What is Passive Income and how can you create monthly cash flow!

What is Passive Income and how you can create monthly cash flow!

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Passive income is a dream for many people. 

It sounds amazing to receive money without doing any action.

Also, there are people who doubt that passive income is legit and believe that it is a marketing scheme. 

However, passive income is real, and in this article, you will read how it works and how you can get it.

What Is Passive Income?

Passive income is money that you receive without doing any action. 

The most typical example is when you have a property, and someone gives you a standard amount of money every month to rent it. 

In this case, you don’t have to do anything if you already own the property.

There are two ways to create passive income. 

First, you can invest in something that generates revenue as buying a real estate. The second option is for those who don’t have money to invest. 

You can put the work and create a business that can work without you. 

This second option is available to everyone, and for this reason, there are so many people that talk about ways to earn passive income on the internet. 

When you do the work to create a source of passive income, it is called residual income from some people.

However, it is not possible to earn passive income out of nowhere. Investing and building an online business requires some type of action. 

The investors put enough time to study and learn their market, while the internet marketers learn their job and take action on it.

Why You Need To Build Passive Income

Every person has different reasons when they want passive income, but here are some common ones to consider:

1. Passive Income Means Freedom Of Time:

When you have to work for your money, you are not free to do whatever you want in life. 

Simply, there is not enough time to do the things you love.

You have to work at least eight hours per day for five days a week. It is almost forty hours per week. 

A whole week has 168 hours. 

If you sleep eight hours per day, the remaining hours are 72. 

From these 72 hours, most of them are spent on other important things in our lives like eating, driving, shopping, cleaning, etc.

In the best-case scenario, there are 20-30 hours per week to do all the stuff that you like. 

The worst part is that you will never get your time back once you lose it. 

Passive income gives you the freedom to choose how exactly you want to spend every minute of your day.

2. It Reduces Stress:

Many people have stress and anxiety because of money and work issues. 

Worries and problems with money can destroy relationships, friendships, and families. 

On the other hand, when you know that you will always have enough money for the rest of your life to cover your expenses, you don’t worry about them anymore. 

Money can make life easier, and having a strong source of passive income eliminates every negative feeling around it. 

When you get rid of your worries, you can focus on positive things that make life happier.

3. You can travel or do other things you want:

When you have unlimited time and enough money to do your hobbies, you can do anything you want. 

Many passive income seekers want free time and money to travel. 

It is advertised in many money-making programs as the ultimate lifestyle.

Others want to spend more time with their kids without worrying about their financials. 

Every dream can be achieved with enough time and money to invest in it.

4. You can live anywhere:

Many times we hear about internet marketers that live in different countries around the world. 

Internet and passive income is a powerful duo. 

If you have a blog or a YouTube channel, you can literally work from any place in the world and let every piece of content to make money for years. 

In a standard 9-5 job, it is not possible to move from your area over two days in a row.

These two lifestyles are the opposite.

5. It allows you to create more sources of passive income:

Once you create a source of passive income, it will be much easier to create a second one and keep building in the future. 

The sky’s the limit. 

Some people want to become millionaires because they like the challenge or desire a super expensive lifestyle. 

Passive income is the way to go. If you get paid once for the hour you work today, it will be tough to make so much money.

7 Passive Income Ideas

While there are many ways to earn a passive income, you can check this list of simple ideas. 

You can start with a small investment or without investment at all. Also, you need only a laptop and an internet connection.

1. Selling Information Products

In this category, we can add products that include information like books, videos, articles, subscription sites, online programs, courses, and more. 

You just need to do the work once and get paychecks for years or life. It depends on the niche and products. 

If you write a book in an evergreen category like personal finance or health, you can make sales forever. 

It may need some small updates, but the main concept will be the same.

There are platforms that you can sell your product like Amazon Kindle and digital product marketplaces. 

If you are active in your marketing, it is not passive income. 

So, you need to find a way to sell the product without extra work in the future.

Of course, you need knowledge about something or put some hours of research. 

People want to get good information and solutions to their problems. 

Later, you can scale your earnings by creating more products or creating upsells of the initial product. 

If you keep the same format, it can remain a passive source of income.

