As we fixate on our 9-to-5 jobs and left with a very little amount of energy, our desires to create additional incomes gets buried somewhere down the lane. The passive income ideas here look at different possible ways for you to get started.
After COVID-19 hit the world, many of us faced tremendous financial loss either in terms of business or job. These have called for one to have multiple passive income streams. So, let me give you some great passive income ideas that will help you earn on the side in 2021.
What is Passive income?
Wikipedia refers to Passive income as incomes “that requires little to no effort to earn”.
Perhaps, that is not entirely true.
Passive income is basically that source of income where you don’t have to do something all the time to make it happen, unlike active income. Here you have to complete the work upfront and then keep a frequent update on it. On the other hand, active income is where the income generated as a result of the active participation of employees.
I would say, active income is your day job. It should take up most of your time. Your active income stream should be stable, carrying low to nil risk.
Passive income on the other hand should supplement your active income. Earning passive income should take less time, carries a bit of risk and volatility. As your portfolio grows and as you add more channels of earning money passively, this will gradually overtake your active income. When you reach this point, you have achieved Financial Independence. After this, you are no longer pegged to your job. You can choose retirement if you wish from your day job.
Learn more about what is passive income here.
Now, let me explain to you some passive income ideas that are going to unlock different streams of passive incomes for you.
1.) Cashbacks & Rewards
This has to be the easiest form of passive incomes without any hassle or complex passive income strategy. Trust me, this is a form of income that anyone can do! I netted over Rs.12,000 from this in 2020 alone. I have made over Rs.40,000 via cashback, rewards, and airline miles. Read my 2020 update here.
As someone’s grandma once said, “A rupee saved, is a rupee earned and is passive income”.
Take this stream seriously. By planning your purchases and availing of the discounts available to you, you get to continue enjoying your current standard of living, while spending lesser.
2.) Passive income through Property
Real Estate Investment Trust (REIT)
Investment in real estate can create a huge fortune depending on the goals of the investor.
If invested in a genuine REIT, even with low funds, one can invest in different prime locations. Incomes generated depends on the owner’s risk tolerance. These investments primarily include residential lands and commercial properties. A few risk factors include significant upfront capital and debt from the bank.
Another very popular passive income stream is renting property. It has been around in India for the past 2000 years! Now, off late more avenues have opened up for you to make money out of your property.
The usual. Buy the property, rent it out, sip your lemonade as money pours in.
Keep in mind that, the income generated from investing in real estate can earn better IRR from several other sources. Nevertheless, there is risk of value of land dropping and property expenses. Plus rent can vary depending on the location.
For 2021, are you availing Tax benefits for home loans? If not, you can consider investing in a property, at a good location, with a reputed builder, and rent it. This way you get a tax break on the loan principal and interest. HRA benefits will be available too for your current house. This needs to be declared and taxes paid on the rent received.
Subletting your property as a source of passive income
Air BnB took the world by storm. Leverage this concept to earn extra cash on the side.
Turn your house into a mini-vacation stay or hotel and make money off unused rooms. I have a couple of friends in Chennai, Mumbai, and Bangalore who have generated a profitable income out of this.
- Find a good platform such as Airbnb, Vrbo, or several other Indian ones that are available.
- Renovate the room to make it suitable for guests
- Rent out a room or two from your house
- People will be able to book your room for a fixed period
- Earn rent as people book your room
Overall, the house is yours, you get to enjoy it for a larger period. On the minus side, less privacy and matters of security and safety to be considered.
Few other incomes from property worth mentioning
Depending on your area or locality, these pay well.
- Rent out your rooftop for cafes
- Front wall can have a Billboard
- How about a telecom tower on your terrace?
- Have a huge backyard or garden? Rent it out for tuitions and classes or even events.
- Don’t prefer the AirBnB route? Here is an alternate way for monetizing un-utilized rooms. Rent them out as storage space to friends. We do this in our ancestral house which we barely use. A couple of rooms have been given to people to simply store their junk. It is accessed very rarely, people do not invade your privacy.
3.) Fixed Deposits & Investments
This is my personal favorite. I have a good chunk of my investments in reliable Debt funds. Their exposure to equity and other market factors is far lower than ETFs and other funds. I highly recommend this to investors with low-risk tolerance.
These funds are liquid and usually come with no Exit Load penalty. I am currently getting about 9.4% from my Debt fund investments. ET Money is a great app to help pick out some good debt funds.
Interest earned from Fixed Deposits
This passive income source is somewhat liquid, safe but the returns are not that good. As of now, the FD rates in India are between 4% to 6.5%. Consider maintaining an FD as part of your portfolio. The portion of your investments in this should be depending on your risk appetite and age.
Fixed deposits are a lot more stable and secure compared to other sources.
So far, in the first half of December, I have investments in Mutual funds that have gone from +28% and -8% and bounced back to a 12% rate of return.
Depending on your risk appetite choose your allocation of funds (I allocate equally across High, Mid, and Small caps). It is best to go the SIP (systematic investment plan) way, where you invest a fixed amount each month (kind of like recurring deposits) into select funds. This way, irrespective of the market being up or down, your investment will average out.
Risky and volatile. Investing in stocks can yield different results depending on how you approach it.
If you are day trading, swing trading, prepare to lose your money.
This is not for the common passive returns seeker. Algo traders and huge volume traders will take your money in a jiffy. Instead, choose fundamentally sound businesses. Companies that grow, are of value and most importantly pay you dividends. These stocks are a great source of extra money that will hit your account every once in a while and appreciate as the company grows.
