Most of us depend on one stream of income - Our salaries. And quite a few of us work very hard for it. I have so many friends who earn between Rs 50,000 (About $750) and Rs 1,00,000 (About $ 1470) by working for close to 60 hours a week.
Consider this scenario:
- Assume that one is earning an average salary of Rs 75,000 ($1100)
- To earn this income, one has to work 240 hours per month (60 hours per week)
- There are 732 hours in a month.
This means, this person is earning Rs 312 per every working hour ($5) and Rs 102 ($1.5) for every hour (non working + working hours)
And mind you most of them are post graduates.
Just imagine. After studying for 22 years, one just gets Rs 102 per hour.
Do you think this is impressive?
Even if one gets promoted, there will always be a cap on the earnings per hour.
Well, I think one can do much better. Not only in terms of earning more but working less.
This is where our education system has failed us. We weren't taught the basics of financial planning. But that is a story for another day.
Today's post is about the different ways in which one can earn passive income. Creating and building passive income streams is difficult, tiresome and takes a long time. However, if one can invest 22 years to earn just Rs 102 per hour, one can surely invest half of that time in building income streams which will not only be much more than Rs 102 per hour but also keep increasing progressively.
Here are 25 ways to help build passive income over a decade:
1) Invest in stocks that offer healthy and regular dividend payouts: Read about this family. They have been investing in the stock market for more than 100 years. Their earnings through dividends are close to 16 crores ($ 2.35 million) ! Just imagine. Even if you don't get out of bed for an entire year, you earn Rs 16 crores. TAX FREE. Although it would take a really long time to achieve this stage, you can begin by investing around a lakh per year in stocks which offer a dividend yield of around 3% to 4%. This means in an year you would earn around Rs 3 to 4 thousand. You can reinvest this money back in stocks. Over a period of time, as the share price goes up, your earnings would also increase. Quite possible that in 5 years, your dividend earnings at atleast Rs 6,000 per year. You can either start an SIP of Rs 500 per month or pay out your health insurance premium with this amount.
2) Create a blog and earn through Google Adsense: As of 2013, it was estimated that there were more than 152 million blogs. Earning through blogging is becoming extremely competitive, yet there is huge potential for blogging about a niche topic. Are you an expert on any topic? Or passionate about it? Create a blog and start earning! Neil Patel claims to have earned more than a million dollars through his blog.
3) Get a product to sell: Find a manufacturer who is yet to attain a substantial market share. There are several of them who are doing well yet want more business from certain regions. Partner with them and finalize a commission. Start selling their products. You would be surprised how much money you can make in a matter of 3 years.
4) Become a broker: People around you are always looking for the next big opportunity in real estate or wish to trade in the stock markets. Find out how you can become a broker. Brokers who started off 15-20 years back are ruling the roost today.
5) P2P lending: There are so many website today through which you can lend your money at rates which would be higher than what you can earn in a fixed deposit. However, the risk of default in P2P lending is high and the RBI is yet to create guidlines for it in India.
6) Invest in commercial real estate: Rental yield offered by commercial real estate is higher than residential real estate.
7) Invest in a shop: There are several shopkeepers out there who are unhappy with their landlord and are looking to earn higher margins. They know their business inside out. You could invest in their business and tie up with them to earn an appropriate share of profits. This way you would be a passive business owner as well as gradually increase your earnings.
8) Invest in an ATM: Like to get paid every time someone withdraws money? It is possible by investing in an ATM. You can either go for a fixed retainer model or earn a commission on every withdrawal.
9) Write a book: Earlier the publishing industry was very difficult to deal with. However with the advent of Amazon, online publishing has achieved a huge boost.
10) Create a video: It is estimated that by 2020, more than 80% of the content which will be consumed on the internet will be video content. Ask yourself - If you wanted to learn something today would you prefer reading a blog or watching a video? Generate interesting content and put it out there. Start monetizing it.
11) Sell stock photos: You would be amazed to know about the number of websites which are ready to pay you royalty for using your photos. You must not only invest in a good camera but also try to figure out whether you can click pictures which are different from the rest. For example: if you get access to a slaughter house and are able to find beauty in its morbidity, you can be rest assured that not many out there would be clicking such pictures. But there would always be a demand for your images.
12) Cook and sell: Websites such as Watscooking and Zupermeal are looking to get talented chefs on board. If you know to cook or know a close relative who can cook, list on these website and start earning.
13) Install vending machines: Find out all those salons, malls and parlors where people have to wait. Strike a deal with the owner to install your vending machine. This was one of ways by which Warren Buffet made money when he was young.
14) Rent out expensive equipment: Have an expensive camera? Rent it out and make money.
15) Buy a business/website: Flippa allows you to both sell and buy websites and other online businesses. It is easy to find a cash generating monster and buy it off.
16) Get a franchise: Look at the humongous variety of options here. Shortlist the franchise which works for you and start working on it. A woman who owns a courier franchise offered by DTDC in my locality broke even within an year and has been doing very well for the last 36 months.
17) Dropshipping: Strike a deal with a manufacturer to send your goods to wherever you ask them to. Start advertising through Facebook and Google to get customers. Once an order is confirmed inform your manufacturer to supply the same to your customer.
18) Sell on Marketplaces: Source products from Alibaba, Indiamart and other such portals or tie up with a manufacturer who doesn't have online presence. Create your own brand and start selling through marketplaces. Vakilsearch should help you complete all the statutory and compliance requirements for the same.
19) Get certified to sell financial products: Get the relevant certifications to start selling insurance policies and mutual funds. I am aware that people avoid life insurance agents as they would avoid a plague infested rodent. But sell general insurance, health insurance and mutual funds. The demand for these products has always been high and you would be less hated!
20) Sign up with websites which offer projects to freelancers: The younger brother of a friend of mine started to earn close to $1500 per month within 3 months of signing up with these portals. Find what you are good at and start offering these services.
21) Write for websites: These are website where you can write and earn money. You just need to create a PayPal Account to start receiving your income.
22) Trade in stocks: If you start following the behavior of even large cap shares in the stock market, you would find that they trade within a range. You can take advantage of this and start trading to make money.
23) Offer consulting services to small businesses: Are you a smooth talker? Or are you good at numbers? Or are you a creative genius? There would be some inherent skill within you which you have built over a period of time. Create a nice website which documents your achievements and work (if any) and start approaching small businesses to help them out at a very nominal fee. As your reputation would grow, you would find several referrals coming your way.
24) Generate leads for businesses: Even today there are various businesses which haven't got online. For example various small time builders in many regions of India haven't gone online. Start generating leads for them through Facebook Ads and Search Ads and charge them on a cost per lead model.
25) Open an HR consulting firm: Thanks to Linkedin you know who is hiring - Not only the company but also the recruiter in the company. From your network, it is easy to figure out atleast one candidate for each position. Start a recruitment firm which can pass on candidates to these recruiters. If your referred candidate gets hired, you make money. In most cases, it is the first month's salary of the candidate which can be a handsome amount.
Over a decade if you are able to start, refine and sustain any or all of these ventures, you would find yourself generating passive income which is more than your expenses. And that would mean you have truly become independent.
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