2. Affiliate Marketing

If you don’t want to create a product, affiliate marketing is a great option. 

You can start with no money and start promoting other people’s products. 

Once you make a sale through your promotions, you will earn a commission.

Affiliate marketing is a type of passive income because you can automate all the processes. 

As an affiliate marketer, you need to find an affiliate program that will allow you to promote a product. 

The affiliate program will give you a link, and you must send traffic to this link. You can automate the process of traffic generation.

For example, you can create a social media account, a landing page that will receive the traffic to get email addresses from the visitors, and a few emails that will be sent to the subscribers to promote these links. 

It’s a standard funnel with three steps. You can outsource all these steps or just create them once and find someone to manage your social media account to keep getting traffic.

Also, there are products with recurring commissions that can generate revenue for years from one sale alone. 

Later, you can repeat the process over and over again to earn even more money.

3. Create A YouTube Channel

Creating a YouTube channel and start publishing videos is completely free. 

You may spend some money on tools that will help you to create the videos, but it is optional. 

Many great YouTubers started for free.

If you like to talk about a specific topic and have no problem putting yourself in front of the camera, you can create informational videos about this topic. 

You can try to inform people about something or just tell your opinion. 

Videos are powerful because it is a type of content that does not require active engagement from the user. 

People can sit back and watch videos for hours. If they feel motivated, they can make a like, leave a comment, or click a link. 

The only negative is that you can’t outsource the video creation of a personal YouTube channel.

There are three ways to make money from YouTube. First, you can enable Google AdSense for YouTube. 

After creating a few videos, you can apply to Google AdSense that is the advertising program of Google. 

After getting approved, the ads will appear in your videos automatically. You can earn money from your existing videos if they keep getting more views.

Next, you can combine affiliate marketing and YouTube. You can add affiliate links in your description or send traffic to a landing page to collect email addresses.

4. Build A Blog

Building a blog is about creating articles and publish them regularly. 

If you like writing, it can be a nice hobby that can generate revenue. 

As a passive income idea, blogging is worth your time because it is super easy to outsource the writing tasks.

You can build the blog and hire a few freelance writers to write the articles. This process requires some initial investment. 

So, you can write the articles by yourself until you make enough money to outsource the writing tasks. Once you outsource the writing, you can repeat this strategy.

Blogs get traffic from search engines because they include helpful information and from social media when people share them. 

Most bloggers focus on SEO. If you optimize your articles for SEO and get good rankings, they can easily remain on the first page of Google in various keywords for a long time.

There are many ways to monetize a blog. You can add advertisements, affiliate marketing, sponsored posts, sell your own products, build an email list, and more. 

You can actually use these ways together. The only downswing of blogging is that search engines take some time to trust new blogs.

5. Peer-To-Peer Lending

Peer-to-peer lending is lending other people through a website or a platform that is responsible for the transactions. 

You remain anonymous and don’t communicate with the lender. 

There are fixed interest rates. With a few words, you lend money to receive back more.

This process is 100% passive income. 

You don’t have to invest time or effort but only your money. 

If you want to scale your earnings, you can easily reinvest them. 

The only risk of peer-to-peer lending is to get started with unknown and fraud companies. 

If the return of investment is too high, something goes wrong. 

The best option is to do your research and start with trusted platforms.

6. Dropshipping

It is another online business model that you can outsource every task once you figure out how it works. 

Dropshipping is about selling physical products that you don’t own. 

The idea is that you browse different online stores, find products that you like, list them in your store at a higher price, and you earn the difference when you make a sale. 

If you give the contact details to the original buyers, they will deliver the product to your customers for you.

There are platforms that you can use to build your stores. 

They have pre-made templates, and your only job is to list your products and add payment details. 

The last step is to send traffic to your store.

There are different ways to get traffic. 

It can work with paid advertising, social media traffic, YouTube channels, blogging, and more. 

You just need to learn about one source of traffic. 

It is not hard to outsource every task and create more stores or add more products to an existing store.

The negatives of this business model are that you have to handle the customer service and the quality of the products depends on the original seller. 

If the buyer is unhappy with the delivery, he will complain about your store.

7. Selling On Amazon

Amazon is a huge marketplace full of buyers. 

