Earning moneyFinancehow-to

What’s Passive Income and how do I earn it?

Passive income is money earned without any active involvement or effort. It can be generated through investing in assets that increase returns on their own or by investing more in an asset class. However, it’s important to note that generating passive income requires first generating active income.

As much as I want there to be a way to make quick money, effort needs to be done before the money we earn can produce for ourselves.

Examples of passive income include stock dividends, bond coupon payments, real estate investments, royalties, and licensing agreements. It’s important to stay on top of passive income investments and have a proper asset allocation based on financial objectives and risk tolerance.

Here are some of the most common forms of passive income:

  1. Rental income: Rental income from properties, such as real estate or vacation homes, can provide a steady stream of passive income.
  2. Dividend income: Dividends from stocks are another common form of passive income. Companies may pay out a portion of their profits as dividends to shareholders.
  3. Interest income: Interest income earned from savings accounts, CDs, or bonds can provide a consistent source of passive income.
  4. Capital gains: Capital gains from investments like stocks, real estate, or mutual funds can provide passive income if the asset is sold at a higher price than the purchase price.
  5. Royalties: Royalties earned from creative works such as books, music, and artwork can provide passive income if they continue to generate revenue.
  6. Affiliate marketing: Affiliate marketing involves promoting someone else’s products and earning a commission on any resulting sales. Amazon has a large affiliate marketing program once you start generating traffic on your website or followers on yoru social media platforms.
  7. Peer-to-peer lending: Peer-to-peer lending involves lending money to individuals or businesses and earning interest on the loan.

Overall, the most common forms of passive income tend to involve investing or creating intellectual property that can generate revenue over time

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