81% of Americans feel that they are underpaid and deserve a raise.
Most of these people are even planning to switch jobs with hopes of earning more money. Sadly, this is the wrong strategy as it’s hard to build wealth relying solely on active income. That’s why you should explore various opportunities for generating passive wealth.
You may, however, feel creating passive income is challenging and only super-wealthy people can do it.
To help you out, here is a complete guide to building a passive income.
Table of Contents
What is Passive Income?
Passive income is money that you earn with little to no effort. However, to start earning this money, you need upfront investment and time. And in some instances, it may take a few months or even years before you start generating passive income from a given source.
So, be patient and don’t give up when you don’t start earning immediately.
Also, know that getting a second job is not a source of passive income, as you have to invest time to earn. The key thing about passive income is earning without your direct involvement.
Why Do You Need Several Streams of Passive Income
From a young age, most Americans were encouraged to go to school to get a well-paying job. So, now that you have a decently paying job, you may wonder why create a passive income stream? Sadly, even unemployed people, instead of focusing on passive income, prioritize getting employed.
Here are some of the reasons why you need several streams of passive income:
Overcome Money Anxiety
77 out of 100 Americans admit that they’re worried about their financial situation. These people report that they feel money controls their lives. They can’t even eat out or enjoy other leisure activities without worrying how much it’ll cost them.
Sadly, most of these people have a single source of information and struggle to raise enough money to meet their needs. To transform their fortunes, these Americans need to learn how to earn a passive income. The goal is to raise enough money to cater to all their bills and achieve financial stability.
Also, you want to have enough money to overcome the fear of what happens if you lose your job or get sick. The objective is to move away from being dependent on your job to survive.
Free Up Time to do What You Love
Globally 85% of employees hate their jobs and only keep working to earn money to pay their bills. These people feel that their jobs take most of their time and sacrifice their dreams and passions. By creating several streams of passive income, these people will stop depending solely on their jobs.
That means that they can quit their jobs anytime they want and pursue the things they enjoy. They can spend more time with their friends and families or even travel the world. Also, they now have the time to work on their dreams and lead fulfilling lives.
Build Wealth
Understand that having a high-paying job can only make you rich; to become wealthy, you must have multiple sources of income. The goal is to reach a point where you can still pay off your bills without breaking a sweat even if you don’t work. To reach this point, you need to search for the best form of passive income.
You want to have several streams of passive income that earn you a reasonable return consistently.
Passive Income Ideas
The great thing about the 21st century is that you’re spoilt for choices on ways to earn passive income. It’s up to you to evaluate various passive income ideas and choose the one that suits your interest.
Here are creative passive income ideas to consider:
Rental Income
The first way to earn a passive income is through real estate investing. You can do this by acquiring a rental income that yields period returns. To lower risks, understand real estate market trends to determine the best places to purchase rental properties.
Also, you can earn rental income by renting out the spare room in your home. With services such as Airbnb, it is easy and fast to find people willing to rent out this space. The wonderful thing about this idea is that you don’t need any huge upfront capital to start earning.
Dividend Stocks
The stock market offers a beginner-friendly option for generating passive income. The secret is to purchase stocks from profitable companies that pay reasonable dividends. The dividends are paid out per share, so the more shares you have, the more money you receive.
That’s why you should develop a habit of buying stocks regularly to increase your portfolio. The wonderful thing is that most companies’ stocks are relatively cheap, so you can buy them with the little money you have.
Selling Information Products
Most people don’t realize that they can leverage their skills and talents to earn a passive income (and no, this does involve getting a second job). Most likely, there is something that you can do better than most other people. For example, you may have a secret recipe for cooking delicious chicken, or you know tricks for decluttering a home.
So, you should leverage this skill by making an e-book or a video course. Yes, developing the information product will take time, but you’ll sit back and start earning once done. You only need to reach out to as many people as possible to boost your returns.
Peer to Peer Lending
One of the most basic ways of making money work for you is by lending it to others. The idea is to give out personal loans using a third-party intermediary. The great thing about peer-to-peer lending is that you don’t need a huge fortune to start.