It allows you to sell your own products in this huge audience. 

Also, it has created a unique process through Amazon FBA in which you can send your products to the closest fulfillment center, and they take care of the packaging and shipping.

If you participate in this program, you just need to buy products, send them to a fulfillment center, and create a listing on Amazon. 

Also, you can ask the provider to send the product for you to the fulfillment center. 

So, the only tasks you have to worry about is the buying and listing of the products.

There are tools that automate these two steps, or you can outsource them as well. 

The negatives of that business are that you can only scale it by adding more products and require an initial investment. 

However, it does not require any marketing because Amazon already has tons of traffic.

What Is the Difference between Passive income and active income?

The main difference between passive and active income is in the way you use your time. 

In passive income, you expect to get money more than once for the time you invest. 

For example, you may invest time in building a business. 

However, this business can pay you over and over again in the future. 

Once you are able to outsource your tasks, there is no reason for you to invest more time in it.

Until the point that you still put the time and the effort to earn your money, this income is 100% active. 

When you earn money from your job or a business that requires your actions, this is a standard type of active income as well.

It does not mean that active income is a bad thing. It can be extremely profitable and pleasurable if you do what you love. 

The problem is when you don’t like what you do, and you must keep spending time on these activities to earn money.

The bottom line is that it’s possible to invest both time and money to create passive income in the future. 

When your actions create income only once, it is an active income most of the time.

FAQ

Can I Get Rich Quick?

It depends on your description of the word quick. 

If you want to start today from zero and become rich in a few days, weeks, or months, then it is not possible to get rich quick. 

If you are willing to become rich in a few years from a business or an investment, it’s possible to achieve that goal.

You can generate passive income without being rich. 

There is the term financially independent for those who have enough passive income to cover their expenses for the rest of their lives. 

So, passive income is not only for the rich. 

Also, it’s possible to cover a part of your expenses from a source of passive income and work part-time for the rest.

However, most people agree that the secret weapon of the wealthy is passive income. 

They create multiple sources of passive income and generate a lot of money in the long-term. 

However, every business needs to have natural rates of growth. Even the richest people in the world worked hard to build businesses and learn things to make smart investments. 

The examples that prove the opposite are rare or zero.

Lastly, there are many get rich quick schemes that promise huge earnings in a few days or hours. 

Their claims are not real most of the time and sell worthless products. 

In some cases, there are reputable marketers that make big claims, so you need to do your own research before making a decision to invest money.

How Much Can You Make?

We can’t estimate the potential earnings of every business and investment.

Usually, it depends on your execution. 

For example, the suggested ideas for passive income that you can read above have part-time marketers, full-time marketers, and superstar marketers that make 6-7 figures per year.

A big part of your results is how you apply every business or investment strategy. Time is always on your side when you do the right things. 

You can accumulate knowledge, skills, and money through time. 

It is natural to make mistakes in the beginning and become more effective in your choices when you get some experience.

What Does Count As Passive Income?

Everything that can generate money more than once can be counted as passive income. 

For example, a video on YouTube can generate income multiple times from a one-time work. 

The same applies to every type of investment with recurring income and any business that can be completely outsourced.

For example, a blog with a writer and an editor that do not require any action from your part will generate passive income.

However, there are businesses and investments that generate active income. 

For example, if you flip houses, you don’t earn passive income. 

You invest time and money to earn income once. 

However, owning a house and getting rent every month is a source of passive income. It is not the number of your earnings that counts. 

It’s possible to earn huge amounts of money with active and passive income.

What do I need to get started?

Each idea and business model is different. 

It’s possible to start for free with your computer.

 For example, creating a YouTube channel or getting started with affiliate marketing can be achieved for free. 

The other ideas of the list above require an investment from a few dollars to hundreds of dollars.

If your plan is to go with pure investing and no action from your part at all, it may require a bigger investment to generate enough revenue.

 Also, it would be a good idea to have some knowledge of your market when you invest money because it will help you to avoid costly mistakes.

Conclusion

Creating a source of passive income could be one of the best decisions in your life. 

You can create a better future for you with fewer worries about money and more free time. 

Everyone deserves more family time and time for hobbies or fun. 

You have an opportunity to start building this life today.