Build passive income: 12 examples for more money

no money poor money 2070384

Passive income that fills your account every month in addition to your salary – a common dream. Continuous income without having to invest time and work in the long term. Earning money while doing nothing. Is this idea really true? In reality, it’s not that simple. Just watching your bank balance grow doesn’t work. But there are ways to earn passively. We’ll show you 12 ideas and examples of how to build passive income and give you 5 tips for implementing…

What is passive income?

Passive income refers to a form of earning where you don’t provide anything directly in return to earn money. Whether you’re traveling, working your day job, playing sports, or just doing nothing, the income flows without you actively working for it.

Generate passive income

When you generate passive income, you create a regular cash flow without having to work permanently for it. The amount of income can vary, but you create an additional financial income without continuous work.

Difference with active income

Active income is the pay you receive for your job. Your salary is the direct consideration for your labor. You provide your service – in the form of time, mental and physical skills – and are compensated through the negotiated salary. Exact arrangements are set forth in the employment contract. Self-employed persons typically receive a fee from the client for their work.

Build passive income: Ideas and examples

The good news is that you can build passive income through a variety of ways. We present 12 options and ideas that can help you make money in the long run without having to keep putting in new work. However, please remember: the options are tried and tested and can work, but they are no guarantee that you will soon be able to make a living solely through passive income.

1. websites

You can build passive income with one large or many small websites on different topics. The better your Google rankings for relevant keywords are, the more money you earn through advertising. The initial effort is big, because content has to be built up. In the long term, updates and SEO optimizations are especially necessary. It is also important that there is an appropriate search volume to get readers to your own pages at all.

2. affiliate marketing

Affiliate marketing is a type of sales where you can generate passive income through commissions. A practical example: You run a website with tests on technology and modern devices. For the test winner, you place an affiliate link to the manufacturer’s store. If your readers use the link to buy the device in the store, you get a portion of the sales back as commission and thus earn money. So the greater your reach and credibility, the better your chances of earning passive income with affiliate marketing.

3. Amazon FBA

The acronym stands for “Fullfillment by Amazon.” If you want to sell a product, you can do it through Amazon FBA – outsourcing the entire process of logistics to the online retailer. In plain language, this means that you list your product with Amazon, send the goods to a logistics center, and the online giant takes care of the rest. You no longer need to worry about shipping or returns. Once you have produced a product in large quantities, you can look forward to a corresponding passive income.

4. e-Learnings

Digital work and products are almost endlessly scalable. You can offer the best advice or lessons for a field or skill – as long as you do it yourself, your income is always active and limited to the time you can invest. If you offer advice, lessons or courses digitally in the form of videos or e-learnings, you can serve hundreds of customers at once and only have to worry about marketing and video shooting yourself.

5. books

It’s far from a piece of cake to write a good book that covers an exciting topic and encourages readers to buy it, but once completed, you can earn passive income from it. With every copy you sell, you make more money and the possibilities are endless, not only in terms of topics, but also in design and marketing.

6. e-books

In the digital age, e-books can be a very good alternative to the classic paper-format book. Whether it’s advice and tips on a topic or specific information about an area in which you are an expert, high-quality e-books that you offer for download at comparatively low prices generate passive income.

7. apps

If you develop a successful app, you can not only benefit from passive income, but make a lot of money. But it doesn’t have to be the next Instagram or Pokemon Go, even smaller apps without millions of users can build money passive income. But if you can’t program apps yourself, you need a partner to take care of the technical side.

8. advertising space

You can build passive income with advertising on a blog or your website, but you can also make money offline with advertising. For example, you can offer your car as advertising space. On the Internet there are portals where you can specify for what price you want to advertise on your car for a company and can be contacted directly by interested parties.

9. designs

Whether on T-shirts, coffee mugs or as a framed picture for the wall: there are many platforms on the Internet where you can use your own designs to generate passive income. With the necessary creativity and a little talent, you will meet the taste of as many customers as possible and make all the more money.

10. youtube

The stars of the scene show that it can be a million-dollar business, but even with fewer followers you can build passive income through Youtube. Whether it’s informative videos, funny content, or something completely different, as long as the click-throughs on your videos are enough, you’ll keep making money from the ads you run, even if you’ve long since moved on to something else.

11. rental income

A classic form of passive income is rental income. By renting out a property, you make a fixed amount of money each month without having to do any additional work. However, sometimes there are administrative tasks that you have to take care of. Prerequisite: You need a property. Therefore, this variant for a passive income is not feasible for everyone.

12. shares

The same applies to shares and the resulting capital gains: By investing in shares, you create passive income that you can enjoy regularly. Disadvantage also here that it first requires start-up capital to be able to invest. However, it is better to start early and invest for the long term through savings plans.

