Previously, we have discussed how to build and have passive income. We’ve tackled important fundamental things that anyone should understand to successfully earn passive income. This time, we will go further and be more specific with the information we need to learn in creating the based assets that generate those earnings that can make our lives easier than ever. It must also be noted that although passive income is an income that is earned with less effort, the assets that are generating them are built through time and through a lot of hard work. In other words, before a person achieves passive income, he must first pass into a seemingly difficult stage of building the asset or wealth that will bear fruits of passive earnings. Now, to give you knowledge and ideas on what kind of passive income is right for you, and what’s the best way for you to achieve it, the following are 10 types of passive income and ways to earn them.
1. Rental income
Rents from real properties, such as building and office space, are earned without much effort. It is one kind of passive income that you can earn while having a good vacation trip locally or abroad. But in order to achieve this kind of sweet income, you need to acquire the properties that will generate that income. Thus, you need to invest in real properties as early as possible, perhaps, while you are young. Rental income can also be earned from movable properties, such as vehicles and other equipment.
2. Interest income
Interest income may come from the money you lend to your debtors or from the cash you deposit in banks. Thus, you need to have enough bucks to put in to earn interests. This also means that in order to earn this kind of passive income, you need to work harder to earn more cash, whether you’re in business or you’re in employment. Further, you need to be a frugal and learn how to save your money wisely. Extravagant people have lesser chance to earn interest income than people who know how to save their money in the banks.
3. Royalty income.
Another type of passive income is royalty fee. This can be earned from publishing a book if you’re a popular author, from music royalty if you’re a great singer or musician, from using your photos if you’re a professional photographer, from licenses or patents for using your software or other inventions, from using your trademark or franchise if you’re in a franchising business, and others. The asset that generates royal income mostly comes from a person’s great talents, skills and abilities. Thus, if you believe that you have a great source of knowledge and wisdom, and you’re a great writer, you can now start writing your book to earn royalty income in the future.
4. Dividend income
Dividend income is a type of investment income that comes from investing in stocks or shares of ownership of a corporation. This type of income might not be considered as a passive income since it involves higher risk and may not become a regular income. However, if managed correctly and when the investor knows how to minimize the risks involved, this can be turned into a good source of sustainable income. And when your investments are well-established, it can also give you regular income without exerting much effort to earn it. The way to realized this is to learn and have a disciplined knowledge about investing in stocks and in other securities.
5. Membership fees
There are many types of membership revenues, like membership fees from a fitness gym, golf club, and other member-paying bodies. But the membership income that I’m talking about is something that is earned online – the income generated from membership websites. Membership websites are online sites that contain unique and useful contents, where people or members pay regular membership fees to have an access or use those contents. These contents can be articles, software, scripts, games, web applications, videos or podcast. Membership sites need a lot of hard work to be done, but once it is established and it gain lots of satisfied members, the cash flow of income would be great.
6. Advertising income
This is the advertising revenue that is generated by blogs and websites. It can be in the form of direct advertising or third party advertising, such as Google Adsense and other PPC (Pay Per Click) advertising schemes. An example of this is the regular advertising income generated by this blog you are reading. In more than six months of hard work and patience in writing articles or blog posts, search engine optimization, and social media promotion, this blog is already able to earn a few hundred dollar of regular income. It’s not still a large amount of money, but there are still a lot of opportunities to increase that in the near future. This income is considered passive because it is received regularly, and even if a little work is only done on the blog, the income will flow consistently. After investing effort and hard work, this blog has somehow developed into a web property or asset that can generate income.
7. Affiliate income
Another passive income that can be earned on the Internet is the income generated from affiliate marketing. Bloggers and website owners also earn this kind of income by promoting the products of other people or companies. Affiliates earn income through commission for every successful sales lead they made. People who don’t own website or blogs can also earn from affiliate programs through email marketing, social media promotion and other strategies that don’t require their own sites. Successful affiliate marketing requires time and some experimentation to determine the best way to earn commissions. But once an affiliate marketer has established his niche or target, affiliate marketing can generate big profits without further hard work. It’s a one time investment of time and energy, but once it works for you, you can sit back, relax and watch your affiliate income coming.
8. Business income
Business startup is hard, especially when you’re new in the business world. Thus, business income may not fall into the category of a passive income. However, business income is an evolving type of income. It can start from a hard-earned profit to an easy-earned profit. It can also be an irregular income or can be transformed to a regular income. Through time of doing business well, business income can become a residual income, especially if your business is formed through goodwill, integrity and consistency of good financial performance. One of the effective ways to succeed in your business is to choose the right business for you. This is the kind of business that you are very passionate of, and that your skills and expertise are aligned to it. This is the business that you will not quit of until you reach its ultimate success.
9. Pension income
Retirement income can be a passive income in the future. This is just like planting money now and harvesting it to enjoy in the future. Just like other passive income, you also need to be patient and learn how to invest money for the future. This is usually enjoyed at your retiring age. The asset you are building is the accumulated amount of money you are contributing to the pension company. You can also contribute to the government social security or insurance system. In the Philippines, if you’re not an employee, who is mandated to contribute to GSIS (Government Service Insurance System) or SSS (Social Security System) for private members, you can make voluntary contributions as a self-employed or voluntary paying member.
10. Donation income
This is not the donation that is received from preaching the words of God. That practice must be nonprofit in the first place. The donation income I’m referring are the gifts a person is receiving from the people whom he provides free professional services or uses of things he has created, such as software, web applications, website templates, and other things he created with so much time and effort. This kind of income is for people who want to help and promote their advocacy while earning regular and stable income. This can also be considered as a passive income, since you will only work hard once, and then receive regular gifts afterwards. For example, once you are done in developing a useful software or script, you can share it to others for free in your website and setup a plugin for accepting gifts (a gift might sound good than donation). The success of your receipts will depend on the quality of the software or script you have created. It may also need to be updated regularly (e.g., monthly or annually). Also take note that in some countries, donation or gifts may be taxable.
There they are, I hope you have learned a lot about passive income and the ways to earn them. Now, you can assess yourself and choose among the list the type or types of passive income you want to earn, and also start the kind of asset or wealth you want to build to generate the type of passive income you have chosen.