11 Working Tips to Building Passive Income for Financial Independence
Coming up with ideal passive income is nothing but the holy grail of personal finance. Not all streams of passive income are created the same way, remember! Some investments require much more startup effort, such as investing enough funds into real estate property acquisition and more.
With the right mindset, you’ll prepare to give the time, energy and resources and will achieve great milestones in the online world.
With supportive passive income you can accomplish the following:
- Start a business in the specialty you have passion for.
- Retire as soon as possible and travel round the world.
- Work from home and spend quality time with your family without ever having to get worried about finances.
- Work less and earn more without having to report for any boss
- Volunteer for causes you love.
- Be a big sister or big brother
- Spend more quality time with your home
- Live longer potentially due to less stress
- Experience sweeter unlimited summers again and again
Once you’ve created streams of passive income, you have so much you can do to live your dream life. I, therefore, advise everyone reading this post to concentrate on building passive income.
The Passive Income Structure
1. There’s Nothing Like 100% Passive Income
Yes, you’ve heard that correctly! Just like in any other business, a passive income entails you begin investing some energy beforehand, be it money, time, or both. Most of the so-called “Get rich quick schemes” in the business world of today aren’t real. Facebook had been in existence for a couple of years before it grabbed the whole world.
This is particularly applicable to earning passive income from several investment sites. While little effort is just required for maintenance after it’s been up and running, they do require so much energy and resources to have it set up and upgraded from the onset. That can mean devoting 70-100 hours of work weekly to it. Don’t take my word for it – that’s the practice with most passive income gurus online.
It’s at the same time real that the bulk of the energy required is beforehand if you must pay attention to an ideal investment portfolio technique. Selling all kinds of information products such as apps or eBooks, which can then move on to drive in a considerable amount of income on a consistent basis is a confirmation that this principle is realistic. Everything an investment requires is a typical, creative and lucrative business model.
2. It’s About Building an Autopilot
One of the principles of building a strong passive income is to automate your daily workflow. Simply put, if you’ve tried to create a great portfolio for real estate or securities, you’ll still need to put in energy to maintain it for success.
You may have to hire the freelance service of a real estate manager or expert for your security or real estate, or simply connect with a professional broker for trading tactics. In order to generate online passive income ideally, your site content must be kept up to date and you must make its user experience free of errors. As a matter of fact, a lot of these are either outsourced, or automated, or both. But there must be some time to be invested on your own part right from the onset to set up a lasting passive income stream.
3. Remember to Factor in Risks
When trying to capitalize on a passive income idea, the most proven case of liabilities emanates from the rental income world. Yes, it can be efficient and profitable, but the volume of cash and work required is enormous from the start.
Anybody that wants to generate a passive income from rentals would first need to answer the questions below:
- What are the costs and expenses of the property?
- What’s your expected ROI?
- What are the monetary risks of owning the real estate property?
Therefore, aside from the issue of feasibility, it’s high time you considered financial liabilities and risks. What if you eventually get a catastrophic tenant? What are likely the costs and expenses associated with renting out real estate property in your specific market/area? Ensure you do thorough home work before you dive into any investment opportunity, otherwise, you might come to realize that what you expected would turn out into a passive income generating machine is already a passive income draining machine.
4. Get Innovative with Your Saving Tactics
I’ve published regarding this long enough previously, but it calls for being repeated. If you’re truly ready to save money for retirement, there are a lot of imaginative tactics that you can implement for a great outcome. It’s more appealing to live within or below your means to gain financial freedom as early as possible in life – rather than having to work for money, every day of your life, forever.
One of the best ways to manage it is to organize a supplementary fund – which ensures you can speed things up to the level where you’ll accomplish great milestones and achieve financial freedom in a lifetime. I want to assume you’ve now reduced your expenses to the very least and are fully investing most savings into ventures that will drive in the financial independence. If you separate your supplementary cash fund from contingency funds, it would only take you a couple of months to start seeing the Return on Investment (ROI).
5. Save as if No One is Owing You Anything
Passive income begins with savings. Nothing works, without a considerable amount of savings. Your complete financial status will be weak if you don’t come up with a financial nut. In this low interest rate environment of ours, it’s advisable to save more than ever.
You must save some money having contributed to your IRAs and 401k, knowing that you cannot tamper with pre-tax retirement accounts unless a penalty is paid until approximately 60.
6. Find out What You Are Passionate About
Everyone is good at one thing or the other, be it at playing musical instruments, investing, doing sports, art, writing, communications, dancing, and a lot more. So, you too can draw a list of what you’re passionate about.
