What is Passive Income?

Passive income (or unearned income is income that you spend minimal or no effort to generate and maintain coming from sources other than regular employment. Usually, this is set up as a side or alternate revenue stream.

A very simple example of passive income is interest earned on your fixed deposit. You just make an investment and earn interest on your deposit without doing any work or putting in any effort.

Why it is important to generate Passive Income?

• Generate a steady alternate source of revenue
• Supplement income which can be used to avoid or pay off credit
• Use as a source for regular and steady savings
• A reliable income stream as a backup in case of unforeseen situations like loss of job
• Requires minimal effort

Today’s market opportunities offer multiple avenues to generate passive income regularly. Here are some of the ideas to get you started on the journey of generating regular passive income.

1. 1. Fixed Deposit

While this investment generates regular passive income in the form of interest, the return on investment is quite questionable with minimal returns. The rate of interest in FD’s is usually minimal and doesn’t even cover the inflation. Added to this, the interest income is taxed! This makes it a less preferred option for passive income and shouldn’t even be on this list.

1. 1. Invest Dividend Paying Stocks

Investing in dividend paying stocks is one of the simplest ways to generate regular passive income. Identify and pick up good dividend paying companies with sound fundamentals. However, dividends are paid as per the market conditions, performance of the company, and management discretion. It is not paid on a fixed time basis. Besides this, the stock price may fluctuate and sometimes your investment value may depreciate.

1. 1. Create a Digital Asset

Creating digital assets like a website, blog pages, etc, where other brands will be interested in advertising, if there are sufficient traffic of different target audiences regularly to the website is a lucrative way to generate passive income.  But the income may not be steady, and regular, and will also require a fair bit of effort from your end with respect to generating fresh content and promoting it to generate traffic.

1. 1. Create Digital Content or Training Program

If you have specific knowledge or skill set like investing in stock markets, video editing, painting, etc, which can be taught to others, then you can simply shoot such instructional videos and upload on your YouTube channel. Once you monetize these videos, the more views they gather, the more you earn!!

1. 1. Have a side hustle on Freelancer sites

Sites like Fivver, Freelancer, Upwork, etc., offer plenty of opportunities to start a side hustle and generate regular passive income. However, these are not purely passive as they will require your time and effort on a fairly regular basis and the amount you generate may fluctuate. High demand jobs like voice recording will need some basic investment in studio set up and regular work.

1. 1. Rent out a spare room out of your home

If you have your own home and have a spare room, you can rent out this room at your convenient time on sites like Airbnb. You can entertain guests from various parts of the country or even abroad. Besides earning a side income, it would be a great way to meet new people and learn about new cultures! However, this option, cannot consistently generate income.

1. 1. Sell hand-made goods

If you have a creative bent of mind and are good with handicrafts, you can create and sell hand-made goods like soft toys, handicraft items, etc., on various e-commerce platforms.  This requires time, effort and a bit of capital investment for the material or equipment required.

1. 1. Run an affiliate marketing business

Affiliate marketing is a type of performance-based marketing where a company or advertiser pays a commission to an affiliate marketer for each sale, lead, or action that is generated through their unique referral link.

In affiliate marketing, the affiliate marketer promotes the advertiser’s products or services through various channels, such as a website, blog, social media, or email marketing. When someone clicks on the affiliate’s unique referral link and makes a purchase or completes a desired action, the affiliate earns a commission.

1. 1. Pick and drop people on the way to and back from work

Carpooling apps like Blabla Car and Quick Ride allow you to pick up people and drop them on the way to your work regularly and earn for the ride. This however is a small income, but at least, it would lessen the burden on your pocket for the fuel charges.

1. 1. Invest in Fractional Commercial Real Estate

Investing in fractional commercial real estate where you own a share of the property or building is one of the most lucrative, convenient and easiest way to generate regular monthly income and also ensure capital appreciation. The required capital for investment is also less, and easily you can look at this option instead of investing in mutual funds or fixed deposits for getting a higher RoI and long term capital appreciation.