Passive Income Ideas You can use to Build Real Wealth 2021

Passive Income Ideas You can use to Build Real Wealth

 Passive income can be a great way to help you generate extra cash flow. You can have money coming in even as you pursue your primary job, or if you’re able to build up a solid stream of passive income, you might want to kick back a little. Either way, a passive income gives you extra security.

And if you’re worried about being able to save enough of your earnings to meet your goals, building wealth through passive income is a strategy that might appeal to you, too.

What is passive income?

Passive income includes regular earnings from a source other than an employer or contractor. The Internal Revenue Service (IRS) says passive income can come from two sources: rental property or a business in which one does not actively participate, such as being paid book royalties or stock dividends.

In practice, you may do some or all of the work upfront, but passive income often involves some additional labor along the way, too. You may have to keep your product updated or your rental property well-maintained, in order to keep the passive dollars flowing.

But if you’re committed to the strategy, it can be a great way to generate income and you’ll create some extra financial security for yourself along the way.

 

 Four passive income ideas for building wealth

If you’re thinking about creating a passive income stream, check out these 4 strategies and learn what it takes to be successful with them, while also understanding the risks associated with each idea.

 

1. Selling information products

One popular strategy for passive income is establishing an information product, such as an e-book, or an audio or video course, then kicking back while cash rolls in from the sale of your product. Courses can be distributed and sold through sites such as Udemyskillshare and coursera.



Alternatively, you might consider a “freemium model” – building up a following with free content and then charging for more detailed information or for those who want to know more. For example, language teachers and stock-picking advice may use this model. The free content acts as a demonstration of your expertise, and may attract those looking to go to the next level.

As a third alternative on this theme, you could use advertisements (or sponsors) to generate your income, while you provide information or content to a growing audience on a free platform such as YouTube. For example, take your love of video games or music and turn it into content.

Opportunity: Information products can deliver an excellent income stream, because you make money easily after the initial outlay of time.

Risk: It takes a massive amount of effort to create the product. And to make good money from it, it has to be great. There’s no room for trash out there. You must build a strong platform, market your products and plan for more products if you want to be successful.

One product is not a business unless you get really lucky. The best way to sell an existing product is to create more excellent products.

Once you master the business model, you can generate a good income stream.

 

2. Affiliate marketing

With affiliate marketing, website owners, social media “influencers” or bloggers promote a third party’s product by including a link to the product on their site or social media account. Amazon might be the best-known affiliate partner, but eBayAwin and Shareasale are among the larger names, too. And Instagram and Tiktok. have become huge platforms for those looking to grow a following and promote products.



You could also consider growing an email list to draw attention to your blog or otherwise direct people to products and services that they might want.

Opportunity: When a visitor clicks on the link and makes a purchase from the third-party affiliate, the site owner earns a commission. The commission might range from 3 to 7 percent, so it will likely take significant traffic to your site to generate serious income. But if you can grow your following or have a more lucrative niche (such as software, financial services or fitness), you may be able to make some serious coin.

Affiliate marketing is considered passive because, in theory, you can earn money just by adding a link to your site or social media account. In reality, you won’t earn anything if you can’t attract readers to your site to click on the link and buy something.

Risk: If you’re just starting out, you’ll have to take time to create content and build traffic. It can take significant time to build a following, and you’ll have to find the right formula for attracting that audience, a process that itself might take a while. Worse, once you’ve spent all that energy, your audience may be opt to flee to the next popular influencer, trend or social media platform.

 

3. Flip retail products

Take advantage of online sales platforms such as eBay or Amazon, and sell products that you find at cut-rate prices elsewhere. You’ll arbitrage the difference in your purchase and sale prices, and may be able build a following of individuals who track your deals.



Opportunity: You’ll be able to take advantage of price differences between what you can find and what the average consumer may be able to find. This could work especially well if you have a contact who can help you access discounted merchandise that few other people can find. Or you may be able to find valuable merchandise that others have simply overlooked.

Risk: While sales can happen at any time online, helping make this strategy passive, you’ll definitely have to hustle to find a reliable source of products. And you’ll have to really know the market so that you’re not buying at a price that’s too high. Otherwise you may end up with products that no one wants or whose price you have to drastically cut in order to sell.

 

4. Create an app

Creating an app could be a way to make that upfront investment of time and then reap the reward over time. Your app might be a game or one that helps mobile users perform some hard-to-do function. Once your app is public, users download it and you can generate income.

Opportunity: An app has huge upside, if you can design something that catches the fancy of your audience. You’ll have to consider how best to generate sales from your app. For example, you might run in-app ads or otherwise have users pay a nominal fee for downloading the app.

If your app gains popularity or you receive feedback, you’ll likely need to add incremental features to keep the app relevant and popular.

Risk: The biggest risk here is probably that you use your time unprofitably. If you commit little or no money to the project (or money that you would have spent anyway, for example, on hardware), you have little financial downside here. However, it’s a crowded market and truly successful apps must offer a compelling value or experience to users. You’ll also want to make sure that if your app collects any data that it’s in compliance with privacy laws, which differ across the globe.
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