active income.