If you can connect your skills with passion, you can monetize your expertise. A football player can teach football for $100 per hour. A copywriter can come up with his first eBook. A musician can release his first song. The more expertise and passion you have, the higher your chances of coming up with something that is likely to create passive income streams for you.
7. Make a Plan
If you fail to plan, you’re definitely prepared to fail well. You need to come up with a process whereby you’re investing a certain amount of money monthly, and working towards completing a certain project.
Expect that things will be slow from the onset, but once you’ve invested a huge amount of money, you should start earning big.
8. Handle Passive Income like A Game
The only genuine way to start building a multiple stream of passive income is by ensuring you are earning actively. The startup funding must originate from somewhere.
Thus, you need to handle passive income like a game that involves several levels. If you can’t achieve a level, that isn’t the end of the road since you are still earning actively somewhere.
9. Determine What Level of Income Level Will Make You Satisfied
Remember or flash back when you earned little or no income at all in your college days. Now, try thinking back to those days when you first started out with this journey. Were you satisfied about the failures then?
Now, try remembering each of the years you got an increase or earned more money working on something else. How did you start being happy? When did things start changing for better?
Everyone has various levels of income that will ensure optimum happiness and joy due to various needs, desires, and living schedules. Your maximum level of income depends on you.
10. Always Realize That Things are Relative
The most prominent way to figure out valuable streams of passive income is by comparing and contrasting the current risk-free return rate with the potential return. If I approximate, the bond of 10 years is at 3 percent.
Any different venture should rigorously go beyond the 3 percent, else, you’ll find out you’re wasting a lot of efforts since you can actually earn up to 3 percent even without doing anything.
11. Get Started & Don’t Withdraw From Your Financial Nut
A journey of 1000 miles starts with a step. Something great had to begin somewhere and you need to schedule a day in order to meet your financial freedom goal. Note the date in your editorial calendar and get away with all distractions.
The greatest barricade I experience from people seeking to create streams of passive income is that they do withdraw from their financial nut too quickly. Ensure your money is used for a promising investment, not just putting it down in a savings bank account.
Have it in your goal to constantly contribute a certain amount every month and regularly increase the amount of savings by a specific percentage until it impacts. Hold on for 1-2 months and keep moving. You’re going to be surprised how much you are able to save.
What about Other Streams of Income?
As part of the structure section of passive income, we’re working around integrity. And the objective is to come up with streams of income that keep pumping cash even without doing anything at all from our end.
Streams of income that do not count:
* Capital gains:
Capital gain is a one-off product, unless stocks can be repeatedly sold at a profit. It’s as easy as to make money in the market as it is to lose money. Thus, do not continue to pretend as if you’re Buffet Warren.
* Freelance writing:
High-quality freelance writing requires enormous efforts. The better your writing quality, the more you’re thinking to move away from freelancing and would love to have all of those write-ups kept on your personal website. Freelancing is an excellent way to manage as a side hustle from the onset. However, it is not ideally okay for someone like me. I’ll likely take on a maximum of 1-3 freelance writing jobs yearly and create a maximum of 5 articles monthly somewhere else.
* Financial Consulting:
I usually do up to 5 financial consulting services monthly on an average of $700 per session, but stopped doing in 2017 so as to focus fully on working more on my personal website.
* Selling anything:
If I resolve to dispose my second car for $600, I won’t have this included in my streams of passive income because I have just got a few of them. The same goes for selling an electric lamp or electronic gadget.
* Blogging:
This particular 2000+ word post has required roughly 6-7 hours to create with many revisions. Content doesn’t just show up from thin air as some people think. It actually requires much energy, time, persistence, consistency, resources, and creativity to create engaging and informative content. With that said, I delight much in blogging.
It’s been over a decade since I got started with investing and I’m really generating a steady passive income today. My investment has given me a reason to retire earlier than most people out there. And I do have a lot of fun operating this website.
Come up with a Plan and Keep Going
Creating passive income streams isn’t a day job. The key goal is to come up with a plan, invest as much as you can, and just keep going. Begin to invest in assets whereby you’re highly comfortable. When you want to start, start very little and scale up your way. Also, think about coming up with your own income generating products.
The internet and technology have rigorously reduced the cost of creating a website and reaching out to a larger audience of people. So, it’s up to you to devise tactics for building a professional website and making it visible to the target audience out there.
Try something sensible enough and great things will start to happen in your financial life. Wish you the best of luck in your passive income endeavors!
I am Chris. I want to hear what you think. Please leave me your comment in the comment section below. I will reply to you as soon as I can. Please share.
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