The concept of passive income and the list of 6 easy passive income ideas
The concept of passive income is not a popular theory among us, the common people. But among super-rich people, passive income generation is a practice without which they cannot live.
Passive income is your secret to getting rich and staying rich. It is such a powerful tool. But before we learn more about passive income, let’s question an enigma of this world: poverty.
WHO ARE POOR?
- Passive income concept – 1
Poor people are those who are not able to generate enough income to handle even their basic life needs.
Why are they poor? Due to its limitation to generate more income.
We all have this limitation. Each has its own income generation limitation. But there is a solution to overcome this limitation. How? When resorting to passive income.
Who are the rich people?
Passive income concept
- The rich are those whose passive income is high. Rich people can also work for money, but they have almost no dependence on their income from work / work. They are financially independent.
- Even if they stop working, their passive income will take care of all life’s needs.
- It is the passive income that makes a person “really rich.” Why do I say really rich? Because to generate passive income, one does not need to work.
Yes, “without labor income” is what gives passive income an exponential growth capacity. The rich are made this way.
LIST OF 6 IDEAS OF PASSIVE INCOME FOR INDIANS
Investing in these assets will initiate a stream of passive income. Although the initial performance will be low, but eventually it will increase over time.
- Rental income: this is the best ever form of passive income. It can be generated from the purchase of a property. But the problem is that the purchase of properties requires a large capital investment. However, it is still worth it. Two types of property can be purchased: residential property and commercial property. Depending on accessibility, one can buy any size of property. By putting this property on rent, passive income can be obtained each month. Read more about real estate investment for beginners.
- Dividend income: dividend income can be generated from shares. Dividends are as good as rental income. For me, both are equally desirable. But identifying a good dividend stock is a bit more difficult. The key control point is the purchase price. Shares must be purchased at undervalued price levels. Read here more about dividend income from stocks and mutual funds.
- Interest income: if you can’t think of anything, bank deposits can generate passive income instantly. Bank deposits can be purchased from the comfort of your home. This can be an best source of passive income. While buying FD, ask the bank to pay interest monthly. Read more about how to value fixed deposits.
- Royalty income: people write ebooks and publish them on Amazon. Previously, writing and publishing a book used to be a great task. But in this age of the Internet, online publishing has made it easy. If you have a concept in which you can write about 10,000 words, I suggest you put those words in the form of an ebook. After the sale of each electronic book, the writer receives the royalty. Please check my eBooks here.
- Online income: a direct way to generate income online is by building an “online real estate property”. This property can earn income from “advertising” (such as rent). What is a real estate property online? Example: website or blog. I am a blogger who generates income online.
- Subscription pays: Become an expert on a topic and start a paid subscription service. People can subscribe to their services / tips by making the payment. Example: Rakesh Jhunjhunwala is a stock market expert. Suppose a paid subscription service begins, in which you will publish names of two shares each month to invest. What do you think, how many people will subscribe to this service? Tens and thousands, if not less. Read more about how to do stock analysis.
What you have seen above are 6 forms of passive income and their possible sources.
But knowing just this is not enough. I think people should go deeper into the concept of passive income.
BUILD YOUR OWN SOURCE OF PASSIVE INCOME
People who are really rich are all thinkers in their own way. How?
Everyone can generate passive income, but the ways of doing so can vary from person to person. My form of passive income generation may not be right for you and vice versa.
So, what is essential to get rich is to find your own comfortable way of passive income generation. How to find one? Think, think and think. Dive deeper into your mind, the answer is hidden there.
What is the quick tip?
- Passive income comes from buying particular types of assets.
- Knowledge of these assets can help the rapid growth of passive income (from zero to billions).
- The deeper the knowledge, the faster the growth rate.
HOW TO START?
First by asking yourself this question, “what are the alternative to my salary income”? What happens if I lose my job? How to run the family? Where will the money come from?
These questions create stress. And there are no easy answers. Why? Because only financially independent people can answer these questions.
If I have to guess, I will say that less than 1% of people in this world are financially independent. Therefore, it means that 99% of people will not be able to answer these questions.
Idea of financial independence.”
WHAT IS FINANCIAL INDEPENDENCE?
- It is that stage of life in which you no longer depend on your work to manage your life needs.
- Your passive income generates enough cash, which will definitely take care of your daily expenses. You are free.
WHY DO PEOPLE NOT ACHIEVE FINANCIAL INDEPENDENCE?
- Because they can’t get out of the clutches of their work.
- Most people have zero passive income. It means that they depend entirely on their work to earn income.
- Even if they begin to build an alternative source of passive income today, it will take between 20 and 25 years to become a “substitute for work.” It means, anyway, they will have to continue doing work for the next 20-25 years.
LABOR DEPENDENCE TO THE PASSION DEPENDENCY
Passive income concept
- Achieving financial independence while at work has a low probability of success. So, if you are serious about financial independence, think about ways to quit your job.
What is the best work alternative?
Identify your passion and turn this passion into a money maker.
Once you are out of the grip of your job, financial independence will begin to seem more real.
