Passive income is an income stream that doesn’t require your active involvement to generate ongoing revenue.
Beyond that, it is a mindset shift that encourages you to approach life in its entirety and not just to live life for a paycheck.
People no longer want to live a significant portion of their lives, making money, and holding things like hobbies, passion, and travel in the background.
Today, you and I realize that there is no point in making our lives miserable by working relentlessly and not tasting the largeness of life itself.
Passive income is a backing that gives you the power to decide ‘What you want to do with your time.’ Whether you want to go on a vacation tomorrow, spend a day at the beach, move to the mountains, and whatnot.
Story Worth Paying Attention To
“My dividend portfolio pays me over $1,200 a month”
– Bob Lai – Product Manager, Vancouver, Canada.
I have been reading about becoming financially independent at an early age for quite some time now, and stories like this really stand out to me.
To give you perspective…
We spend 7- 8 hrs of our day every single day to support a living. But while we work so hard to live the life we want, we never actually get the time to taste the fruits of our labour.
And unless you build a passive income where you don’t have to spend that 7 or 8 hours working, you will find yourself in a never-ending loop of making money to support a living.
Bob Lai’s goal is to become financially independent to a point where his passive income is equal to or greater than his expenses.
He is at the top of his finances and reinvests all the profits from his investments back into his portfolio to achieve his goal in the next few years.
And personally, I feel this is the goal to chase because no amount of money will be enough if you only earn and then spend all of it.
Rather use a portion of your money to earn passive income and then buy all the time in the world for yourself actually to LIVE THE LIFE.
10 Passive Income Ideas to Make Money
- Taste Money Markets
- Check Out Stock Markets
- Leverage Cryptocurrencies
- Tried & Tested Fixed Deposits & Recurring Deposits
- Explore Equity & Debt Mutual Funds
- Invest In The U.S stocks
- Exchange Traded Funds To Your Rescue
- ESG Maybe The Next Big Thing
- Intraday Trading Stands A Chance
- Mine Cryptocurrencies
Inspired by this story, I thought of jotting down some ideas that I am exploring and hope this helps you too.
So here they go:
1. Taste Money Markets
Money Market funds are short-term debt funds (similar to loans) that include treasury bills, national savings certificates, commercial paper, etc.
Individuals can invest in Money Market funds via Commercial banks, Cooperate banks, or any other financial institution. You can park your idle cash in money markets to earn fair returns with reasonably fewer risks involved.
2. Check Out Stock Markets
If you have a good understanding of stocks, shares, and companies, then the stock market may be exciting to you.
Out of all the stocks, dividend stocks are a great way to earn passive income. When you invest in dividend stocks, you earn a share of profits made by a company in dividends.
You can either pocket out or reinvest these returns to build capital.
3. Leverage Cryptocurrencies
Cryptocurrency trading and cryptocurrency staking is another way to earn passive income.
Stacking cryptos involves keeping your funds in a wallet and performing network functions like validating transactions to receive rewards as passive income daily, weekly, or monthly.
Trading cryptocurrencies are just like trading stocks.
Apart from this, you can also perform crypto lending to earn passive income. P2P lending in cryptocurrency is like the traditional lending system where you lock your funds for a defined period to earn interest.
4. Tried & Tested Fixed Deposits & Recurring Deposits
Deposit schemes like Fixed Deposit and Recurring Deposit are one of the easiest ways to earn passive income.
You can invest a lump sum amount in an FD or invest a small amount periodically in an RD with a lock-in period of anywhere from 6 months to 10 years and reap the benefits of compound interest.
It is one of the safest ways to earn passive income by investing, but the returns are low and can rarely beat the inflation rate.
5. Explore Equity & Debt Mutual Funds
If you know little about the markets, then mutual funds could become your friend.
With Mutual funds, you can invest in portfolios of expert fund managers that pool retail investors’ liquidity to invest in stocks or bonds of different companies.
You can either invest in equity or debt funds based on your risk tolerance and enjoy the perks of less volatility.
6. Invest In The U.S stocks
The U.S is the home to some gigantic global companies where you get to invest in up-and-coming companies from a very early stage.
Not only that:
The U.S stock market is comparatively less volatile and has outperformed the Indian market over the last 10 years.
It is an excellent way to expand your portfolio to markets beyond your home country and capitalize on the innovations happening there.
7. Exchange Traded Funds To Your Rescue
ETF’s are a sweet spot between stocks and mutual funds.
ETF funds pool liquidity from individuals to purchase shares, bonds, and securities. But the additional benefit is that they are traded on stock exchanges, too, unlike the mutual funds.
It pays dividends on the performance of the asset management company. It is highly liquid and less risky than mutual funds.
8. ESG Maybe The Next Big Thing
ESG (Environmental, Social, and Governance) funds are portfolios investing in securities of companies compliant with the environmental, social, and governance factors laid down by the authorities.
The ESG segment has grown multifold over the last few years, with its total market value at $40.5 trillion in 2020.
The market has enormous growth opportunities, and it may see a significant change in the coming years as Environmental, Social, and Governance factors become more critical.
As of 2019:
ESG has 26% of the total assets globally under its management.
9. Intraday Trading Stands A Chance
Intraday trading involves buying and selling financial instruments like stocks, ETF, etc., on the same day for a profit.
Individuals pick highly liquid stocks and trade in volumes to make a maximum profit with no substantial losses. The trading period here is short, allowing you to leverage market volatility.
Though intraday trading requires you to monitor the markets, it doesn’t require you to work actively.
10. Mine Cryptocurrencies
Yes, I know that we have already covered cryptocurrencies, but mining radically differs from staking, lending or trading them.
Cryptocurrency mining requires you to solve complex problems to validate transactions on a blockchain by using power computing devices.
Once you solve those complex puzzles, it will reward you with mining rewards in the form of that particular cryptocurrencies. Though it requires effort in setting up powerful hardware for mining, the rewards are totally worth it, but at the same time, it not everyone’s cup of tea.
The Bottom Line
The takeaway that I would like you to take from here would be to; rethink your finances and investments.
Whether or not you want to replace your work income with passive income, it is always a good choice to have something to fall back on.
Passive income backs you when tough situations like COVID hit and liberates you to make decisions without being concerned about money because ‘Money is just a means and not the end.”
Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.
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