Achieving a measure of financial security through a passive income stream doesn’t have to be an unattainable dream. While hard work certainly increases the odds, using your natural talents and following your inclinations eases the path to success.
Thanks to the Internet, there are more avenues than ever for putting your energy to productive uses for personal and financial enrichment. But some types of passive income opportunities are better suited for certain personality types than others. Before you start putting all of your extra time and energy into one thing, it’s a good idea to make sure you’re getting into something you’ll enjoy. Here’s a quick guide:
Do you have a knack for story telling? You might find your way into self-publishing e-books, videos on YouTube and other streaming channels, or consider the world of screenwriting. There are plenty of online resources to get you started, from accredited classes in your fields of interest to freelance writers and editors.
Word processing software and editing programs make it easier to automate some of the work involved, although nothing will ever replace a fresh set of eyes on your drafts.
The Internet has revolutionized the world of publishing, and if you can spin a good story, you might be able to make money. However getting from a final draft to a steady income stream is risky.
People who have credentials and expertise in a specialized field might be able to package their knowledge in books or video clips to sell to a larger market. While it’s not quite as risky as venturing into creative projects, it’s still challenging to identify and brand yourself in a specialized field. You might also face online competition from others in your field who provide the information for free as part of their business strategies.
If you enjoy analysis, are fairly objective, and have plenty of patience, consider putting some discretionary money into the stock market, private capital markets, or financial funds. Successful investors study markets with an open mind on a regular basis, and realize that not all investments have a large or immediate payoff. They also accept the risk that the stock value will fall or the business not perform as projected.
Risk-averse investors have used rental properties for centuries to build passive income with minimal risk. Residential real estate is one of the few investments that takes full advantage of leverage. With as little as twenty percent down, which can come from gifts or loans, property owners can start generating monthly income as soon as the home is rented.
Across the country, rental vacancy rates have reached new lows. Since the start of the recession in 2008, the national vacancy rates have fallen from over 10 percent to 6.8 percent in the third quarter of 2016. The U.S. Census Bureau reported that 36 percent of households in 2015 rented their home.
When you use a property management company to help with property selection, acquisition and management, the income it generates is nearly effortless and well over the monthly carrying expenses. The management companies take care of the day-to-day details and use their expertise in everything from selecting tenants to scheduling maintenance.
As you search for ways to build your income, assess your interests, core beliefs, and skills before jumping in. It does take time and effort to reach those goals, and when you enjoy what you’re doing, it more than doubles your rewards.