Passive income. What is it and what does it mean?
So in basic terms, a passive income is a regular flow of money made through minimal effort.
Sounds like a dream, but what exactly does it entail?
Passive income comes in a variety of different forms, and suit a variety of different people, but most passive incomes are not designed to be long-term, and lots of scams are dressed up as passive incomes.
A passive income can ensure a steady but usually is small and not intended to be a soul source. They also vary in terms of the effort put into them. Sometimes there is no effort required and sometimes there is a fair amount.
When entering a situation that offers a passive income, it’s important to weigh up the benefits against the impact it will have on your daily life.
Now, we will begin discussing the types of passive income and what each one means and whether there are any famous examples of it.
The first example is E-commerce. E-commerce is the sale of online goods. It can be through hundreds of different means, but the most popular items to be sold through this are books and music.
This also extends into selling anything online. Selling items you make in your home, selling items from around your home etc, all count towards a passive income. It’s an easy to become a part of, but as it involves creating something to sell, you need both talent and time or excessive belongings to make anything of substance.
Another popular form of passive income is called ‘drop shipping’, which is famous for things companies like Avon. Drop shipping is when a company sells products that they don’t have. They take orders from customers and then buy the products. Along the way, a profit it made, but there are risks involved in such a premise, as well as time and energy. While it is popular, it does not suit everybody.
Private labelling is another passive income option, and it involves selling your own product under another companies brand. It increases the chance of sale when the customer is familiar with the brand, but again, such a business involves having a product to sell.
Retail Arbitrage is similar to the above, in that you sell products online that you have bought for cheap elsewhere. It’s taking advantage of the price gap between how one person is selling and how much people are willing to buy. This is common practice and used often on Amazon and EBay. If you know someone is willing to pay $100 for a bag, but you know where you can buy it for $10, you’re taking a minimal risk in buying and selling those products. It does involve an upfront payment for whatever you’re selling and the time it takes to put it online and make it available, but this can be a very profitable and lucrative business to be a part of and in comparison to other forms of passive income, it can take less time and less energy to be a part of it.
While it hangs on the line between a main source of income and a passive income, creating products to sell across the wide range of online market places (Amazon, EBay, even Facebook) is a popular option for some people who wish to put their skills to use in a profitable manner. Depending on the complexity of the product and the demand, this could be a fruitful endeavour or it could be a colossal waste of time. It’s always important to weigh up the benefits before embarking on what could be an emotionally and physically taxing endeavour.
Another option for those who are more tech savvy and who own a blog or a website is the Amazon FBA Affiliate Marketing option. It’s free to join and can be very beneficial if you have a lot of traffic on your sites. It allows people to go through your affiliates site, buy products and then you can make money from their purchases. Amazon generates sales and you generate a passive income. It’s painless and takes almost no effort to join.
You could also use your website or blog to sell other peoples products, services or knowledge, and make money from them, or advertise and make money that way. Again, this can have a minor impact on your daily workings but could be profitable for your and whoever you go into business with.
Moving on from online based commerce and onto small businesses.
Small business do take up more time and effort in general, and tend to require more attention that E-Commerce, but this varies from business to business and is usually done on your prerogative.
This ranges from simply washing peoples cars, to hosting a laundromat, or to starting a small lawn-care business with employees who do the actual caring. The possibilities are plentiful, but again the success of these endeavours depend on the services you chose to offer and the audience you’re offering them to.
So far, these options have been relatively low-risk, but there are other profitable ideas that are noticeably high-risk but that can sometimes promise a large turnover.
Real estate renting is possibly the biggest risk when trying to make a passive income. It can also have the biggest reward if done correctly. There are many types of real estate that besides just rental income. This style of passive income will take time to develop the knowledge and skill like many others I can assure you it will be worth it in the end.
Although you are trusting people to pay you on time and not damage the property. There’s also the chance that things in the building fail and as the landlord you’re expected to fix these problems once they arise. But stick with Passive Wealth Warrior here and we can teach you ways around the negatives of real estate and show you the upsides!
A passive income is called a passive income because it is not designed to be your main source of income and should be treated as such until it exceeds your monthly expenses. Naturally as your income increases so does your expenses unless you are very well disiplined in areas of your finances. When someone tries to draw you into a pyramid scheme with the promise that you can make a real salary, do not believe them with your life. There are plenty of real business models out there that have the potential to generate a moderate consistent passive income that with hard work and dedication will yeild you a passsive income that exceeds your monthly expenses. Then you may exit the rat race my warrior friends.
As with all work, the benefits come from being good at what you do and being passionate about how you do it. Being sub-par is not conducive to your attempts.
Passive income is not intentionally passive. Money does not just appear, you must put in the work upfront and do a good job then down the road you will reap the reward of your previous work and money, making you up to 10x the money you originally started with. Hard work , dedication and personal growth is the place to start. Passive income will create a opportunity for you to live a lifestyle free of the corporate 9-5 or the blue collar 80.
Stay tuned and signe up with your email as here at passivewealthwarrior.com we will be diving into passive income on all levels to help you along your journey to creating a passive wealth lifestyle.