Who doesn’t want to make some extra cash? We all do, right? Yes!
But how? It might seem difficult, but there are sources of passive income that can prove to be pretty handy and help generate passive income. [lwptoc]What is Passive Income?
Passive income is when you earn extra along with your regular income. Ways to earn a passive income do not require you to participate and devote fixed or regular hours to generate funds. However, this does not mean passive income works on the "get rich quick" theory. That does not work, and you do not earn something in return for “nothing” – some ways of making generating a passive income might require some work or effort on your part.
For example, if you have a property that you rent, to earn passive income from that, you may still need to keep it well-maintained to ensure the revenue keeps flowing – this will require work but, on a need basis.
What Are the Best Passive Income Ideas in India?
Apart from traditional rental income, there are several other ways to build passive income in India. Here are 8 of the best ways to get your passive income flowing.
1. High-yielding Savings Account
You might be shocked to know that opening a savings account with high-interest rates can become a great way to earn passive income, but that’s true! Savings accounts usually tend to have the impression of producing some of the lowest returns on investment. However, that's a thing of the past. Today, a savings account at an online bank allows considerable generation of passive income with some of the highest interest rates.
Cons: As long as you open your account with a government-recognised bank, you don't have any disadvantages. However, your returns can hit a low during inflation. Moreover, some people still think they can’t get the return they expect, for whom, Freo Save is the ultimate solution!
Freo's rewarding zero-balance digital savings account provides the highest interest rates on your savings – up to 7%, which is the most you can get in the market!
Open Your Freo Savings account today & start earning up to 7% interest on your savings!
Get Freo2. Rental Income
One of the most popular for earn passive income is renting out your property. Although it’s among the preferred choices, it’s not the easiest to maintain and you must be involved actively. You also need to invest your time to learn how to make your rental property a profitable venture, or you will lose your investment. But once you understand the basics of real estate, investing in properties is a great method to begin your journey of passive earning.
Cons: Several questions can make property investment uncertain. You have to constantly think about: “Is there a market for your property? What if you are not able to rent out your property? And if you do, will the tenants pay rent on time?” Any of these concerns can turn true and be a roadblock on your passive income earning journey.
Moreover, you need to consider some economic downturns. For example, economic challenges can hit anyone, due to which your tenants might want to leave the contract mid-way. In this situation, you’ll have to again invest time in finding tenants, sometimes even pay agents.
3. Stock Market
The goal of stock market investment includes diversifying your portfolio while reducing the risk. You can make this happen by investing in high-dividend stocks, mutual funds and exchange-traded funds (ETFs). However, this industry can be confusing. Initially, you need to invest upfront time and effort in understanding how the market works. But once you get the hang of it, you will realise it’s a great way to build wealth passively.
Cons: Most commonly, people mistake stock market investments for a short-term goal that gives results quickly. But that's not true. It is a game that needs to be played in the long run. People need to stay for long to reap the benefits.
Another con of investing here is that you are liable to pay taxes on every earning you withdraw.
4. Peer-to-peer Lending
Have extra money you want to utilise but want to ditch the traditional investment methods? Why not start lending out loans to borrowers?
You can sign up on a third-party platform that connects lenders to borrowers and become a peer-to-peer lender where you can give out personal loans to small businesses or individuals and make it your side hustle. You get your money back with added interest, making this a great modern method to earn passively.
But where there’s a mention of a loan, there are chances of encountering a default situation. To avoid that, invest smaller amounts on multiple loans and analyse the borrower's financial history to make more informed decisions.
Cons: We cannot say it is the best way to earn passively for beginners since it will initially take time to master the P2P lending platform. Moreover, you will have to carefully research the borrower and look at their debt history.
5. Blogging
Do you travel a lot and love writing about your travelling adventures? Or are you an excellent gamer and want to show off your skills? Maybe you are an expert dancer and want to share your knowledge with the world. Did you know that you can pick up any subject you are an expert in and turn it into a side hustle by writing blogs?
But how do you start earning as a blogger? First, begin by finding your niche. Become an expert in the topic. It can be anything, from sharing hacks to the struggles of being a pet parent. Start creating content on the topic. As you continue in the field, you will grow and as your audience grows, brands or businesses may approach you, or you can pitch them to pay you to create content around their brand.
