One of the most held benchmarks of true success is becoming so wealthy that you never have to work again. While this level of wealth is certainly attainable to some, it isn't the only way to liberate yourself from the requirement of working.
Passive income is an incredibly useful tool in allowing you to slip the shackles of the traditional working grind and allow yourself to lead a life that makes you truly happy. Of course, to build up enough passive income that you can do this, there is a good amount of work that you are going to have to put in first.
This article aims to make that process easier by outlining what passive income is, how it works, and some of the best ways in which you can create your own sources of passive income.
Passive income is exactly what the name suggests. It is an income that you earn while doing nothing. On the surface, this might sound like a complete fallacy - nothing comes from nothing after all. As true as that might be, passive income is still very much a real thing that you can (and should) work towards.
However, it is important to note that passive income isn’t you getting “free money” for nothing, but rather the payoff of a lot of very strategic work that you have done. It is a return on an investment that generally takes a huge amount of work to put into motion. So, with that being said, how does passive income work?
Fundamentally, the idea behind passive income is that you have enough assets or existing wealth that you generate enough income passively to meet your cost of living. There are plenty of ways in which you could be generating this income. Whether it is through dividends from stock that you own, interest from your savings, or even rent payments toward properties that you are renting out.
So, if you can build up enough of this passive income, so that it equals or even exceeds your cost of living, then congratulations, you have achieved financial freedom and are now able to engage with anything you’d like to do with your time.
There are certainly plenty of ways to start putting together an effective passive income system, but some of the most efficient and effective are found for trading online. That's right. From stocks in Google to bonds and cryptocurrency, some of the best ways to start building up a passive income for yourself is through the trade and sales of these digital resources on the stock market and other similar platforms.
Of course, one of the most important things that you all need to keep in mind when engaging with this kind of passive income development is that there is always a measure of strong risk attached to these kinds of endeavors. You can do everything you can to prepare for and protect yourself from these risks, but it isn't always going to be possible to avoid them entirely.
As a result, you must have a strong game plan and a series of goals that you can effectively follow when engaging with this approach to passive income.
Step 1: Set Your Goals. One of the first things you should do when you're looking at the possibility of trading stocks, bonds, and anything else to create a passive income is to determine how much of an income you want to create. This might sound like a simple question, but by having a definitive solid goal in mind, you can work toward reaching that goal.
Plus, by having a solid overarching goal that you are planning on pushing towards, you can also allow yourself to establish steppingstone goals, which can give you consistent feedback on your progress, and allow you to maintain momentum toward your overall goal. At the end of the day, setting goals is an art form and it is something you should make sure you do well.
Step 2: Do the Research. With your new goal in mind, you can now dive into some of the most important elements of achieving such a goal, and that is doing effective research. Knowledge is an incredible tool, and when applied correctly, it can help you to achieve so much.
After all, you're going to have a much easier time engaging with a field in which you have a high level of knowledge, rather than one that you are uninformed about. So, by taking the time to engage with proper research, you can build up a solid foundation of knowledge regarding trading, so that you are more able to engage with it safely and effectively.
Step 3: Acquire the Right Toolkit. Now that you have cultured a full and reliable understanding of the properties you are planning to sell, you are going to want to take some time to put together a good tool kit.
There are plenty of essential elements that you will need to include in your crypto toolkit, for example, from a good reliable crypto exchange platform to a calculator that can help you to check the value of any given cryptocurrency. After all, it would be incredibly helpful to have access to a calculator for 1 eth to usd if you are trying to ensure you are making intelligent trades using Ethereum.
Ultimately, you're going to want a good and specialized toolkit for anything that you are planning on trading in. So, make sure that you take your time and do the work to put together the best toolkit you can.
Step 4: Trust Your Instincts. Another incredibly important point to keep in mind is that you must trust your instincts when you are engaging in any kind of trading. That isn't to say that you shouldn't try to bring your knowledge and understanding into the equation as well, but you shouldn’t dismiss your gut feelings, as they are often a result of a more fine-tuned process than you know. Instead, you should aim to blend your instinctual reactions with the tempering of experience and knowledge to allow yourself to reach a high level of success.
Step 5: Delegate Your Process. Finally, once you've reached your overarching passive income goal from the things that you have traded for, you should go ahead and find someone who would be willing to oversee your portfolio.
This is an incredibly important element of using something as volatile as a cryptocurrency or even stocks as a form of passive income because you cannot rely on that income to remain completely stable without some level of management.
Fortunately, that baseline management can be outsourced relatively easily and allow you to simply enjoy the benefits of your passive income, without having to worry about the processes that keep the income intact.
Another fantastic way to start building up your sources of passive income is to invest in the industry of fixing up and flipping houses. Flipping houses can involve either selling houses or renting them out yourself, but generally, if you're looking to build passive income, then you’ll want to be renting them out yourself.
There are plenty of steps and skills that go into the process of flipping houses, but the general principles involved are explained below, so why don’t you jump right into them?
