Passive income is the holy grail for many who want to live a life where they don't have to work every day. If your passive income is so lucrative that it exceeds your expenses, you can in principle do without a job.
Read on if you're interested in what passive income is and how you can do the legwork to get passive income.
Passive income is the term for income that you do not actively work for. If you are an employee, you 'exchange' your time for money and can therefore be said to receive active income.
Passive income, on the other hand, often comes from investments or other assets that provide a return without you having to actively work for the income.
It is mainly shares and property that come to mind when talking about passive income.
Passive income requires that you own an asset that provides a return without you working for it. This can be done, for example, by owning shares in limited companies that pay annual dividends to shareholders. You therefore receive extra income from the company simply by owning part of it.
Another, often profitable, passive income is renting a house. If you own a property that you can rent out, you can often rent it out for more than the cost of owning and maintaining it.
Property has historically been one of the most sought-after investment properties for passive income, as you can both earn extra income from renting out the property, while the property can increase in value.
However, property rental typically requires a fairly high initial capital. So unless you have a lot of money lying around that you can use to invest in a property project, it can be difficult to get started.
With Fundbricks, however, you can easily get started anyway. We offer investment in real estate projects through crowdlending, where you pool money together with other like-minded investors, giving you more capital to spend.
Read more about your investment options through crowdlending here.
Interested in seeing examples of fully subscribed projects that are currently providing passive income to a lot of investors? See our fully subscribed projects here.
The good old expression 'money begets money' also applies when talking about passive income. If you have cash, you can invest it in shares that pay a return or a property that you can rent out for extra income.
Another way to make your money grow is to lend it out. Here you don't have to invest in either shares or property to earn passive income. Here, it is the interest you receive as payment for lending money that constitutes the passive income.
However, there are other types of assets that do not require a sum of money to generate extra income. It is also possible to earn money from creative content you have created, such as books, films or apps. Here, your copyright is the asset on which you earn passive income.
It is the dream of most people to receive a passive income without having to work all day every day. However, achieving a passive income is easier said than done. If you invest in shares or property, there is always a risk that the price of the asset will go down and you will not make money, but rather lose money.
Moreover, the term 'passive income' can be misleading, as many types of passive income actually require some work. If you have several rental businesses, you can get others to manage them, but ultimately it will take effort to decide which properties to invest in, do risk assessments and choose the right partners.
The same applies to shares. To earn passive income through stock investing, you will often need a broad knowledge of the stock market or professional advice before you can invest in stocks that generate passive income. However, it is possible to start investing without knowledge of the stock market through so-called passive investment.
A good way to start creating passive income is through passive investment. Here you can use your income from your job to build up a passive income.
You set an amount you want to invest per month and a professional investment team invests your funds for a small fee. So you don't have to learn about investing in shares yourself, you can leave it to the experts.
Now that you've learned more about passive investing, take the next step and read more about investment portfolio diversification.
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Historical returns are no guarantee of future returns. The money you lend to projects can therefore increase or decrease in value and there is no guarantee that you will get back the full amount lent.
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