It can mean a better retirement plan and even business opportunities. So what’s holding you back? We’re here to help you understand the world of passive income online so you can start on this exciting new project. Keep reading to learn more!
What is passive income online?
Starting with the basics we have to understand what passive income is and why we are talking about it being online. So let’s start defining the opposite: active income.
Do you receive a salary, tips or fees as payment for services of any kind? That’s what’s called active income, probably the most important part of many families’ earnings. It doesn’t matter if we’re talking about a freelance worker or a salary person, that’s active income all the same.
There’s a small problem with this type of earning: it’s limited. A day only has 24 hours and a person can reach their working limit fast. Whenever we try to increase the amount of money made this way quickly, one’s life quality can decrease a lot.
That’s why investors defend passive income. When you have this type of earning the money will come no matter how involved you are. Most people use it as extra income or a tool to plan for the future. Since the money will keep growing no matter what, it’s a great idea to turn your savings into passive income.
Is it possible to get passive income online?
Now that we understand there are ways to make money with your labor actively involved and without it, we get to another question: Is it possible to get passive income online? The answer is yes and there are many ways to do that. Actually, investors and the online community alike keep creating new innovative ways to make money.
What you’ll need to get started on this journey is a notebook (or even just a phone) and good internet connection. But we recommend a good deal of studying too, so that you can understand where your money is coming from and how to keep it flowing.
Along this article you’ll find out more about passive income online ideas and offline as well. One creates the basis for the other and keeping different income sources will allow you to have even better earnings.
Examples of traditional passive income
Americans have been looking for sources of passive income for as long as we could remember. You’ll find some of the most traditional ways of earning money without putting your back into it. One tip: it’s really interesting to keep your investment portfolio mixed up. If possible, acquire both offline and online sources of income to stay safe.
1. Real estate assets
Owning a house or apartment is a great way to start investing. Mortgage aside, the most traditional way to get a boost on your income is by renting off real estate. That way, tenants will deposit a monthly amount for the housing and will keep cash flowing.
However, there are some important pitfalls in this type of investment, especially for people that aren’t ready for it. Firstly, you have a mortgage to pay, which is a fixed expense, add taxes and maintenance and you’ll get quite the number.
Many owners charge their tenants wrongly when they don’t consider that. Which means, there are people whose real estate assets only pay for their own costs (if they’re not losing money without realizing).
Another problem is the high price of entry, since buying a home can be quite expensive.
2. Peer-to-peer lending
Almost everyone has lent money to a friend or family member at one point in life. When you learn how to lend smartly, it can become good passive income. After lending a certain amount all you have to do is define interest so that the investment will become profit. Does it sound hard? Nowadays there are platforms that can help out with that.
Prosper, for example, offers a marketplace for online loans. Its objective is connecting people who look for money at a more competitive interest rate than that of banks, with those who have the assets to invest.
Using a platform can help boost your security. Another, more traditional option is using legally binding contracts that establish the percentage of interest and time for payment.
3. Dividend stocks
Dividend stocks are shares of a company that anyone can buy. Once you become part of the investors, you’ll earn a part of the company’s profits for a period that can vary according to the investment. The longer you keep investing, the better the payout, thus this can be an interesting passive income for those who have long term financial interests to attend to.
One advantage of dividend stocks is how less volatile they are than other types of stocks. Which means you’re not likely to lose your investment because of a market crisis or instability.
4. Bonds
Bonds are, basically, a way of lending money to a private or state owned corporation. They allow you to lend a certain amount to the company when buying bonds and earn interest on that amount. This is a reasonably safe way to invest, which means the interest is rarely affected by market fluctuations.
The only bad side is that since they’re less volatile, bonds tend to earn a lot less in interest than other types of passive income investment.
Popular passive income online ideas
The greatest problem with the choices we’ve presented so far is requiring a certain degree of technical knowledge. Most people don’t understand them as deeply as they should to start investing, which means they’ll need an advisor or company to actually make a profit. That’s why passive income online ideas are becoming more and more popular.
Most of them require a smaller amount of cash to start and allow more freedom. You can invest from the comfort of your couch and get returns without the need for an intermediary. When you need someone in the middle, it’s an app or platform that makes things faster and easier.
1. Dropshipping as passive income online
Dropshipping is a passive income online that requires more time than actual money to start. Putting it simply, it involves creating an online store that deals with in demand products and sells fast. The upside: you don’t need any actual physical stock since you’ll have a supplier that handles everything for you.
Once a cliente buys online, the supplier handles the production and shipping to the buyer’s place. All you have to do is sit back, watch the money flow in and do occasional maintenance on the website.
Since you don’t pay suppliers until clients buy, the risk is small. The only downside is that you need to know some programming and a bit about e-commerces to get good returns.
2. Domain name investing
Did you know that you can buy any domain name that isn’t used online? Some people found out about that and started buying as many cheap domain names as they could. With time, businesses started getting in touch with these people to purchase the names and start their websites and thus domain name investing was born.
It’s a cheap way to start investing, since many names go for less than US$10. All you have to do is get generic terms that a broad category of companies could use. However, we recommend patience and caution, since domain names can take some time to sell. If you need quick returns over your investment, this might not be the choice for you.
3. Digital products
Selling digital products is becoming a main source of passive income online for investors. But there is a catch: first you need to figure out exactly what you are selling and create the product. It can be an ebook, app, online course (there are platforms, such as Udemy, that allow you to upload these), or even art templates.
Once the product is ready you have a few choices: create your own website for sales and keep all the profit to yourself or include it in a marketplace and pay a percentage to the seller. We recommend starting with a marketplace if you’re still new to online sales. If not, create your website, sit back, relax and watch the money flow.
4. Affiliate marketing
Do you want to sell online without much work, but don’t want to create a product? Affiliate marketing is the choice for you. Some digital producers allow people to recommend their product with a referral link. Every sale generates a profit and you don’t have to handle producing, shipping or dealing with consumer complaints.
All that you need to do is use a bit of time to generate traffic to your link. Some people do that in Whatsapp and Telegram groups, Facebook Groups or their own audience on social media.
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