What is passive income and how do you earn it?
Passive income refers to positive cash flow from little or no effort. An example would be the income from winning the lottery and electing to receive the payout over time. You do nothing and boom, you get a direct deposit every month. Since we can’t all be lottery winners, let’s look at other, more likely ways to earn money passively.
Earn Dividends Through Investing
Dividends are like lottery winnings. If you find the right stocks, you can reap a jackpot in both increased value and dividends. Dividends are cash payments associated with a company’s profitability. Not all stocks pay dividends, and some are artificially high to attract investors. As with any stock market investment, there are risks so be cautious and do your homework.
Sell the Stuff You No Longer Need
People accumulate a lot of things. Most of it is unnecessary, and some can be valuable to others. Offload your stuff online through eBay or at local flea markets or antique stores. One person’s junk can be another’s treasure, and you’ll be surprised what some people will buy.
Invest in Real Estate
Real estate investment is a time-honored way to may extra cash. It is by no means effort-free — you will be the one responsible for answering tenant phone calls about leaky pipes and clogged toilets — but if you are good at managing projects and tasks, being a landlord can bring you a steady stream of income.
Become a Mini-Landlord by Renting out a Room
If you have extra space, you can rent a bedroom to someone for extra cash. You probably have extra space, and the experience can help you test the waters of real estate investing. The rent can fuel other types of passive income, such as through dividends. And sometimes, you can earn money by simply reducing your bills.
Refinance to a Lower Mortgage Payment
While a new mortgage won’t add dollars to your paycheck, it can considerably reduce your monthly costs. Interest rates have been at historic lows, so if you haven’t refinanced in several years, speak to a lender about how a new mortgage might affect your monthly budget. While you are searching for improved cash flow, don’t stop at your housing payment. Take a good look at your monthly budget and tighten up your expenses. Every dollar saved goes right into your pocket!