If you have been searching for ways to make some extra money or a new business idea, you will most likely have heard of the term ‘passive income.’
This is the art of having an income generating stream that requires minimal to no effort. It is a sharp contrast of active income, often your regular job or part-time tasks, where you get to work and earn salaries, wages, or business income.
There are varied forms of passive income today spread across virtually every industry in the economy. And the most intriguing thing about the passive income ideas is that they generate money for you literally while you sleep.
They also free up your time, allowing you to pursue your goals and more important aspects of life like chasing your hobbies and spending quality time with your family.
Your office job needs direct effort in order to produce an income in terms of their salary. A passive income stream is however different as it runs on independently. You don’t need to keep watching over it consistently and generating funds doesn’t require your active involvement.
But what makes passive income so popular and what are some of the most popular passive income ideas worth trying in 2020?
Why Passive Income Is Essential
- Passive income gives you the freedom of time:
Of all commodities, time is the most valuable as there are only 24 hours in a day. Time cannot be re-spent or recreated – it exists only once, then it is gone. Passive income is a way to detach earning ability from the limited amount of time available to work each day. It is automatic and keeps coming in as long as you have carried out the initial work required.
- Helps secure your financial future:
Nothing is worse than living under the pressure of being unable to pay your bills. It results in anxiety, desperation, and hopelessness for your future. However, earning a passive income goes a long way to alleviating these concerns. You no longer need to worry about being the victim of corporate downsizing or losing your job.
- Sets you free to pursue the things you are passionate about:
What are your interests? Is it traveling, music or art? A high-return passive income doesn’t just help sort the monthly bills, the supplemental income derived from these savings can be used to save towards your holiday vacation. When you raise your passive income to a level that is higher than your debts and monthly obligations, you have the freedom to pursue projects that you are passionate about.
Criteria used to create the passive income stream list
- Capital required to start
- The autonomy with which the income idea operates
- The annualized rate of return
- The amount of time it takes to pick
- Scalability: Opportunity for growth
- Safety of the income generating stream
- Investment diversification
- Tax consequences of incomes earned
Best Passive Income Ideas 2020
Passive income opportunities bring you closer to financial freedom by earning you a supplemental income. Most are however preceded by significant capital investments, dedication and man-hours contributions. Others like crypto and forex engagements expose your initial investments to huge risks. It is therefore imperative that you take these factors into consideration before deciding on the best passive income generation idea you want to pursue.
What is passive income?
Passive income is a payment you receive on a regular basis from sources other than employment or contracting. The income source usually requires little or no continuous input after the initial work is done.
What is the difference between active and passive income?
With active income, how much you earn depends on how much you work. For instance, if you work for an hour, you get a single payment for that hour. However, with passive income, you keep earning money from work you have done once.
What is the main advantage of passive income over active income?
Passive income is attractive to many people as it detaches your earning potential from the time spent working. For a minimum time investment, you get a lifetime of earnings.
Do I continue to earn a passive income when I move cities or go on vacation?
Yes. Almost all the passive income ideas we have provided above let you earn money no matter where you are, day or night. Earning a passive income is, in most cases, independent of your location, and your earnings keep accumulating even while you sleep.
Is it easy to get started with passive income?
Building up a source of passive income that guarantees a long lasting income stream requires plenty of research and sometimes lot of work to get started. Even something that seems as simple as setting up a blog needs planning and extensive research. You should be willing to take time to find out the details of the specific opportunity and the challenges that are related to your passive income idea. After this, put in the effort needed to get it right.