4.) Dividend Stocks
Stock dividend is the profit that is paid to the shareholders in shares instead of cash.
The greatest advantage of a dividend stock is that shareholders are not required to pay taxes on the value. Investing in a stock dividend is generally considered better than a cash dividend as it gives the shareholders the choice of keeping their profit or turning it to cash whenever they desire to do so.
5.) Side Hustles and Income from Online jobs
This century has seen numerous opportunities for you and me to make money from the internet. There is some work involved and you need to have some skills. But all of these are good money earning schemes where working from home is an add-on
Money from Web development/Programming:
With everything going digital and online, developing new programming skills has become every man’s job.
Have I mentioned, I used to make about Rs.20,000 a month during my college days. This is for a couple of weekends of work on WordPress for clients. And if you are a ninja in coding, you can build websites from scratch and earn thousands of bucks with it. You can make money over your weekends in several ways:
- building websites
- doing research work
- writing copy or blog posts
- Data entry
Earn money with your creativity
Have you ever heard of Fiverr? Do you have creative or other viable skills? Head over, you can score gigs for making logos, designing business cards, banners, brochures, infographics, editing images, making videos and music for others. Fiverr is no longer stuck to $5 gigs, you can earn big these days.
Few other ideas for income from online
There are a few other things you can look at:
- Social Media Management
- Coaching and other services
- Tutions and Paper corrections
Though it takes time to grow a blog that doesn’t mean it is gone. If you have a knack for writing, use your creativity and genuine information to write articles and eventually another revenue stream.
Social media management
Plenty of companies and startups are looking for someone to handle their Social media accounts like Facebook, Instagram, Youtube, LinkedIn, Twitter, etc., and regularly manage campaigns, posts, ads, likes, comments and boost up their audience by increasing followers and subscribers.
Coaching and other services
In this era of networking, if you can establish a good hold of the audience with your authenticity and valuable services, then you can create a revenue stream by providing coaching services in different sectors all around the world starting from fitness, finance, education, etc.
Tuitions and Paper corrections
You can easily pick up a side job of teaching any of your favourite subjects starting from English to Finance to even any local language. My wife was once correcting English papers for non-English students online. All she had to do was read through and correct the grammar, sentence structure, etc. A few hours per week is all that is needed to generate this income source.
6.) Non-traditional alternate Income Opportunities
In this century, there is a tonne of alternate areas to invest and grow your wealth from. But, that also means there is a tonne of crooks, so be careful where you invest and always be cautious.
This is a recent idea where a bunch of investors lend for the construction of a property or alternately buy a share in the property. You get your returns on the rental income from the property or if the property is sold a fixed % as interest on your funds. There is also REITS (Embassy group has one on the stock exchange). In India there is PropertyShare and further away you have Crowdestate, Bulkestate, and Estateguru
Out of the box
Some quirky ones exist too, that end up helping people or the environment while generating incomes :
Heard of Sun exchange? This Africa based startup sets up solar plants in large buildings and schools in Africa and allows you to buy solar cells from them. You are paid back in terms of the energy generated by your cell. I have a couple of solar cells and feel good about it! I get about 11% returns on investment.
7.) Royalties and revenues
You can put your skills and education to good use and generate multiple recurring incomes for your retirement.
Monetizing your Creative Assets
- Stock Photography – Great photography skills? Monetize it by selling your photographs as stock images. High-resolution images are required in online and offline businesses. Sign-up with a stock-imagery website and you are good to You can try Getty Images, Shutterstock, and Scorpio
- Coursework – PMP expert, Six Sigma, fluent in French, Machine Learning? Sign up to coach or creating course work. Edureka, Udemy, and many MOOCs are looking for you
- Writing, music, scriptwriting, advertising, photography, video editing, choreography, event management are all skills that can be monetized to supplement your active income.
This concept has picked up steam over the past few years. It is quite simple, you have money and are looking for a way to grow your money, someone has a need for your money and is willing to pay a premium (interest) done by a third-party intermediary. There are a number of platforms such as Faircent, LenDen, etc, and globally Mintos.
Cryptocurrency is one of the most stirring innovations of this era, more and more people are interested in putting their incomes in this field.
Cryptocurrency is the digital or virtual alternate of money that is powdered by blockchains. Crypto lending works by connecting borrowers to lenders via cryptocurrency platforms. This lending works for people who have cryptocurrency reserves and are not going to use them soon. Some of the crypto platforms are Blockfi, blockchain, etc.
9.) Affiliate Marketing
Affiliate marketing is simply promoting another company’s product via an affiliate link.
You can do this on your blog, social media page or in groups on Telegram or whatsapp.
When a customer purchases any product via the affiliate links, a commission gets added to your affiliate account. The advantage of being an affiliate marketer is that you can promote multiple businesses and products from different companies, unlike traditional salesperson where they only sell products on a single company.
There is no limit to how much one can earn in affiliate marketing. It depends on the niche and efforts that one puts in. Successful marketers can earn up to six to seven figures per month. Different platforms can be used to promote such a blog or YouTube. Different affiliate programs include ShareASale, JVzoo, Solvid, or Amazon Affiliate programs.
These passive income ideas are all tried and tested. Hence, by investing time, effort and money in the initial phase, a passive income source can be generated with a huge amount of return.