What is Passive Income and How Do You Start Making It?

You work hard for the money you earn each month from your regular job but what would be a great thing to achieve if it’s possible would be to earn some your income without having to do virtually anything at all.

That’s what passive income is all about. Creating a situation where the assets you have are managing to generate money for you even while you are asleep.

There are plenty of different ways to make a passive income and here are some ideas to set you on your way to a scenario where your bank account receives regular credits without you having to put in a shift.

Minimal activity

The fundamental explanation for passive income is where you manage to earn some extra money on a regular basis with minimal effort on your part once you have set up the system to generate the cash.

A good way of thinking about passive income is planting financial seeds that manage to grow your money and allow you to get to a situation where your money is, hopefully, working harder than you are.

An obvious starting point

A good place to start with your passive income strategy would be to ensure that every spare amount of cash that you have is put to work and isn’t wasted.

It is all very well keeping a few spare thousand in your regular bank account for the comfort of knowing that you have enough cash available but if that account is not paying any interest it will be eroding the value of your cash over time due to the effects of inflation.

It would be much better to seek out a savings account that pays a good rate of interest so that your money is at least keeping pace with inflation.

This action should illustrate the mindset you need to adopt if you are going to be successful with your passive investment moves.

Invest in property

One of the most successful wealth-creation strategies deployed by wealthy individuals over time has been to invest in bricks and mortar.

Investing in property allows you the opportunity to enjoy capital growth as the value of your asset appreciates in value as the years pass by and, in the meantime, you can generate a monthly income if you rent the property out to a tenant.

The obvious drawback here is that you need a certain amount of money in the bank to be able to buy a property and start your portfolio.

However, you don’t have to be a landlord or actually buy a property to profit from this form of passive investing as you can buy into a suitable REIT, for example, which uses a pool of cash to invest in property and generate a return for investors.

The value of your holding can fall or rise, so it is not a one way street to profits, but that also applies to real estate where prices shift according to market sentiment and conditions,

These are a couple of examples of what passive investing is all about and should give you the line of thinking and discipline that is required to put your money to work so that one day you might be able to have an income without having to lift a finger.


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