However, be careful with the peer-to-peer lending platforms you use, as some offer unsecured loans. So, if the borrower defaults, you lose your money.
Become a Silent Business Partner
Most Americans know that to become rich and wealthy, they should consider starting a business. Yet, it is hectic to develop great business ideas, and it takes time to establish a successful brand. That’s why you should look for less time-consuming options for becoming an entrepreneur.
One easy way of achieving this goal is by becoming a silent business partner. As a silent partner, you don’t participate in the business’s day-to-day operations, yet you’re entitled to a profit share. That means that you have the freedom to become silent partners in as many businesses as you want.
Content Creation
The other way of building a passive income is through content creation. You can do this by starting a blog or a YouTube channel. In addition, you can become a social media content creator and influencer.
The idea is to create captivating content which people enjoy to grow your audience base. Once you get a large enough audience base next, learn how to monetize your content. The idea is to explore various ways to make money from your content.
One of the top ways you can earn money is by posting adverts on your content.
Building a Passive Income: Obstacles
Creating most streams of passive income requires courage and commitment. You must be bold and be willing to get out of your comfort zone. That’s why you need to learn the obstacles to expect and how to overcome them.
Here are some of these obstacles:
Fear
37% of working adults in America admit that they’re afraid to invest in the stock market. These people fear that the stock market will crash and they’ll lose all their money. Others fear that they pick the wrong stocks, which keep depreciating and pay zero dividends.
To create a passive income, you must learn to manage this fear and understand that all investments carry risk. The trick is to carefully review the above passive income ideas and choose those that match your risk appetite. Also, learn to diversify your investment portfolio with alternative investments to lower risk.
Finally, understand that no one makes great investment decisions all the time. Even experienced investors sometimes pick stocks that turn out to be duds and end up losing money. The trick is to ensure your gains outweigh your losses.
Impatience and Inconsistency
Most people tend to give up when they invest in a passive income source, and it doesn’t pay off immediately. For example, they buy stocks and don’t receive dividends after the first year, or they create a short course, and no one buys it. When this happens, these people liquidate their investment and move on to other things.
However, even the best form of passive income takes time before it starts paying off. That’s why you need to be patient and be consistent to receive massive returns in the future. So, even if a stock doesn’t pay dividends, keep investing in the stock market.
Lack of Knowledge
The other obstacle for creating residual income streams is a lack of knowledge on how to do it. Yes, you may have some hints on how to buy stocks or invest in real estate, but you feel it’s not enough. After all, you understand that having the right information is key to maximizing your returns.
So, to overcome this obstacle, you should look for ways to expand your knowledge on creating passive income streams. For example, consider taking a real estate investment class or class on how to sell a course online.
You want to get information to enlighten you on what it takes to make it in a given field. Also, make friends who know more about generating a passive income to learn from their expertise.
Lack of Funds
39% of Americans claim that they don’t have money to invest in the stock market. Sadly, even a larger number feels that it takes a load of money to invest in real estate. That’s why these people feel that only the already rich people can create streams of passive income.
Yet this is inaccurate as there are many passive income ideas you can explore with the little money you have. For example, it’s relatively cheap to start a blog or create a YouTube channel. All you need is to commit your time to build these residual income streams.
Also, to generate passive income, you need to learn how to use “other people’s money.” The idea is to leverage loans to explore various investment opportunities. For example, take out a loan to purchase a rental property and use the proceeds you receive to finance it.
Lack of Time
Most employed Americans feel that they don’t have the time to work on their dreams. These people argue that in the beginning, most passive income ideas require a lot of time, and they don’t have this time. They claim that they’ll create passive income once they find more free time, but sadly, they never do.
To overcome this challenge, start slowly by freeing up a few minutes daily to learn about creating passive income. Understand that to achieve financial freedom; you must sacrifice your time.
Achieve Financial Freedom by Learning to Build Passive Income Streams
Building a passive income is a necessity if you wish to achieve financial freedom. The idea is to stop relying solely on your active income, as you must work to earn. You need to explore the above passive income ideas to pick the most suitable ones.
Also, understand obstacles to building passive income and how to overcome them. You want to create several streams of income to ensure you have enough money for all your needs.
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