How can we create permanent income sources other than jobs?
The need to create permanent income source.
We work to earn our livelihood. There are many sources of Income such as salaries, business income, rental yields, interest, and dividends, etc. We work hard to earn more. But there is one saying “ Penny saved is a penny earned“. Saving can be one of the passive income if invested properly in different asset classes to earn extra income every month.
We need to follow these points. and make our saving work as hard as we do.
- Save before you spend. Most of the time we save only when all our expenses are met. This is the wrong approach. You should first keep aside your saving amount. Transfer it in the separate bank account. No withdrawals should be allowed for any expenses from that account.
- You should save at least 20 to 30% of your monthly income. If you are single and no big responsibility on your shoulder then saving rate should be more than 50%.
- Once you think about investing always do your risk profiling. It is a process by which you understand what type of investor are you whether conservative, moderate or high-risk taker. It helps you to chose proper financial products according to your risk appetite.
- Invest in Index funds: If you are very new to equity, get worried about market fluctuations but still want to ride on the returns from the market then index funds provide you with a way to invest in the stock market that is completely passive. you will be invested in the general market, without having to concern yourself with choosing investments, rebalancing your portfolio, or knowing when to sell or buy individual companies.
- Asset allocation is a key for successful investment strategy. Always stick to your asset allocation mix. Do necessary changes according to your age and changes in life events.
- Never put all your eggs into the same basket. It means you should have the right mix of different types of investment such as equity, debt, real estate, and gold, etc.
- Only long term investment can create wealth. You should stay invested for a long time to make most of the Compounding factor to multiply your invested amount.
- Last but not the least control your greed. Focus on sustainable growth rather than shortcut for earning an unreasonable profit.
Ways to earn passive income apart from our salary
I have mentioned different sources of income in the above paragraph. In this digital and modern world, we have different sources to earn extra income. We can think of these options :
- Start making Youtube videos: This is a venture that is growing rapidly. You can create videos in just about any area that you like — music, tutorials, opinions, comedy, movie reviews — anything you want . . . then put them on YouTube. You can then attach Google AdSense to the videos, which will overlay your videos with automatic ads. When viewers click on those ads, you will earn money from
- Blog our thoughts: If you have new ideas or thoughts, you want to share your stories or views blog writing is the best medium. Slowly once your blogs get good views you can start earning.
- Freelancing: This can be done in any field which you find interesting and it is your expertise. You can manage to do it on Weekends or after job hours.
- Write an Ebook: This can be a lot of work upfront, but once the ebook is created and marketed it can provide you with a passive revenue stream for years. You can either sell the ebook on your own website or offer it as an affiliate arrangement with other websites that provide content related to your ebook.
- Covert your hobbies into business: If you like to create lanterns, craft items, paintings or jewelry get them on online. Many portals help in selling these products.
- Assist college students in projects: Many engineering students search for helping hands who can share good ideas, insight, and experiences for their projects. Help them and earn from it.
- Rent out unused space with Airbnb: Airbnb is a concept that has only been around for a few years, but it has exploded around the globe. Airbnb allows people to travel all around the world and to stay in accommodations that are a lot less expensive than traditional hotels. They do this by staying with participating Airbnb members who rent out part of their homes to travelers. By participating in Airbnb, you can use your residence to accommodate guests and earn extra money just for renting out space in your home.
- Affiliate marketing: The idea behind it is that you promote other people’s products, often through an affiliate network, earning a commission if people actually end up buying thanks to your marketing.
- Royalties: Royalties really are one of the few forms of true passive income. But, they’re usually only available to a certain few. Think actors and musicians who get a check each month for performances they did decades earlier. And even some inventors see a monthly royalty for their ideas.
- Buy high paying dividend stocks. Many Blue-chip stocks offer high dividends. Companies declare dividends on yearly basic or half-yearly. These dividends can be your secondary income. This income can be used for your travel or on functions.
- Hobby classes: If you are a dancer, choreographer, knows cooking, painting or art and craft you can take hobby classes and earn decently.
- Tutions: If you like teaching and you are specialized in any particular subject start taking tuitions in the evening. Specialized subject teachers are in demand nowadays.
- Fitness and Yoga classes: You can open fitness classes or Yoga class if you know the required knowledge and passion for fitness.
These are some passive income ideas which one can try. Earnings from these sources may not be much at the beginning but it will slowly start increasing if you are consistent in your efforts. Your Consistency and perseverance are the most important virtues for your success in earning passive income.
Be patient and focused.
Make effective and productive use of your time, and it can get you in places
SEBI Registered Investment Advisor and Fee only Financial Planner