Furthermore, we will not only explain what passive income is, but also tell you which are the most used techniques to produce money in this way and how you can get the most of it by yourself. But don't feel intimidated, this is not too good to be true, you just have to find what works best for you.
Time is ticking, and you could be making money online... (Source: Pixabay)
The concept of Passive Income is about the profits that are generated without the person being involved or working directly on it, that is, without sitting in an office for 40 hours per week and receiving a payment only on the 15th and/or 30th of each month (this is known as active income, which is obtained in exchange for a product or service rendered).
This doesn't mean that you don't have to participate at all; on the contrary, it is always necessary to carry out a job or initial investment. Likewise, passive income is not exempt from taxes, although these are treated differently by the collection agencies (they represent a lower tax rate than those of your assets).
What makes this type of profit so attractive is that you can manage your time and money as you want. To illustrate this idea a bit, I can mention the case of an engineer, who needs to do their work "without fail" or even cover more shifts because, otherwise, they won't be making any money.
If this engineer requests their retirement or, unfortunately, are no longer able to continue performing their trade, their funds would be committed to the future... unless they count on a source of passive income.
There are several kinds of activities that generate this type of earnings, among which are: rental of real estate (department, house, commercial premises), pension or retirement payment, royalties or profits for copyright (intellectual property, as original graphic material), business agreements or partnerships where the active participation (of the "passive partner") is practically zero during the year, and other investments that generate some kind of interest.
In the latter case, special emphasis is placed on those activities where the beneficiary of the passive income is the one who makes a monetary investment (granting a certain amount of capital) to obtain a continuous profit, derived from what was initially invested, but who doesn't actively participate in the process.
Likewise, in the field of passive income generation, the phrase "make money while you sleep" has been widely used, although this doesn't mean exactly "while you do nothing". The misunderstanding occurs when you refuse to accept that you must risk something from yourself, be it an investment of time or money, so you can make a profit from this, even if you don't spend more time and/or money on it.
Real Estate is just one source of passive income that can change your life. (Source: Pixabay)
There are many examples of activities that can be carried out to produce this type of earnings - although, if they were to be classified by "levels", it could be said that the less participation you have (or less time you dedicate) in the business, the more passive they will be.
In the case of the "less passive" activities, we have the rent of own physical spaces, that is, the rent of a room or any other kind of property that you have in exchange for a certain sum of money (e.g. Airbnb), which you will charge periodically (each month, quarter, semester, year...). This also applies to equipment or moving parts, such as decoration (tables, chairs, awnings...), means of transport, machinery, tools...
This line also includes the sale or resale of items through specialized web pages (such as Amazon). What do these first three methods have in common? You will have to get involved in every transaction.
On the other hand, the "more passive" activities may involve sources of income as varied as: royalties for copyright (in any form), advertising profits (including affiliate links, which we will talk about in a future article), interest generated by monetary loans or savings, sale of digital products or services (books, courses, domains of web pages...), among many other ways of generating liabilities.
First, you must identify what kind of "passive beneficiary" you are, what you really want to do and what you count on to carry it out. This means that, most likely, either you have a large sum of money or time to invest in the generation of your passive income, but it is a bit difficult for you to have both at the same time.
If you have a capital that you can consider as solid or belong to the group of those who have invested a lot of time in a traditional job but have been able to save a part of the money generated, then you have the option of investing in one or more properties (furniture or real estate). It also depends on what you can get and how much you are willing to risk in making the appropriate arrangements to rent it/them.
You can also consider other options, if the field of real estate is not your thing, such as hiring one or several people to do the work you want (write a book, write a song, create an invention or an innovative app...) and obtain the passive income generated by the sales of these products. Actually, the possibilities are countless.
On the contrary, if you are one of those people who have more of the valuable time resource to focus on the goals you want to achieve, then you must dedicate yourself to develop a product of the best quality. Whether it is the creation of a blog, a Youtube channel, a course or what you do best, the truth is that you must sacrifice many hours to reach your goal and put all of your effort in stand out with your proposal in a market that has many people doing the same.
In any case, it must be clear that generating passive income is not something that happens from one day to the next, it is something that you have to constantly work on and maintain the quality of what you are offering. You need to make sure that people notice the dedication you put into your work.
The secret is to create a good follower or client base, in order to build a great reputation with which you can support your product or service in front of the potential new customers or consumers. This means one thing: work very hard at the beginning, which is when you need it most, stay motivated and have patience so that little by little you can see how your work decreases as much as your income increases, proportionally.
Patience and hard work lead to great results. (Source: Pixabay)
It should be noted that, in case you have invested a large amount of your time in developing a profitable business, that will generate good dividends, you won't enjoy the same conditions or benefits as if you'd invested a large amount of capital in a society from which you can expect (with some confidence) a certain level of returns.
Also, you must be astute when it comes to choosing where you want to point your investment and how to proceed then. This could lead you to lose everything that you invested in and, even in the worst case, cause you to have to pay large sums of money for debts you have incurred.
It is crucial to take into account your skills, knowledge, talents and financial situation to wisely choose the way in which you can achieve what you set out to do. Having realistic goals is something that will also help you a lot; instant success is very unlikely.
There are people who don't believe in this kind of "business", so this world is not made for anyone. It is important to clarify that, normally, the investments that generate money more quickly are those which make it in smaller amounts, so it is very convenient to have patience when you wait to see the results. There is nothing better than perseverance to harvest and taste the fruits of success.
And with this excellent motivational phrase I say goodbye to this interesting article, but not before asking you...
Have you thought about which method suits you best?
Co-Founder. Lead Content Creator (Spanish). Licensed in Chemistry. Scientist by profession. Curious from birth. Traveler by passion. Writer by calling. In love with the very essence of existence and thrilled with the idea of helping others reach their dreams and fulfill their life's desires.