Five Ways To Build A Passive Income

Five Ways To Build A Passive Income. It sounds like a dream: make money without working. This should be possible thanks to passive income. This is the term used to describe income streams that regularly come into the account – even if you do nothing for it.

So, what is the mean of passive income?

Passive income, also called residual income, is the dream of financial freedom. It means building something that produces a steady stream of income over a more extended period of time.

3 Criteria define passive Income:

1 | Independence From Work

With active income, you swap time investment for money. Anyone who manages to build up a passive flow of money receives it regardless of the time invested.

2 | Scalability

To generate passive income, you have to choose a scalable business model. This means that you can increase sales without having to invest in production, infrastructure and fixed costs continuously. Business models with high scalability, for example, are often very highly automated.

3 | Uncertainty

An employee can be sure that at the end of the day, they will be paid for the time invested. Someone who wants to receive passive income must first make an advance payment without any guarantee that they will earn money in the end.

FIVE WAYS TO BUILD A PASSIVE INCOME

Investments are an alternative way to passive income: By using money instead of labour, you can generate passive income. Finding the right investment is time-consuming at first. But once the portfolio is set up, passive portfolio income can be generated in the long term. The following five investment opportunities are available to build up a portfolio income:

1. Benefit From Rental Income: Tangible assets such as real estate are not only a popular investment in financially uncertain phases. Because they represent a real asset, “something you can touch” – regardless of whether the value moves up or down over time. Besides, a passive income can be built up through regular rental income.

• Receive Interest From Real Estate Investments: Real estate funds and real estate crowd investing offer another option for investing in real estate. A passive income stream can also be built up through returns and interest payments.

• Rake In Dividends With Stocks: In the search for new sources of income in times of low-interest rates, stocks and bonds are increasingly becoming the focus of investors. Companies that issue stocks and bonds regularly distribute their profits to investors as dividends.

Those who hold so-called “dividend aristocrats”, that is, shares of incredibly successful companies with rising profits, in their portfolio can expect high, steadily growing streams of income. Exchange-traded index funds – called Exchange Traded Funds (ETFs) – also offer a flexible and cost-effective way of adding such stocks to your portfolio.

• Interest On Bond Purchases: Holders of government or corporate bonds receive regular interest payments. With bond ETFs and bond funds, risks can be quickly spread.

• Lend Money & Receive Interest Like A Bank: The “peer-to-peer loans”, i.e. loans that are given from one individual to another, have recently become increasingly popular. There are various crowdlending platforms on the Internet on which borrowers and lenders can easily find each other. You can lend money yourself, receive interest on it and thus generate income with personal loans.