“The richest people in the world look for and build networks. Everyone else looks for work.” – Robert Kiyosaki
Many of us have witnessed friends and acquaintances rake in impressive earnings through YouTube and Instagram, and it has us wondering – how can we tap into this new-age fortune? The concept of generating income has transformed drastically for the current generation. While our parents relied on traditional jobs or businesses, today’s youth explores innovative avenues. The concept of passive income has garnered attention of millions, which throws up multiple streams for financial prosperity. If you’re eager to explore passive income ideas relevant to 2023, you’re in for a treat as we delve into some top passive income ideas that can help bolster your wealth.
Read More: Passive Funds – All you need to know
What is passive income and why is it important?
Passive income is like a friendly financial companion that brings in regular money with little effort from your side. It can come from things like investments, renting out property, earning royalties, or having a side business that doesn’t need constant attention. Passive income is important because it can give you a sense of financial stability and freedom. It means you can earn money even when you’re not actively working, which leaves you with more time for other things you enjoy and helps build a more secure financial future.
Top passive income ideas
Now that we have seen the meaning of passive income and its importance, let us now focus on a few popular ideas for passive income.
Start a youtube channel, ebook, blog, or create a course on Udemy
Creating online content is one of the most popular forms of passive income through various channels. For example, starting a YouTube channel allows you to earn money through advertisements and sponsorships. Writing and selling ebooks provide ongoing royalties and blogging can generate income through affiliate marketing and sponsored content. Apart from these one can also create a course on platforms like Udemy which allows you to earn revenue from course enrollments.
Blogging can be a lucrative source of passive income as it grows in popularity. Through ad revenue and sponsored content, bloggers can earn without constant effort. By consistently providing valuable content and optimizing for search engines, they attract a loyal audience. Over time, increased traffic and engagement lead to more ad impressions and potential sponsorships, generating passive income. Whether sharing expertise or pursuing a passion, blogging offers an opportunity for individuals to turn their words into a sustainable source of earnings.
This is one of the most common forms of passive income and may also be touted to be the traditional method of earning passive income. Investment in quality stocks that provide regular dividend is not only a good addition to the long-term portfolio but also a good source of more or less stable income.
Although, It is traditionally preferred by retirees the young generation too can use the abundantly available resources to filter quality dividend stocks and invest in them at a very early stage. By gradually adding to these stocks, investors can build a substantial form of passive income as well as gain from capital appreciation in the long term.
Investment in bonds and similar debt securities
This is another safe and traditional method of investing and earning money. Investment in stocks can be risky for investors with a low-risk appetite. Bonds and similar debt instruments are a good solution to this issue. You get the safety of your corpus as well as a regular and fixed source of passive income through such investment.
Rental income or listing the property on Airbnb
Owning a house is considered to be one of the major milestones even today. However, many also invest in a house property with an investment perspective and not putting down roots. Renting out such commercial or residential property that you own is another tried and tested form of passive income. The rental income is consistent and the property is also effectively managed as it is not kept idle.
Furthermore, if you have an extra room or a farmhouse on the outskirts of the city, they can be an excellent source too for rental income. All you need is to list it on websites like Airbnb that make it easy to connect with people who are searching for a new place to stay. By offering your extra space on Airbnb, you can potentially earn a significant passive income, as accommodations on Airbnb are often more affordable than traditional hotels. It may require more effort though like refurbishing or renovating the space to make it more attractive, but the cost can nevertheless be recovered through the rental income.
Peer-to-Peer lending is relatively new in India. This is the result of the digital boom where you can register on a P2P lending platform and provide loans to individuals or businesses. These platforms facilitate the borrowing and repayments of the loans, and you earn passive income through the interest charged on such loans. However, it is crucial to assess the creditworthiness of borrowers and diversify your lending portfolio to ensure the safety of the corpus and the steady stream of passive income.
This is one of the many new trends of earning passive income and the result of the popularity of social media platforms like Instagram and TikTok. Through affiliate marketing, you simply promote products or services on your blog, website, or social media platforms. When people make purchases through your unique referral links, you earn a commission. The primary requirement for this is building an audience and creating engaging content that encourages people to click on your links and make purchases.
Cashback websites are another good opportunity to make money while you are spending it. These websites offer the opportunity to earn a portion of the money back on your online purchases. By shopping on these websites or platforms, you can get cashback in the form of a percentage of your purchases or a flat amount depending on the amount spent. It’s a simple way to earn rewards while enjoying your regular shopping habits and making money along with it.
Invest in a business
If you have a lot of surplus funds, you can invest in some flourishing business and take a bet on it. As the business generates profits, you receive a portion of those profits as dividends or through capital appreciation. This allows you to benefit from the business’s success without having to actively manage its day-to-day operations. It’s like being a supportive partner, cheering on the business, and reaping the rewards of its growth.
Invest in stocks through robo-advisory firms
Robo-advisory firms are also new to the Indian markets and offer automated investment services, making it easier for you to invest in stocks. By using these platforms, you benefit from their expertise and automated portfolio management. They allocate your funds across a diversified portfolio of stocks, aiming to maximize returns and reduce risk. These firms act like a smart assistant managing your investments, allowing you to participate in the stock market with minimal effort and expertise. Capital gains that you make from your investments can act as a good source of passive income.
Investment in REITs
REITs are companies that own and manage income-generating real estate properties, such as office buildings, malls, or apartments. By investing in REITs, you become a shareholder and earn passive income through the rental income generated by these properties. Such investment offers the chance to earn income that is similar to rental income without the hassle of directly owning and managing properties. REITs offer an opportunity to diversify your investments and benefit from the steady income stream of rental properties.
Generating passive income has become simpler than ever before. What is needed is to find the correct fit, start the process and then just lay back to reap the returns. The awareness of the need for passive income has also contributed to the more dynamic sources of such income today. However, it is important to understand that each passive income idea requires careful consideration, research, and understanding of the associated risks. It is important to choose options that align with your interests, goals, and risk tolerance.
Yes passive income is added to an individual’s total taxable income and taxed as per applicable income tax slabs.
Some of the most commonly known sources of passive income in India are rental income and income from dividends or interest income.
Some of the ways that you can begin earning passive income is by actively posting quality content on social media, investing in stocks, affiliate marketing, etc.
Recurring deposits, large-cap mutual funds, Bank FDs, Post Office Saving Schemes, etc. are few of the stable investment options for passive income.