Do you know what passive income is about and how it relates to earning an income? Passive income is having your money work for you, instead of the other way around.
Wikipedia defines passive income as – Passive income is income resulting from cash flow received on a regular basis, requiring minimal to no effort by the recipient to maintain it.
My definition of passive income is Freedom. Passive income allows you to live your life without trading your time for money.
There are several ways of earning passive income – all of which take a little work to get going.
Some types are easy to set up and other types take more time and effort. Similar to building a house. The bigger or more elaborate the house is, the longer it takes to finish building. Without building a good foundation the house will never rise.
The best part of earning passive income is that your money is working for you. You are not actively engaged in earning revenue. You may have gotten the ball rolling but while you are sleeping, relaxing, or on vacation, you are still making money.
What Are Examples of Passive Income
- Profits and earning from any business that does not require direct involvement from the owner.
- Appreciation of property of real estate.
- Interest on money in savings account.
- Profits on investments.
- Dividends earned in the form of the cash flow of stocks, securities, etc.
- Royalties earned from an intellectual property like music, books, pictures, etc.
- Earning from Patents.
- Income from rental property.
- Income earned from the Internet.
- Vending machines business.
- Joint Ventures such as partnerships.
- Interest earned from lending money.
- Involvement as a silent partner in business.
All the above passive income streams take time and effort to set up and get started. The more streams of income flowing to you create better chances of building wealth.
Some other examples of passive income are in my earlier post about smart passive income. Together both of these articles should give you a great foundation on which to build your own passive income stream.
Welfare, unemployment wages, or Social Security are NOT passive income even though no direct involvement from recipients are required.
Residual vs. Passive
Residual income is actually passive income but it is earned again and again from the one-time effort. Ongoing work or maintenance would be minimal. You do the work once and reap the harvest long after your initial investment.
A great example of this would be royalties from writing a book. You may have written the book two years ago but you are still earning residual income from the proceeds of the book.
Another example of a Residual income stream is a membership website where a member pays a monthly fee. You sell the customer once, but they continue to pay every month.
Passive income refers to any income stream where no work is required to continue to earn revenue. A bank savings account or investment account are great examples of this type of income.
Benefits Of Earning Passive Income
You can only work so many hours in a week to earn revenue. Trading your time for money has a limit on how much you can earn. Even if you earn many dollars per hour, there is still a limit on what can be earned.
Passive income, however, is earning income for you continuously. Passive and residual incomes essentially free you from the bonds of time. This allows you to go earn money by working and still earn money passively. Like earning compound interest. Soon this technique begins to double, then triple, and so on.
This is how the rich get rich and stay rich. This is the only way to reach financial freedom other than winning the lottery or inheriting from your rich uncle.
The more passive income streams that you can build the more streams of revenue you can earn. Put several small streams together and soon there is a large river of income flowing!
The two books written by Robert Allen describes this phenomenon as the biggest source of creating wealth than any other sources combined. The books that I am referring to are “Multiple Streams of Income” and “Multiple Streams of Internet Income”.
Mr. Allen says, “Information is less expensive to manufacture, promote and ship than any other hard products like shoes or music CD’s”.
Robert cleverly diagrams the purpose of building multiple streams of income. Employment these days is never guaranteed. A “job” means just over broke. Trading your time for money is a great way to remain poor.
- By creating an Internet stream of income magnifies your potential of building wealth
- Double your current offline business by going online
- Launch an Internet business in hours – not days or weeks
- Set up six robust streams of Internet income that flow 24/7/365
- Deliver your marketing message to consumers faster, cheaper, and easier
- Operate your business from any telephone in the world
- Drive traffic to your site and get people to beg for your products
- Turn junk into cash from auctions
- Setup a product to go viral and rack in the revenue
This is the only true way to acquire wealth and financial freedom. The more streams of passive and residual income you have flowing in will offset any disruption of one income stream slowing down or stopping.
What Is The Best Way To Make Passive Income
By using the Internet to earn a passive income you can start earning income faster and easier than any other means possible. It also doesn’t require a large amount of money to get started.
There are several options for you to enter the online world and start earning income. Some of these options can almost be free. One type of online marketing is from an Auction website like:
- Atomic Mall
- Auction Fire
A nice thing about an auction site is that they furnish the website for you; you have a ‘store’ or ‘booth’ set up with what you are selling. The auction site already has many buyers. You pay a fee to set up a storefront or booth, a small fee to sell, then a small fee on the total selling price.
I first started out with eBay and had an eBay store. I was selling new products by drop-shipping (A drop-shipper has the products you are selling in their inventory. Every sale you make you must buy the product from the drop-shipper with the money your customer paid you. The drop-shipper ships product to your customer. The money left over after drop-shipper fees are your profit).
Sometimes there was a lot of profit; other times not so much. There were a lot of fees. eBay always made their money. eBay makes money from you listing your product (the front end) and then fees from the sale (the back end).
Many people do very well with eBay. Some vendors even get all their wares from garage sales, estates sales, etc, usually at very low costs. Then they sell these items at the auction sites, like eBay, overstock.com, etc for very good profits.
The great thing about auction sites is that they already have lots of buyers. It is up to you to persuade the customer to buy from you instead of your competitor. There are no website costs, hosting or advertising costs. There are, however, front in costs like small fees to list your wares. There are also shipping fees to ship merchandise to the customer to consider.
Another way to make passive income is by having your own website. Learn how to be an affiliate marketer for successful businesses like Amazon, Nike, Apple, and other big brand corporations. All that is required is a niche website and your time to write reviews on products.
Don’t you have a website? Would you like to have one? It’s not that difficult. If I can do it surely you can too.
By having your own niche website you can become an online business. There are many types of online businesses.
Start an Affiliate Marketing business! This is the easiest! Promote hundreds of products for a large corporation like Amazon.com, Nike.com, Apple, even Wal-mart. Just a few dollars a month to host a website. You can almost hear the ka-ching sound of making money from your own website.
Build a website and then teach yourself how to market online. You can do this with no guidance by going to someone like Weebly.com or Wix.com, that is if you want to fail. Online marketing CAN be done easily AFTER you know how.
Before diving in and building your website you should read some reviews about WHO you get your website from. Finding the best website builders in the market will give you some great Tips on what to look for when choosing what platform your website is built upon.
I started out just like this back in 2006. I am a self-taught webmaster. I have made many mistakes along the way before finding success. I know what I am talking about. There is no yellow-brick-road to follow. Like roller skating, you are not going to be able to skate like a pro the first time you put the skates on. It will take practice.
Lots, and lots of practice…
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Build Your Own Website
You know there is a ‘right way’ and a ‘wrong way’ of doing anything. In order to begin earning passive income quickly and efficiently is to get some training first. The Internet is full of scam artists that will take your money and leave you with nothing but contempt.
The best part about getting the training is acquiring the knowledge to start an online business and becoming successful – all on a minimum amount of money and time!
How to start a business online for free can put you in the driver’s seat quickly to start your new online career.
With a website, you are able to do many different things, such as promoting products through affiliate marketing, promoting your own products to sell, even starting your own consulting and coaching business.
The best part about having your own website is that a website never sleeps! It is open 24/7/365 days a year! A website does not take vacations or is closed due to an illness. Create your own website free today!
Learning how to work from home without an investment will set you up to earning a passive income that can last for years. The key, of course, is learning the right way so that your money starts working for you in the shortest amount of time.
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I hope you found this article full of useful information to get you earning a passive income in a short period of time. It can be done – if you are willing to learn. It is not rocket science.
Your comments are always welcome! I also welcome you to share this article with people you know who could use this information.
To Your Success!