The Most Reliable Passive Income Sources

Passive income can be one of the best things to have in your life. If you’re able to consistently build streams of passive income, you’ll find yourself in a position where you have separated your earning potential from your time. As opposed to income that you earn from a job (active income) passive income requires very little effort to earn and maintain. This is money that you earn without needing to work for it every day.

By earning passive income and separating your time from your money, you’ll have the freedom to focus on things that you’re more passionate about. In this article, we will examine what some of the most reliable passive income sources are and how to generate them.

Stock Dividends

One of the main advantages of owning stock is being a recipient of dividend payouts. A dividend is just a payment of earnings made by a company to its shareholders. Dividends usually come at the end of every quarter and can be anywhere from a few cents to a few dollars per share. If you own a significant number of shares in a dividend-paying company, this can work wonders for your personal income.

Let’s take a look at an example. Suppose you’ve received a bonus of $10,000 from your company at the end of the year. You decide to invest it all and buy 200 shares of Company X, whose stock pays out a dividend of $1.50 each quarter. Each quarter you’d receive $300 dollars (200 x 1.5 = $300). By the end of the year, you’d have earned an additional $1,200 in largely passive income through dividend stocks that you own.

This is really all there is to it. You buy stock and receive dividend payments. Of course, you want to make sure you’re buying the right stocks. If this is something that you’re interested in, some of the most reliable dividend stocks are Coca Cola, Chevron, Lowe’s, Target, and AT&T.

Bonds Payments

Bond payments work very similarly to stock dividends. A bond is essentially an I.O.U from a company or government. You pay them money today and they promise to pay you back a larger amount in the future. While you’re waiting to get paid back, they will also pay you in the form of bond payments. These usually come twice a year.

The main difference between bonds and stocks are that bonds are much safer but have very little growth potential. You can expect to earn $30 annually for each $1,000 you invest in bonds. This may not seem like a lot but remember that at the end of the bond’s term you will receive your investment back. This means that you’re basically lending out your money, letting it produce income for you, and then getting that money back. Not too bad!

Real Estate

Real estate is one of the most well-known ways to create passive income. When many people think of real estate they think on the side of the lessee. You pay a mortgage or rent each month to the landlord. However, when it comes to investing, we think on the side of the lessor.

Investor’s who are trying to create passive income from real estate will perform a process that looks like this:

  • Identify a deal – This is done by performing research on a number of properties. The investor needs to find a property that will produce enough income to cover its expenses.
  • Close on the deal and find financing – Once a deal is found you need to buy the property and find a bank (or lender) to give you money to buy it.
  • Rent out the property – You now own the property and need to find a reliable tenant to live there.
  • Receive passive income – Each month the tenant will pay you a monthly rent payment. After you’ve paid the mortgage payment on the property and all other necessary expenses, you keep the rest of the payment.

Business Income

Out of all the options on this list, business income by far has the most potential. However, it also requires the most work. To generate business income, you will need to create a business. There are a lot of ways to go about this but the most important thing to remember is that it needs to be needs-based. Identify a problem in society and offer the world a solution. In doing this, you can create a lot of wealth for yourself.

Here are some tools to get you started:

Reddit – This is a great site to go scan through when trying to brainstorm a business idea. There are forums about all different topics and it’s great for brainstorming.

Social Media – Pay attention to what people are saying on social media. This is a good place to pick up on trends and try to get ahead of the curve.

Life – Listen to when people complain. What are they upset about and can you offer them a better solution to fix their complaint?

Setting up shop:

Alibaba – This is one of the best sites for finding products to sell. Once you’ve identified a need or product you can come here to find a manufacturer.

Amazon FBA – The Amazon FBA (Fulfilment By Amazon) program will help you handle logistics if you aren’t prepared to. 

Shopify – The best e-commerce software to give your business an online presence.

Remember, when it comes to creating passive income, the majority of the work is done beforehand. It takes a lot of time and effort to earn the money to invest. It takes a lot of time to find and research a successful real estate deal. It takes even more time to try and create a business that will successfully produce income.

That said, the rewards for this type of work are long and fruitful. For example, a few years of hard work creating a business can create passive income for you for the rest of your life. The most important step is the first one: take action!

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