Passive income: Imagination versus reality

Passive income is the dream of many people – no stress, no annoying colleagues, no work and still enough money in the account at the end of the month. The seemingly perfect life with lots of free time and financial carefreeness. Sounds too good to be true, and in this extreme form it is. The above examples also show: It is difficult to impossible to make a living only through passive earnings.

In addition: You always have to build up something first, which will yield regular income later on. The path to this goal is long, arduous and involves a lot of work. You will not generate passive income by sitting back and waiting. It takes motivation and the necessary initiative.

The more realistic approach is to view passive income as a source of income that initially requires at least as much work as a normal job with active income. Subsequently, the amount of work can be reduced, but anyone who just lays on his lazy skin is giving in to an illusion.

Advantages and disadvantages of passive income

Advantages

Financial plus

If passive income becomes a regular stream of money, it can help you improve your financial situation every month. Whether it’s 50, 100 or 500 euros, you can improve your standard of living, save money or build long-term wealth with the extra cash.

Greater independence

Passive income is not linked to fixed working hours or a specific location. Regardless of what you are doing, you continue to generate cash flow.

More time

This is advantage, but more importantly, long-term goal for many: If the passive income is large enough, you can eventually replace part of your normal salary – or in the best case, all of your earnings – with it. This allows you to work less, have more free time and less stress.

Disadvantages

Poor planning ability

A fixed, regular salary from your employer ideally with a permanent employment contract promises great security. With passive earnings, on the other hand, there can be strong fluctuations. One month goes very well, another very badly – and it’s hard to estimate how things will go in half a year. This makes long-term planning difficult.

Required workload

In reality, passive is not completely passive after all. Especially at the beginning you need to invest a lot of time and work in order to be able to generate first revenues at all. In addition, there are ongoing controls, adjustments, improvements and administrative tasks.

Difficult to calculate risk

With many sources of passive income, it is difficult to say in advance how successful the business will be. Is your product really selling well? Will you find enough people interested in digital products? Will your website be a long-term success?

Passive income tips

Now you know many different ways with which you can create passive income. In addition, we have put together a few more tips to help you get started:

Find a business idea

There is no silver bullet to passive income. Everyone has to find out for themselves what works for them and fits their individual situation. Don’t rush into a project without thinking, but think about which idea will create the best possible passive income for you.

Focus instead of mass

Passive income is not always a fortune, but often an additional income. In order to maximize the profit, some people get the idea to combine all variants of passive income if possible. This is rarely crowned with success. It is better to focus on a few forms of passive income, but optimize them.

Easy duplication

Products that are easy to duplicate and distribute are suitable for passive income. After all, you want to put in as little work as possible and still have income. This is especially true for digital products, which is why they are preferred for passive income.

Sustained demand

Short-term passive income is nice, but it’s really worthwhile over months or even years. Sustained demand ensures passive income over a long period of time, which you can continue to build on.

Control passive income

In order to successfully build passive income, you need to constantly monitor whether the income is growing or at least remains constant – and if necessary, intervene to achieve this. After all, it does not work without your help.

Especially the last tip should be taken to heart by anyone who wants to create passive income: As nice as it would be to earn money by doing nothing, the reality is usually different. If you don’t get involved, you’re unlikely to generate passive income – unless you already have the wherewithal to make financial investments and profit from them.

Passive income without start-up capital: is it possible?

“I can’t build passive income without the necessary startup capital…” This criticism and concern is widespread, and so many don’t even pursue the desire for a passive income source. But does it really need a larger starting capital first, in order to be able to generate passive income?

The clear answer is: No, it doesn’t! There are ways and means to earn passively without needing investments or a certain start-up capital in advance. The exception is financial investments, for example in the form of shares, real estate or even personal loans, which you can give for passive income.

How much money do you need for passive income?

Financial investments – stocks or real estate – are considered one of the purest types for passive income. With a stock portfolio with a passive investment strategy, almost no other effort is required. However, the following applies here: You need a certain start-up capital in order to generate income in a notable amount. With an investment of 100 euros, the beginning is made, but a large financial plus is not to be expected in the foreseeable future.

How much money you need depends on your goals and your expectations. A simplified example: With a dividend yield of 5 percent, you will receive a total of 50 euros in dividends in the first year on an investment of 1,000 euros. If you want an additional 50 euros every month, you would have to invest 12,000 euros in this example.

Taxes: How is passive income taxed?

You have to pay a portion of the income you earn passively to the state. This is because you also have to pay tax on passive income. From a tax perspective, this is treated like other income and profits. This means for you, if you pay tax on passive income: As a self-employed person or freelancer, you pay income tax on your passive income. Income from capital transactions must also be taxed.

Ignorance is no excuse. You must declare and pay tax on your income – whether active or passive. Anyone who fails to do so commits tax fraud and must expect serious consequences.

Leave a Comment

Your email address will not be published.