But you can ask that, why am I talking about financial independence. People who read this article want to know about passive income (not financial independence).
Generating a few cents here and there in the name of passive income will not help improve the quality of life. But building a source of passive income with the general objective of “financial independence” has powers to transform lives forever.
WHY “PASSION DEPENDENCE” IS BETTER THAN “WORK DEPENDENCE”?
Suppose your income is Rs. 100. While at work, to generate these Rs. 100, you must make a 100% effort (for example).
Now suppose you have a passion that can also generate an income of, say, 100 rupees. To generate these Rs. 100, you have put 100% effort. But it won’t feel like 100%, it will feel less (say 20%). Why?
Because you are doing a job you love.
What is the point? When we love our work, no matter how much effort we make, we will never feel the burden.
It’s almost like generating income by doing nothing. This is what passive income is, right?
That is why the transition from “doing a job” and “doing something we love” is the essential first step towards financial independence.
WHAT IS THE NEXT STEP OF THE PASSION DEPENDENCY?
Passive income concept
The next and last step is financial independence. In this step, the person has sufficient passive income from the assets. This income is so much that you don’t need to work for work or passion.
A truly rich person can be called if he has reached this final stage.
With this mood, let’s try to answer a very basic question. It will further unlock our hidden inhibitions on financial independence.
WHAT IS PASSIVE INCOME?
Income generated by applying an “insignificant” effort.
The income generated by not being actively involved in any work / work is called passive income. Few ideas of passive income that we have also discussed in this article are the following:
I am sure that the above list of passive income ideas is not new to you. The Internet is full of online content, which can boast an even bigger list.
I will tell you how I read this list. The way you read this list will make a big difference. Out of the list of all passive income ideas on the internet, separate them into two parts:
Part 1 (Passion).
Part 2 (Assets).
For me, my segregation between “passion” and “active” is like this:
I earn money from my passion.
Use a portion of this income to buy assets.
The assets in turn generate passive income.
One day, the income generated by the accumulated assets will be large enough to guarantee financial independence.
Asset income: the income from assets is the actual passive income. Passive income is very “intensive asset.” What does the intensive use of assets mean? One must have an investment portfolio full of quality assets.
What are quality assets? Assets with high and consistent income. The more the “quality assets” in the portfolio, the better. To accumulate more quality assets, it takes time. Hence the achievement of financial independence if it is difficult.
THE ASSETS BUILDING NEEDS A DIFFERENT FRAMEWORK OF MIND …
I have written a separate blog post on how to build assets with little money. I will ask you to read this blog post too. Aid to the cause of financial independence.
We have a habit of handling money in a lump sum. Example: How do we earn money?
The salary is deposited in our savings account on a specific day.
When we sell investments, the total amount is downloaded to our bank account.
At the end of the year, the company pays us a bonus. This also comes in heaps.
Can you see the point? Our mind is trained to handle money in bulk. But passive income drips only slowly.
It is much harder for us to manage passive income than we can imagine.
Let me make you aware of another aspect of the passive.
You have two investment alternatives available:
Stock: which yields 15% per year, but the maintenance time is 5 years.
Bank deposit: which yields 7% per year. each month.
Are you more likely to choose which alternative? The majority choose actions. Why? Because the focus is more on yields than income generation.
But when it comes to passive income, the focus cannot be solely on returns.
Here the priority must be in “income stability”. This is where the problem is, investment options based on “income” produce low returns.
Therefore, people choose to skip it, thinking they are a bad option. But this thinking process is not correct.
What is the point?
The investment options that serve the generation of monthly income are different.
People who invest in growth actions, gold, art, futures and options, etc., cannot expect these investment options to generate stable monthly income.
If you want to generate passive income, only certain types of assets can be accumulated.
But personally I think that, even if one knows those investment options that are suitable for passive income generation, they still won’t like it. Why?
Because people who like passive income think psychologically differently.
WHO LIKES PASSIVE INCOME?
- Lovers of passive income are those who believe in financial independence. These are people who are looking for early retirement from their jobs.
- But before adopting passive income ideas, two points of caution:
- Passive income is not like a lottery.
- Passive income will not bring a tsunami of money into your life.
- Instead, passive income will begin as a light drizzle. This slow and pleasant drizzle will continue until eternity. Unless the source is cut, the passive rain of income will not stop.
- If you want more drizzles, increase the number of origin points.
- To really like passive income, it is necessary to understand this aspect very well.
How to start earning passive income?
- Start by giving yourself a goal.
- The objective can be like this: “Generate your first passive income of Rs.1 in the next 30 days.”
Yes, I am talking about Rs.1. Is it too small? But this first passive income Rs.1 will teach you a lot about financial independence.
- Generating even Rupees.one as passive income (consistently) is not easy. Therefore, even if the onset is slow, do not get bleak. Give yourself the space to breathe.
The focus should be on the following:
Identification of quality assets: not all assets are a good investment.
Buying them at an undervalued price: buying assets at any available price is not good.
Continue to accumulate these assets throughout life: the goal should be “buy alone and never sell.”
This should be the mentality during the start phase. Once this is configured, you will be on the road to financial independence.