In recent years, salaried professionals have realized the importance of maintaining a source of passive income alongside their primary jobs. Passive income adds to your savings and efforts to achieve financial goals. The pandemic also showed us the significance of passive income in unfortunate events. Everyone needs to know what passive income is and how you can generate it.
What is Passive Income?
Any income earned from a source other than an employer or contractor is considered passive income. An essential characteristic of passive income is that it does not require much time, resources, or investment. It also does not demand active engagement or putting in dedicated hours. The idea is to create a setup that earns money with little or no ‘active’ efforts from you.
This article explores the top four passive income ideas in 2023.
Top 4 Ideas for Passive Income
- Include Different Financial Tools & Services in Your Investment Portfolio – When investing your savings, consider diversifying your investment portfolio. Try to include different financial instruments such as –
- Savings Account Offering a High-Interest Rate – When opening a savings account, research well to look for banks that offer a high-interest rate savings account. Savings accounts are low-risk financial instruments and assured returns. And now, Neobanks offer zero balance digital savings accounts that are convenient to operate and can be opened within hours. You can open a Freo Save digital savings account at the click of a button and receive interest as high as 7%.
- Buy Dividend Stocks – Most people believe dividend stocks don’t offer a good income. But in truth, if you choose your stocks wisely, you can earn between 1 to 10% of your investment value in cash every year. Choose from blue-chip companies and real estate investment trusts (REITs). When investing in dividend stocks, keep the following points in mind –
- Ensure that your dividend pay-outs are staggered throughout the year
- Think about the company’s stability in terms of dividend payments
- Choose a stock that has consistently paid a dividend for decades and raises the dividend to keep up with inflation.
- Dividend Options in Mutual Funds – Mutual funds are a popular investment tool that most people use to accumulate savings and reach their financial goals. The mutual fund’s universe is vast and has many different kinds of funds you can invest in. Choose a mutual fund that gives the option of earning a monthly or quarterly dividend. Mutual fund dividend options are a reliable source of passive income.
- Non-Cumulative Fixed Deposits – Non-cumulative fixed deposits are a lucrative option for building a source of passive income. In cumulative fixed deposits, you don’t earn anything during the tenure of the deposit. Still, in a non-cumulation fixed deposit, the interest is paid monthly, quarterly, or semi-annually.
- Buy Dividend Stocks – Most people believe dividend stocks don’t offer a good income. But in truth, if you choose your stocks wisely, you can earn between 1 to 10% of your investment value in cash every year. Choose from blue-chip companies and real estate investment trusts (REITs). When investing in dividend stocks, keep the following points in mind –
- Savings Account Offering a High-Interest Rate – When opening a savings account, research well to look for banks that offer a high-interest rate savings account. Savings accounts are low-risk financial instruments and assured returns. And now, Neobanks offer zero balance digital savings accounts that are convenient to operate and can be opened within hours. You can open a Freo Save digital savings account at the click of a button and receive interest as high as 7%.
- Launch a Dropshipping Business – Starting your own dropshipping business is a great way to earn passive income. In dropshipping, you receive online orders from customers, which are redirected to a manufacturer or dropshipping company. The company then ships the order directly to the customer in unbranded packaging. You charge the customer a little higher than the drop shipping company charges you for the product and earn a profit on every order. In the beginning, you may need to invest some time and effort to start your business, but once established, you don’t have to handle the product or the shipping efforts. As the product is shipped directly from the manufacturer, you don’t even have to worry about getting stuck with inventory or investing in the infrastructure of any sort.
- Use Existing Assets to Earn Money – If you own an apartment or have a spare room in your home, you can rent it out to earn some extra money. Having a renter can help you cover your mortgage expenses and fund any repairs in your home if needed. You can also rent out other assets, such as pieces of furniture or a vehicle.
- Earn Money Through Your Skills – There are many ways to earn money online using your skills. You could sell stock photos to advertisers if you are a good photographer. You can take copywriting assignments from marketing agencies if you are a good writer. Another option is to start a YouTube channel, a vlog, a blog, or an Instagram account to chronicle your passion. These are some excellent ways to start a passive income.
Passive income adds to your financial stability and boosts your earnings. If you are willing to invest some time and use your skills, you could quickly start a source of passive income for yourself. Don’t be afraid to try new ideas; if it doesn’t work well, you can always try something else. We hope you will try some of the tips discussed above and develop a source of passive income.