Step 1: Set Your Goals. First and foremost, whenever you are looking at flipping a new property, you should start by setting up a list of your goals for the property and a plan for how you're going to achieve each of those goals.
This is incredibly important when flipping houses because it is such a structured and physical thing. You need to be certain that you hit every benchmark before you start looking toward the possibility of earning any kind of profit from the house.
Step 2: Learn the Right Skills. Speaking of hitting those benchmarks, one of the most important things that you can do to enable yourself to understand what each benchmark is and how to bring a house up to snuff is by building the right skill set. Flipping houses often require a wide-ranging and diverse skillset of specialist skills.
So, whether you are developing your understanding of electronics or improving your plumbing skills, there are plenty of skills that you can develop to enhance your chances of success in turning house flipping into reliable passive income.
Step 3: Build Up the Funds. Once you've built up the right skills and have a specific set of goals in mind for each house, the next most important thing you will need to do to flip your houses is to build up the funds necessary to purchase and then renovate the properties you are going to be working with.
After all, property is not cheap, and if you want to be turning a reasonable profit, then you're going to want to make some significant improvements to the houses that you are working on. All of this means that you are going to have to be able to save up a fair amount of money to put into the process of building this kind of passive income.
Step 4: Know When to Stop. The process of flipping and improving houses can be, for lack of a better term, addictive. This means that it is incredibly important that you learn when it is most beneficial to you to stop your development of the houses and look towards renting the properties out. After all, you will only be able to turn a profit on the properties that you are developing once they have been fully renovated and put onto the market either for sale or for rent.
So, if you want to build an effective passive income pipeline using real estate, then you are going to have to be able to tell when you need to stop renovating and start selling.
Alternatively, if the process of flipping houses doesn't appeal to you, then maybe you'd rather have the idea of flipping businesses. Now, naming convention aside, the processes involved here aren't necessarily as similar as you might assume.
Fortunately, the ideas of building brands and flipping businesses aren't as complicated as they could be, which makes it relatively easy to outline how they work. In essence, the process of flipping businesses revolves around the development of small, successful companies, which you then stop managing directly, instead opting to promote a deserving employee to CEO and take a small share of the profits.
Step 1: Develop Your Skillset. First and foremost, you are going to want to investigate the skills necessary to create powerful brands and manage small businesses effectively. There is a plethora of useful skills that you will probably want to develop for this purpose, and fortunately, there are also a plethora of different courses and eLearning options available online to help you get there.
So, it will likely be of significant benefit to you to knuckle down and develop these skills so that you can make businesses that will be easier to flip.
Step 2: Build Strong Brands. Now it will be time for you to put those skills to the test as you work to develop strong brands that are both appealing to customers and also indicative of the potential businesses that they are being made for.
Not only is this process of creating effective brands incredibly good practice, but it can also be a great steppingstone for you to then build a whole business around the brands that you are creating. After all, customer engagement is a key element in the development of a successful business.
Step 3: Create a Portfolio. Next, now that you've had the opportunity to build powerful brands, you should be looking into the most effective ways to turn them into successful businesses. Customer engagement is an incredibly important element of a successful business, but it is not the only thing that can lead to a profitable company. So, you need to make sure that you are considering every element of a successful business and bringing those to life.
Step 4: Benefit from a Distance. Last but certainly not least, now that you have created successful businesses out of the brands that you have designed, the next step in this passive income pipeline is to pass on the mantle of direct management. After all, you can't exactly call a business passive income if you are directly managing the operations of that business.
This is where delegation becomes key in the process of flipping businesses for a passive income stream.
Last, but certainly not least, another fantastic way for you to start bringing in passive income is to simply have a gratuitous amount of wealth. While this may not necessarily be easy to achieve, it is absolutely a simple way to bring in passive income and requires relatively few steps.
Step 1: Set a Goal. First and foremost, like any other form of passive income, you are going to be best served by planning to identify how much money you are going to need to effectively earn passive income through your wealth alone.
One of the most important steps in this is identifying the expected cost of your ideal living situation. That is to say, how expensive it will be for you to live the life you want to lead.
Once you know roughly how much money you're going to need to make that a reality, you can then move on to identifying how much money you're going to need to generate that income passively through interest payments.
Step 2: Save. With a plan in hand, the next most important thing you are going to need to do to benefit from the passive income possibilities of enormous wealth is to go ahead and start saving up money to reach your target amount.
There are plenty of routes you can take to help yourself more effectively save money – from cutting down on your spending to increasing the amount of money you earn from your work – and you must take all steps available to you to help you reach your saving goals faster.
It might be worth taking some time aside to research effective saving strategies online to ensure that you aren’t missing out on any obvious routes to reduce the amount you are having to spend regularly.
Step 3: Sit Back. Finally, once you put enough money together to meet the goal that you set initially, you can sit back and relax. The difficult part is over and now you can enjoy the passive income that your enormous savings are going to bring you.
One of the best parts about taking this approach to building passive income is that the amount that you have saved can also work as a decent parachute fund in case you ever run into financial trouble down the line.