The path to financial freedom and wealth is through the creation of multiple sources of additional income. In this, perhaps, all successful people who have achieved financial stability are unanimous. To achieve such monetary well-being, there must be several sources of income.
Additional income is not always associated with extra earnings and finding one-time jobs to get one-time money. One of the most reliable types of additional income is the creation of passive cash flows.
The key difference between passive earnings is that they come without wasting energy and time. The more such sources, the more stable the financial cushion.
Types of passive income
The most common types of passive income are:
- financial investments in banking products;
- intellectual property;
- business;
- leasing of real estate, cars, mechanisms, etc.
Bank as a source of passive income
One of the most reliable ways to create additional cash flow is to invest in banking products. One of them is a simple deposit account.
Each bank has its own line of deposit offers, which differ in the following criteria:
- by the amount of the minimum and maximum contribution;
- the term for placing funds;
- opportunities for capitalization of interest;
- the size of the interest rate.
Another option is mutual investment funds (PIFs), which operate with most large banks. In fact, mutual funds represent participation in the game on the stock exchange with the only difference that the decisions to buy shares instead of the investor are made by professional investors.
The advantages of mutual funds are the ability to get more income in comparison with the deposit. Minus - banks cannot say exactly what amount of funds will be received at the end of the period.
Intellectual property
A difficult but reliable means for passive income is earning income from intellectual property products: a percentage of the sale of an author's book, downloading an application, selling software or using an author's method.
The richness of the choice of ways to make money on intellectual property has an obvious downside. It is not enough to create a product in order to receive income from it - it is important that it is in demand among consumers.
It is not only consumers who have to prove the consistency of the product, but also investors, whose involvement may be required to implement a start-up idea. Most often, this is faced by those who want to publish a book, who inevitably have to interact with the editors of publishing houses. Investors may also be required to build software. However, it is also possible to enter the market independently.
Business
Another common type of passive income is starting or acquiring a business. This path has a certain level of risks, which are offset by the opportunity to get a greater return on investment.
Investing in a business can be considered both in the form of creating your own business from scratch, and by purchasing a ready-made one. In the first case, the cash flow will start working only after all the costs of organizing it have paid off.
A business becomes fully passive earnings when its owner does not take part in its work and does not perform managerial functions.
Business investment can also be viewed as the acquisition of founding shares in existing organizations.
Rental
Providing rental of real estate, cars, equipment, etc. is also a subtype of business investment. Of course, the most attractive and promising higher income is the rental of real estate. However, a relatively high profit requires corresponding costs to maintain the area in a "marketable form".
It is believed that leasing commercial real estate is a more profitable source of income than renting residential premises. However, in practice, the financial benefit depends, rather, on the location of the property, the equipment with the necessary infrastructure and the condition of the premises.
