telework, technology, laptop-6795505.jpg

Passive income: Earning money without work?

Always having money in your pocket without working every day – that’s what many people dream of. If they succeed in generating passive income, this dream can become a reality, at least to a certain extent.

There are different ways to build up a passive income. In the beginning, there is work and time, but with the right know-how, it can be worthwhile to invest in building up a passive income. The digital age makes many things more manageable.

The essential facts in brief

Passive income flows even if you don’t go to work every day. You theoretically earn income even at night, on vacation, or weekends.

Passive income can also be built up alongside your primary job. If you invest only a few hours a week, over time, you can generate a source of money that increases your monthly income and may soon help you cut back on your primary job.

It is often time-consuming to build up a passive income. However, trim work will be needed once the money starts coming in, and you will have more time for leisure and family or new projects.

Definition: What is passive income?

If you go to work regularly and are employed, you are paid according to performance. So there is a direct connection between the job done and the earnings. This is active income.

Passive income also requires an investment or performance, but it is not paid immediately. Instead of one-time wage payment, passive income builds up a permanent income that does not require much time or effort afterward.

Roughly, passive income can be divided into two forms:

Background: What you should know about passive income.

It seems tempting to you to have this additional source of money? But so far, you haven’t paid much attention to the possibilities of passive income? Then you can read below how you can succeed in building passive income, what advantages this source of money brings you and which business ideas are best suited for it.

How can I generate passive income?

If you aim for a reliable source of money in the long term, you will have to plan well. To keep the risk as low as possible, it is a good idea to consider several options and to have a plan B in your pocket, so to speak, if one source of income does not work out.

Does the Internet offer the best opportunities for earning money? Not necessarily, and certainly not if you’re not familiar with it. Which form of passive income is suitable for you depends on your interests and talents.

As is often the case, the financial aspect is also crucial. If you have enough spare change, you can invest your money or buy real estate and quickly earn a considerable amount of passive income.

You’ll be most successful doing things you’re comfortable with, specialties you’re proficient in, and tasks you enjoy. The priority in building passive income should be automated processes and scalability.

This benefits you down the road, as automated processes only require work after they’ve been generated. Scalability stands for expanding the number of customers or users at will.

What knowledge do I need to generate passive income?

What knowledge is required depends on the chosen method of earning.

Selling digital products is a future market and is gaining priority almost every day. Knowledge of online marketing opens many doors. If you are computer literate and can market digital products accordingly, you will find your purpose in running blogs, writing ebooks, or developing online courses.

The knowledge you need to generate your passive income depends entirely on the area in which you want to earn your money. However, in many areas, knowledge of online marketing is a great advantage. (Bidlquelle: pexels.com / rawpixel.com)

If equity is available, perhaps the stock market will hold an allure for you. However, handling stock transactions profitably requires special knowledge. It would help if you familiarized yourself with this complex topic in advance.

Building passive income and promoting your talents – this is also possible. If you like photography, have a good camera and the appropriate image editing software, you can earn money with stock photos, enhance blogs or illustrate digital products.

If you’re good with words, try your hand at writing EBooks or generate niche sites that promise a high click-through rate. If you’re musical, compose your music to accompany videos or clips.

What are the advantages of passive income?

The most significant advantage of passive income is having more income at your disposal. You can continue to work at your primary job and receive additional passive income. The two are by no means mutually exclusive.

What do I need to consider in terms of passive income?

Nobody gets rich overnight. Passive income may sound tempting, but it must be built up first. It will hardly be feasible to quickly post appealing amounts on the account without much effort. If you want to be successful, you must have a goal in mind and work hard to achieve it.

In the search for suitable passive income sources, this approach can help:

consider different possibilities

find income ideas that match your skills and abilities

Select three to five suitable options

find out which options can be implemented best

check income and expenses every week

exclude unprofitable options

How is passive income taxed?

Whether taxes have to be paid does not primarily depend on the amount of income but your chosen activity. You can determine whether you have to pay income tax under §2 paragraph 1 of the Income Tax Act.

