Need More Cash? Check out These 7 Income Streams That Actually Generate Passive Income
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Earning income as an employee isn't the only way to make money. If you want to build wealth or achieve your long-term financial goals, you have to diversify your income sources with multiple streams of income.
The great news is that strategies exist through which you can generate passive income. Here are several of them:
1. Build a blog.
A blog helps you build passive income that can you can grow over time. For instance, you can generate income from ad sales and affiliate marketing. That's how food blogger Meeta Aurora generated over $5,000 monthly even while working at a full-time job.
You can learn and apply a new skill, such as ad sales or affiliate marketing, to scale your blog using platforms such as Ad Thrive and Amazon Associates, so you can leverage various income sources within your blog. For example, you can incorporate affiliate links within your blog posts to earn a commission from the sales of products you promote. You can also scale your blog by offering other products you've produced, such as an ebook, templates or guides.
2. Earn income from freelancing.
Freelancing is also a great way to hone your skills or develop new skills while earning income. For instance, you can freelance as a content strategist or social media manager and apply the skills you are learning to the real world.
You can work as a seasoned developer or specialist and charge higher rates for your services and even scale your business by hiring additional contractors to take care of small tasks to help your business grow.
3. Reel in royalties.
Licensing a product or invention you own can bring in income via licensing fees and royalties that can last for years. It's also a quick way for your product to reach your intended market. For example, you can license the use of a consumer product you created for an average 3 percent to 5 percent percent royalty rate based on your industry.
You can license an app or create an app with the goal to bring in royalties as your app's audience grows. Royalty rates can be even higher in technology-based industries with 80 percent profit margins, according to research from The Journal of Biolaw and Business.
4. Keep up with capital gains.
Capital gains provide a way to earn income from assets, including stocks, real estate and even cryptocurrency. That's because this type of income increases over time, and it's how some of the top 1 percent of the wealthiest people in America made income in 2017.
For instance, you can earn income from selling a home you own, since real estate typically appreciates in value over time. You get to control when you sell your home so that you can take advantage of capital gains tax rates that are in your favor.
5. Pull in profit from your business.
A business offers profit potential that you can grow over time, and you can start doing this as a side hustle even while you work as an employee. A Bankrate study noted that over 44 million people in the United States had a side hustle. The study also revealed that earnings from the side hustle bring in at least $500 or more for 36 percent of 86 percent of the study's participants.
The term also covers side businesses for marketplace platforms, such as eBay or Etsy, where you can sell merchandise or digital products. For instance, if you create clothing or shoe patterns, you can sell technical design packs, templates and the end product on Etsy.
6. Reap rewards from rental income.
Rental income makes a great option for those who have a second home, a vacant property or extra space in their current homes. For instance, you can earn income from short-term rentals, such as renting out a room or your entire home via Airbnb, HomeAway and other vacation rental property platforms.
You may even earn income tax-free if you rent out a room for less than 14 days while you live in your home. Consider also renting out a spare room or your home for long-term property rentals to solidify passive income for at least one year. You can also earn real income from renting out commercial property or land spaces that you own, such as a beachfront lot or parking lot.
7. Leverage your earnings by lending money.
When you lend money, you can earn passive income from the interest you charge borrowers. Consider using peer-to-peer lending platforms, such as Lending Tree, to earn money from interest on money you lend to qualified borrowers. These platforms vet the borrowers for you so you can reduce your risk of default while you earn income from the interest the borrowers pay.
With a real estate Investment Trust or REIT, you can finance real estate that produces income and own a part of it, too. This includes commercial properties, such as shopping malls, factories and hotels.
You get to leverage the benefit of earning returns via appreciation and dividends that are typically steady and pay out in higher amounts than equity stocks, sans the need to manage the property. However, you must follow important rules, such as the one in which the REIT requires at least 100 shareholders and is taxed as a corporation.