2 answers
lia
Student
Bethesda, Maryland
2
Questions
Asked
352 views
How to make passive income?
I know and have heard that passive income is a good way to make money and get wealthy, but no one really talks about how you get that started.
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2 answers
Sandra Lukac
Solutions Architect
4
Answers
Salt Lake City, Utah
Updated
Sandra’s Answer
Hi Lia, great question! Kevin gave a really solid answer so i'll try and complement his answer. The best advice I can give you is that: knowledge is power. The more you know and can educate yourself on, the more you can do. I'm a young professional and the best (and easiest) way I have learned about passive income is actually on Instagram. This is a great account that talk about AirBnB passive income: https://instagram.com/melefante6?igshid=YmMyMTA2M2Y=. This is another great account: https://www.instagram.com/your.richbff/?hl=en for money tips and advice on how to make the most of your income. You can also search "side hustle" on instagram and you will get a lot of other accounts.
If Social Media is not your thing, I would suggest signing up for these newsletters which have offered me some great advice:
- The Hustle: https://thehustle.co/
- The Skimm: https://www.theskimm.com/daily-skimm
- Morning Brew: https://www.morningbrew.com/daily
Lastly, I would pick up a book about passive income and how to create it for yourself, like this one: https://www.amazon.com/Passive-Income-Ideas-Under-1000/dp/173072681X/ref=asc_df_173072681X/?tag=hyprod-20&linkCode=df0&hvadid=266244150619&hvpos=&hvnetw=g&hvrand=4228900238773116703&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9029756&hvtargid=pla-584733586978&psc=1
Sign up for one newsletter
Start reading one book
Set a goal for yourself
If Social Media is not your thing, I would suggest signing up for these newsletters which have offered me some great advice:
- The Hustle: https://thehustle.co/
- The Skimm: https://www.theskimm.com/daily-skimm
- Morning Brew: https://www.morningbrew.com/daily
Lastly, I would pick up a book about passive income and how to create it for yourself, like this one: https://www.amazon.com/Passive-Income-Ideas-Under-1000/dp/173072681X/ref=asc_df_173072681X/?tag=hyprod-20&linkCode=df0&hvadid=266244150619&hvpos=&hvnetw=g&hvrand=4228900238773116703&hvpone=&hvptwo=&hvqmt=&hvdev=c&hvdvcmdl=&hvlocint=&hvlocphy=9029756&hvtargid=pla-584733586978&psc=1
Sandra recommends the following next steps:
Kevin Julien
Composer
11
Answers
Phoenix, Arizona
Updated
Kevin’s Answer
Passive income can be described as income that does not primarily depend on how many hours a person works.
The best way to illustrate would be by example. If a person works for an hourly wage, let's say $100 per hour and their contracted hours are 40 ours per per week (8 hours each day from Monday to Friday) then the maximum they could earn is $4,000 before taxes and deductions.
The maximum they can earn in a week or period of time is fixed.
The difference with passive income is that in realty there is no limit to what one's income could be as it does not rely on the number of hours worked. Real estate is an example. If a person owns a rental property and they are making an income from it, assuming that the property is in good standing and the renters are happy living at the house without any problems to report, then the person (Landlord) will earn rental income each week and month spending very little time (if any) at the property. If the same Landlord were to grow this to 5 properties and all were well managed resulting in very little time spent on them, they would have good passive income. In effect they would be earning money even during the times they were sleeping!
There are a number of ways to get started in passive income. Although for IRS does not technically regard this as passive income, the way most people earn what is passive income in reality is by having a savings account; that being the interest one earns on the money in their bank account.
As it can often take a lot of money to invest in real estate or other passive investments, a great place to begin is with "crowd funded investments" where a person can invest very little to get started and own a small fraction of something and then be paid on a regular basis or be paid out with profits once the investment is sold.
Passive income does have the potential to make a lot of money but it also the way that a person can lose a lot of money. It is a lot riskier than having steady paid employment so anyone considering making investments should be aware of this.
Please note that the examples above are for illustrative purposes and are not advice to make any particular investment.
Visit: investor.gov
Learn and read about different types of investments and passive income on: investor.gov
Always seek professional advice before considering investing in anything.
Read and learn about the terms and conditions about any potential investments and always seek independent advice.
Remember that investments can go up, down or stay the same. There are always risks .
The best way to illustrate would be by example. If a person works for an hourly wage, let's say $100 per hour and their contracted hours are 40 ours per per week (8 hours each day from Monday to Friday) then the maximum they could earn is $4,000 before taxes and deductions.
The maximum they can earn in a week or period of time is fixed.
The difference with passive income is that in realty there is no limit to what one's income could be as it does not rely on the number of hours worked. Real estate is an example. If a person owns a rental property and they are making an income from it, assuming that the property is in good standing and the renters are happy living at the house without any problems to report, then the person (Landlord) will earn rental income each week and month spending very little time (if any) at the property. If the same Landlord were to grow this to 5 properties and all were well managed resulting in very little time spent on them, they would have good passive income. In effect they would be earning money even during the times they were sleeping!
There are a number of ways to get started in passive income. Although for IRS does not technically regard this as passive income, the way most people earn what is passive income in reality is by having a savings account; that being the interest one earns on the money in their bank account.
As it can often take a lot of money to invest in real estate or other passive investments, a great place to begin is with "crowd funded investments" where a person can invest very little to get started and own a small fraction of something and then be paid on a regular basis or be paid out with profits once the investment is sold.
Passive income does have the potential to make a lot of money but it also the way that a person can lose a lot of money. It is a lot riskier than having steady paid employment so anyone considering making investments should be aware of this.
Please note that the examples above are for illustrative purposes and are not advice to make any particular investment.
Kevin recommends the following next steps: