Ah to make money without lifting a finger! That’d be the dream, won’t it?
However, making money or rather earning money without pretty much doing anything is an actual reality millions of people around the world are living. It’s called passive income.
What is passive income?
Passive income like the name suggests is earning money passively or without doing anything or next to anything at all.
How to earn passive income?
Much as it’s the dream of many, there’s no magical formula to earn a passive income. In fact, it takes years of work, strategy and vision to get to a point where you can truly earn passive income. It’s hard, but it’s definitely achievable. Also, thing to keep in mind is that a passive income may not necessarily be your sole income or a big chunk of money. It can be anything that could be a nice addition to your “active income”, or a small bunch of money to enable paying of bills.
Here are 5 real ways to earn a passive income
- Start a company and exit day-to-day operations
While starting your company and building it requires serious investment of time and effort in the initial years, once it’s established, with a stable business model, team and operations in place, the founder can afford to sit back a little and enjoy. Of course this is not to say that founders stop being involved completely, but they can exit day to day operations and just look into top-line reports and strategies at their own time and convenience. Bostjan Belingar of Hustler Marketing, a top email marketing agency in the US has put this somewhat difficult path to freedom in action by stepping away from operational stuff at the agency, trusting the team he’s worked hard to put in place over the years. Bostjan spends most of his time traveling, working on his personal goals, doing top level strategy stuff and of course the weekly standups with his team. “To be honest, even those could totally work without me, but I just love seeing my team every once in a while!”, says him.
- Rent out property
There are a lot of mixed opinions on this. Some people believe that renting a house out doesn’t amount to passive income given the work it takes in maintaining the property and dealing with the tenants. However, as someone who’s successfully been an Airbnb host for years now, I can vouch for it earning a rental income can be truly passive if you get long-term tenants or hire a property manager. Now of course, not everyone has their own property to rent out and that’s where working hard until you can earn a passive income comes into play.
For many people, it may take virtually their entire or a significant part of their life to be able to buy a property, unless they inherit one. Another way to still be able to rent a property out without owning it is to lease one for a long term, give it a unique identity and branding – basically add value to it which previously didn’t exist and rent at a higher price than leased at.
- Write a book/music and earn loyalties
Much as we love our favourite writers for giving us the gift of good books, it’s also great to know that those books also make bank for the author. Other than the revenue from the book copy sale itself, every time a book sells, the publisher pays a royalty to the author. Even a book written 25 years can still earn its author royalties in current and indefinite future, provided the right royalty contract is in place.
“Amazon KDP is pretty passive. I do work on books daily but I’ve gone several months without doing anything and still get the royalty deposits of around $2500 a month. It’s not much, but it’s nice because once you upload a book you don’t need to deal with customers or do anything. I’ve gone months without logging into my account and the royalties still come.” says Tiffany Choi, who has over 1400 books under her name!
- Open a fixed deposit with a good bank
If you already have a sizable nest egg, then opening an FD with a bank that gives a good rate of interest is a no brainer. The rule of the thumb is that longer you stay invested, the magic of cumulative returns kicks into action and your money grows incrementally. I personally have invested in bank FDs that return up to 8% annually. Money put in a normal savings account also earns a nominal rate of interest, but keeping it there would mean not even beating inflation as the standard rate of inflation would vary between 5-10% from country to country.
- Build a digital product
There’s a reason the digital world is flooded with online courses, $1 subscriptions and the like. Digital products are the strategic gifts that keep on giving. A digital product like an online course or SAAS product can continue to sell and make its maker money without any involvement in the day to day sales. Once your product is successful enough and you have a strong SEO game, the sales do themselves. So the trick lies in figuring out a niche, tapping into your resource pool, and working on building a great digital product. (How about a prerecorded tutorial on 10 vegan party dishes?)
- Start a travel and events site and earn affiliate income
If you have some basic web development skills and a knack for writing and organizing information, you can start a travel and lifestyle focussed blog or an events curation website and embed booking links to hotels, flights, events and yoga retreats and earn a commission whenever someone books through your link. But to attract constant traffic to your website, you’ll have to either put in consistent effort to write content making it not so passive, but still you can hire a content writer for cheap to do the same.
There are many other ways to earn passive income but the above are the most common and reliable ones. One can also earn their passive income not from just one but a combination of the above and other means earning their path to the ideal digital nomad life.
