Thinking of passive income streams as ways of making money while sitting on your couch is wrong. Although this involves significantly less work than a 9 to 5 job, you still have to do a lot of research and act accordingly.
Nonetheless, passive income offers you more freedom and flexibility in your schedule – and, when done right, it can turn into a profitable way of making money. Passive income streams can also help you prevent burnout. But, let’s first see what is passive income and how can it help you make money, in the long run.
Passive Income – What Is It?
To fully understand what passive income is, let’s take a closer look at what active income is.
Active income is the type of income most people make. They go to work daily, and they get paid for it. It’s an exchange of time/effort-money, in most of the cases. This is what most people do to pay their bills and live a comfortable life. The luckiest of us get away by working 8-9 hours a day. The least lucky can work over 12 hours a day. This is when burnout is most likely to occur. The work-life balance, in this case, is, in most of the cases, lacking, making the worker feel frustrated and unhappy with their lives.
Passive income is what seems to be fixing all the issues listed above. Passive income streams are ways of making money without actively working for it. Think of a person who rents an apartment or house they inherited. Although initially, they have to fix the home to make it appealing for tenants, after a while, they have to do close to nothing to collect their monthly rent.
Although fantasizing about finding a reliable way to make a living off passive income, this matter has to be carefully analysed. You can’t decide that from now on, you’ll make money by using this strategy. It all demands a lot of initial work and research. Finding a reliable stream of passive income is the main challenge here. This is why we have a list of several passive income ideas to help you get started.
Those who already have some money to invest, should consider dividend-paying stocks.
If you’re unfamiliar with the concept, these are lumps of money companies are paying to shareholders. Buying dividend-paying stocks in a company will virtually make you part-owner in the business. When companies in which you invest grow and become profitable, the money comes back to initial investors.
As you might have guessed already, this is an effective passive income stream. All things considered, you still want to do your fair share of research before jumping in the stock wagon.
#2. Index Funds and ETFs
If the dividend-paying stock idea doesn’t thrill you too much, index funds and ETFs are a solid alternative. This idea is easier to manage, and you can make a good profit out of it. Neither of the two involves risky strategies or approaches, so you will make the most out of your money, without overworking yourself.
Index funds and ETFs are market indexes that track specific returns. When you want to put the money you already have to work, this is a simple and reliable approach.
Index funds are types of mutual funds with broad market exposure and low operating expenses. ETFs are similar to index funds. Because of these reasons, the two options mentioned above make great investment opportunities for inexperienced investors who want to make a living off passive income ideas.
#3. Forex Trading
This is where the fun begins. Although not entirely a passive income stream, foreign currency exchange is a solid way to make generous income, while staying at home. Because the Forex market is open 24/7, you have enough flexibility to choose your own schedule and pick the most profitable time zone for your own case.
FX is a decentralized global market where all the global currency exchange takes place. It’s the market with the highest liquidity rate, with an impressive trading volume of over $5 trillion a day. Sounds impressive? It is.
If you have ever travelled abroad, then you are familiar with trading currencies. When you want to turn this into a profitable adventure, you must think of what currency you think is valuable, or where its value is headed. You can trade up and down easily, based on different currency pairs’ value.
But before starting to make a living off trading currencies, you must find some reliable MT4 Forex brokers. The broker will influence your trading experience a lot, because of a series of reasons.
- Security – the most important thing to search for in your broker of choice is if the broker is regulated by competent bodies. Remember that each country has its own regulatory bodies so check first which is the responsible body in your country and if your broker of choice is regulated by it.
- Advantageous transaction costs – reliable brokers come with the advantage of low-spread transactions. This means you will have more money entering your account per transaction.
- Advantageous deposit and withdrawal conditions – not all brokers allow you to make deposits and withdrawal money as you wish. Search for those that do, since this is a tell-tale sign of reliability.
- The platform itself – assessing the broker’s platform will help you ensure you will have an easy time trading with them. Search for user-friendly solutions, as you don’t want to struggle in the process.
- Customer relations and customer service – since Forex trading takes place 24/7 you want to also enjoy 24/7 customer support service. No matter what issues you might have, you want to solve it in a timely and correct fashion.
Passive income streams are a great way to find more balance between your work and private life. Although, traditionally, few jobs guarantee this balance for their employees, being your own boss and using one of the methods above to make money is a promising beginning.