What is Passive Income?

There is an economic crisis brewing because of Covid-19 and it is getting closer with every passing day. As the second and third wave of the pandemic sweeping across the world, the economies will take hits and many people are expected to feel the financial strain. Many are already feeling the strain as the pandemic has already claimed millions of jobs.

In these financially difficult times, it is important to think of ways to supplement your income. One way of increasing your income is to get a higher paying job, this however may be a difficult option given the state of the economy and the job market.

Another way to supplement your income is by increasing the passive income streams. Passive income refers to any income that is generated in a passive manner, without investing a lot of time and resources into it.

Consider this, your active income comes from the day job that may require you to work 9 to 5 or you may have a business that requires an investment of both resources and your time. Active income requires an active investment of time and resources. Whereas passive income only requires minimal investment of both time and resources.

Adding passive income streams is the best way to supplement your income and grow your wealth over time. So what are some of the ways of generating passive income?

Before we proceed we must differentiate between passive income and portfolio income. Many financial experts group them together while many like to keep these two categories separate. Portfolio income refers to the income generated through investment in securities such as bonds, stocks, mutual funds etc.

The reason for differentiating between portfolio income and passive income is that portfolio income requires more active involvement unless you have got your own investment manager. For the sake of this article, we are going to look at passive income, while excluding portfolio income.

So what are some of the ways in which anyone can generate passive income to supplement their active income stream?

Affiliate Marketing

Affiliate marketing is one of the best ways to earn passive income. In order to be able to do so, you must have a running blog. Setting up a blog and having regular visitors will take some time. You can also start off with affiliate marketing with a brand new blog but it will take some time before you can get a steady stream of visitors. Which is why it is advised to have a running blog to get started with affiliate marketing.

So what is affiliate marketing? Affiliate marketing involves you, i.e. the blogger putting up blog posts that can compel people to buy the product you are marketing for. You can do this either by putting up product reviews or you can promote the product in any other way.

Whenever any customer clicks on the link of the product that you have placed on your site, and then that customer purchases that product, you will receive a commission for every sale made through your referral link.

You do not need to have a blog for affiliate marketing, this can also be done through a youtube channel. The medium, however, changes on YouTube. With blogs, you will be persuading people to purchase the product through your writing skills whereas Youtube requires a completely different skillset.

You can choose to be an affiliate marketer for brands directly or you can sign up with any affiliate marketing platform and market any product that you like. This will give you a wide variety of products to market. Signing deals with brands can narrow your scope down but it carries a greater monetary reward but brands usually look for blogs having a large reader base.

Every time anyone uses your referral link to purchase any product, you will get a commission for it. It may not sound like much but bloggers are earning respectable figures through affiliate marketing. The only effort that you have to put in, is in writing the actual blog post.

Youtubing

Another way to generate passive income streams is through a YouTube channel. This path, however, requires both talent and passion. Youtubing is not for everyone and becoming a successful Youtuber requires dedication to your work and passion.

You can set up a channel for whatever you like. It can be a cooking one, book reviews, product reviews, fan fiction, sports channel or whatever category you want to go for. You must put in the time, effort and create content that is engaging for your audience. Once you have got a certain number of followers on your channel, you can monetize your videos and earn money through monetization.

YouTubers like Pewdiepie and Jake Paul have not only become celebrities but earned millions through their Youtube channels. If they can do it, so can you with passion and dedication.

Write a book

If you think that you are good at something then why not write a book about it? Take your evenings off to start working on your book. Make a proper plan to divide the book down into chapters and then get working. It may look like a daunting task in the beginning but once you build up momentum you will not find it so difficult.

Once completed, the book can be published as a hard copy or as an ebook. The initial sales will depend on your own network but once the word gets out, the book will generate recurring earnings.

There are more ways of generating passive income but the three methods mentioned above are the most rewarding methods of generating passive income.

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