Cons: You need to be patient, and we mean extremely patient! One of the biggest downsides of becoming a blogger is that you cannot build your online community within a day. It takes years to get a solid following to the point where you start earning some money through your content and gaining the trust of your audience. Moreover, you need to be consistent in creating content. You must spend time and resources to become an expert in your niche.
6. Become an Influencer
Did you know that you can get paid to create content on social media platforms like Instagram, Twitter, LinkedIn, YouTube, etc.? If you have a good number of followers on your socials, you can leverage them to collaborate with brands/businesses and create content to promote them!
Cons: Again, like blogging, you need to be patient with social media to start earning passively. It takes time to build an audience who will trust your recommendations. You need to spend time and resources creating content – it's not as easy as it looks!
7. Create an App
There are a few ways you can earn through an app. First, you can make it public for everyone and run in-app ads. The second method is to have users pay a nominal fee for downloading it.
Cons: It’s a huge upfront investment, from developing the concept to hiring or sourcing skilled developers. Moreover, if it is well-received by the audience, you need to add more features to keep making it interesting.
Another disadvantage is that if you do not consistently commit to improving the app, you might lose your users and eventually witness its downfall.
8. Print-on-demand Designs and Handmade Goods
As the world is digitalising, more and more people have also started selling handmade goods online as a side hustle. Some sell handmade clothes, while some even sell toys. You can even find people selling pet supplies and beauty products. Find a good e-commerce site or create your website to sell your stuff.
Another thriving side-business idea is selling things with printed designs on them. You can begin selling with your design by searching the market and going with what's trending, or start a personalised on-demand design business where people get to order the prints they want.
Cons: You will need to spend time and money marketing your online store. Moreover, an inventory is needed to store the goods.
9. Affiliate Marketing
Do you have a knack for social media and influencing people's choices? Affiliate marketing can be a great way to leverage that. You can partner with companies and promote their products or services on your social media platforms or website. If someone clicks on your unique affiliate link and makes a purchase, you earn a commission. It's a great way to monetize your existing audience and requires minimal upfront investment.
Cons: Building trust with your audience is crucial for success in affiliate marketing. You need to be transparent about the products you promote and ensure they align with your audience's interests. Also, depending on the commission structure, it might take time to see significant earnings.
10. Rent Out Your Parking Spot
Sitting on an unused driveway or garage space? Don't let it go to waste! You can list your empty parking spot on apps or websites that connect drivers with available parking. This is a fantastic way to earn passive income, especially if you live in a busy urban area.
Cons: There might be some legalities or limitations depending on your community or homeowner's association rules. You'll also need to factor in insurance and potential wear and tear on your driveway.
FAQs
1. What is the easiest source of passive income?
A high-yielding savings account is one of the easiest passive income sources! You don’t have to invest time or resources upfront. Simply opening a digital savings account with Freo Savings will let you earn up to 7% annual interest rate. Moreover, you don’t have to visit a physical bank branch as everything is available online!
2. How can a beginner earn passive income?
If you want to earn passive income and are not sure about where to start from, here are some options that don’t require too much efforts:
- High-yield Savings Account: A high-yielding savings account is easy to open. If it’s a zero-balance account, you won’t have to constantly worry about maintaining it.
- Certificates of Deposit: CDs can generate good passive income, although your money will be tied up more often.
- Real Estate Investment Trusts: REITs are another way to earn income by investing in properties without managing them. The trusts lease properties, collect rent from tenants and later distribute it among the shareholders as dividends and income.
3. How to create passive income with no money?
If you have little to no money to invest in heavy-duty passive income methods like real estate or the stock market, you can rely on your expertise where you will be required to do upfront work, like creating courses, becoming an influencer, freelancing, etc.
4. How much passive income can you earn?
Depending on the hours, effort and capital you spend initially, you can earn as little or as much as you want. Moreover, the earning figure also depends on the type of passive income source you select.
5. What are the seven sources of passive income?
Apart from the above-stated passive income sources, the other seven streams of passive earning are:
- Royalty income
- Earned income
- Dividend income
- Profit income
- Rental income capital
- Interest income
- Gains income
