Whenever there is a discussion about passive income, serious people usually scoff at the idea. It conjures up a notion of doing no work but getting paid anyway. This is not nearly what passive income entails, though there are ways to actually do that too.
Passive income simply means putting in the work in the beginning and then enjoying the profits later. If you are preparing ahead of your retirement then this work can be done now and you can then have an extra income when you do finally decide to leave your work behind.
Of course, there are actual ways to have an income without actually doing any work. This is from investing. In this case, you are asking your money that you’ve saved to do the work for you.
In this article, we will go over several ways that you can set up a passive income so you can have some additional income when you retire.
One of the best ways to earn money without having to work for it is to invest in stocks. If you buy the right stocks and don’t sell them then as the value grows, your income will grow with them. You can either buy stocks that pay out dividends or ones that don’t but you get the profits when you sell them for more than you bought them for.
Investing in stocks can be risky, however, so you shouldn’t put more in than you would be comfortable losing. There are many different types of stocks and investing strategies that require either a lot of risk, a little risk or something in between. It’s all about how much risk you are willing to take.
If you don’t like risk at all, then buying up some index funds is a good way to go. You don’t make as much as a result, but you can expect returns of around 6-8% on average. Warren Buffet is usually big on buying index funds to protect your money and have some residual income to supplement your retirement.
If you don’t mind a bit of risk with the reward being high returns, then buying up individual stocks is not a bad idea. You do have to be careful and understand how the market works to be able to pick some good winners. High dividend stocks can really supercharge your passive retirement income if you are good at picking the right stocks. What are the best stocks to buy? Well, the trick is to pick the next Google or Apple. If you can figure that out, then you’ll do alright!
Something in between is to invest in ETFs. These are exchange traded funds which is simply a way to buy fractions of shares in companies by using a robo investor. You save money by not needing a broker, have stability as they are split between a lot of different stocks and they pay out a nice return of around 8%.
Invest in real estate
Real estate is always a great way to earn extra income. It’s usually a safe way to park your money to protect it against inflation so your retirement income doesn’t decrease. Does it provide passive income, however?
It certainly can but that isn’t always why people buy into it. The way to make it passive is twofold. First, you can buy income property like rentals. There are apartments or even entire houses that can be rented out. The key is to find an area where there are a lot of potential renters but not many rental units. This will bring in top dollar and prevent an empty property from happening.
To make it passive you have to hire somebody to manage your properties. There are many management companies that will take care of every aspect of the process for you. Give them the criteria that you are looking for in a tenant and they will handle the application and acceptance process for you.
Then, when your tenant has an issue they call the management group and not you to fix things. The only thing you need to do is check in with your company once in a while and make sure they are paid.
If you are a few years from retirement then this is a good time to start an affiliate marketing website. It can take a couple of years of work to get it to where it is making a steady income. But once it is up and running and bringing in an income, you can set things up so it runs on its own.
The idea is that you start a website based on a topic that has products or services that are related to it. Then your site is there to promote these things. With your own special link, if a person clicks and makes a purchase within the set amount of time you get a commission. There is no product you need to handle, nor is there any shipping on your part.
Once you have the site established then you can hire a virtual assistant to manage it for you so you can keep your important posts ranked high on the Google search results.
If you have a good idea and your site is taking off, you can try to sell your own digital products for much more money than you get when promoting other people’s products or services.
Create an app
The best way to make money in any capacity, whether you are looking for passive income or not, is to make something that helps solve peoples’ problems. And apps are a great way to do that. If you have a problem yourself that often gives you trouble because you can’t find a solution, then you already have an ideal app idea.
You don’t even need to know how to program or code yourself. All you need is the idea and the vision of how you would like to see the app work. Then, you hire a programmer to build it for you.
Do some testing and make sure it works. Then, put it up on iTunes, Google Play and other platforms for people to download. You can either make it a free download with paid upgrades possible, or charge per download if you think you have a runaway hit on your hands.