If you want to build your passive income and create a FIRE (financial independence, retire early) lifestyle, you need to carefully pick your ideas. You also need to consider the time and skill commitment required.
For example, renting out a property takes work and maintenance on your part passive income. However, this is one of the most popular options for those seeking a passive income stream.
1. How Much Money Do You Have?
The first question to answer is how much money you have and how much risk you’re willing to take on. There are a variety of passive income ideas that involve investing in stocks or buying rental real estate.
But some of the most risk-free and easiest ways to earn passive income can be as simple as keeping your money in a high-yield savings account. You can find these online and through some banks.
Similarly, investing in an annuity is another way to earn passive income that requires no upfront cost. These annuities provide periodic payments for life, and they’re often backed by an insurance company.
Lastly, there are many opportunities to turn your spare space into a rental property. Websites like Airbnb make it easy to get started by letting you list your home and rent out rooms on a weekly or monthly basis.
2. What Are Your Passions?
A passion is an activity or idea that makes you happy and fulfilled. It’s a part of you that you want to do more and more of, says Michael Page, author of the book “Find Your True North.”
When you pursue your passions, you often find yourself happier and more fulfilled. That’s because doing something you love is a great way to practice self-growth on an emotional and intellectual level, he explains.
Similarly, when you pursue your passions, you often find that you develop new skills that help you in your career or personal life. These skills can include the ability to communicate well with others, patience, discipline, and more, he says.
Employers typically ask about your passions because they want to see whether you’re a well-rounded person with other interests and priorities outside of work. This question also helps them decide if you’ll be an engaged, motivated employee who works hard to learn new things and grow professionally.
3. What Are Your Skills?
You can build passive income by finding ways to utilize your talents and interests. These can include selling digital products, launching a blog or running an online course.
When determining your skills, you need to evaluate what you already know and what skills you want to develop. This will help you narrow down your list of potential ideas and create a more effective passive income plan.
For example, if you have skills in graphic design and marketing, you could create a video course teaching others how to do their own SEO and digital marketing. These courses can be sold on platforms like Udemy, where you can also use affiliate marketing to earn a commission from people who purchase the product.
Other possible skill sets include customer service and administrative skills. You can highlight these on a resume or during an interview by including examples of when you were able to successfully interact with customers and provide support.
4. Where Can I Find Them?
Passive income can come from a variety of sources. Some are investments, such as real estate or dividend-yielding stocks, while others are more akin to a side hustle.
One of the most common passive income ideas is to rent out your home or other property. This can be a great way to earn some extra cash, although you do have some risk involved.
Another option is to sell information products, such as e-books, online courses or video tutorials. This is a great way to build up a passive income stream since you’ll make money as soon as people start purchasing your materials.
Annuities are another great opportunity to invest in a guaranteed stream of income. They offer monthly or lifetime payments until death. However, they can be expensive and may not work for everyone.