The following income is taxed:

Income from self-employment

Income from non-self-employed work

Income from business operations

Income from agriculture and forestry

Income from renting and leasing

Income from capital assets

For online income, the legal situation is somewhat opaque. The first thing to look at is whether a business has been registered. If you have written a company, you will pay taxes in any case.

Income from self-employment must also be taxed. Freelancers benefit from 24,500 euros or more earnings and do not pay a trade tax. If the passive income is above this amount, you should classify it as a freelancer.

Passive income: With these ideas, you can generate passive income

Now you know the basics and want to get started finally. Below we’ve gathered some ideas which usually work well and promise an appealing passive income.

Selling stock photos

If you like taking pictures and having the necessary equipment, this is the perfect way to earn money. Even professional photographers have discovered this option for themselves and use it actively.

The photos taken are posted on the Internet in a stock photo exchange. There, interested people can buy the images. You don’t have to be a professional to succeed with this business model.

If you don’t have a camera but have a high-quality smartphone, you also have the necessary prerequisites.

Some stock photo exchanges to choose from:

Shutterstock

Photo search

Alamy

Adobe Stock

iStock

On some exchanges, in addition to photos, videos or graphics can also be sold. With the number of published photos or videos, the earnings prospects increase.

Real estate, shares, investments

If there is already some start-up capital available, it is worthwhile to invest the money profitably. Investments are one of the classic options for generating passive income. While daily or time deposit accounts hardly permit a considerable interest formation, there are profitable alternatives connected, however, with more significant risk.

The risk can be minimized by choosing funds that include various securities. With security investments, passive income can be obtained by increasing value and dividend distributions.

However, losses in value are to be expected. Who decides for this income possibility should deal in advance intensively with the topic and administer the security depot over an online broker.

Money can also be increased by granting loans to private individuals. Contacts can be established via unique online portals. Investors lend their credits at favorable interest conditions. Since a credit default risk cannot be ruled out, it makes sense to invest several small amounts.

Developing your product

If you are creative, you can also capitalize on this. There are many avenues open to you on the Internet. Writing EBooks or developing an online course are just a few examples.

Writing

For example, you can write your book and sell it online. Online courses in many fields are also in high demand nowadays and are a great way to earn passive income. (Image source: pexels.com / Adrienne Andersen)

Stock photos mentioned earlier also fall into this category. Also on the rise are the development of T-shirt motifs or designing templates for the 3D printer.

Affiliate marketing

Affiliate marketing refers to niche sites. If products or services are linked in an article, the site operator receives a commission.

Suitable partners can be found on networks such as:

TradeTracker

Belboon

SuperClix or

Digistore24

can be found.

You first need a website with a high click-through rate for this source of income. Your blogs are well suited. Maybe you have a special hobby or know a thing exceptionally well.

Content should be produced regularly. This content should be optimized for search engines. The article should contain keywords that are frequently requested.

Write your blog

As already mentioned, a blog needs visitors. How many visitors you can attract determines at the end how much income you can beat from the described affiliate links or renting advertising space.

A good source of income is pay-per-click advertising. After an analysis of your website, suitable advertisements are displayed. You earn income as soon as someone clicks on this ad. The payment varies from a few cents to several euros per click.

Become an Influencer

YouTube has already helped many people to make money. However, there is a lot to do beforehand because only good videos have a chance of getting many clicks. Anyone who wants to advertise via the YouTube partner program can apply if their channel has at least 1,000 subscribers and has reached 4,000 playback hours in the last year.

Dropshipping

Dropshipping offers the opportunity to become an online retailer without needing a warehouse or even seeing the goods. The products are delivered to the customers through a wholesaler.

No goods need to be purchased and stored. Therefore, dropshipping can be implemented with little effort and investment.

Dropshipping involves the following steps:

Create concept

Find wholesaler

Conduct negotiations

Test products

Set up an online store

Maintenance of the online store

Customer service

Advertising

Through portals like Shopify, it is possible to build up passive income. The way Amazon FBA works is similar. As a seller on the portal, you can offer products stored and shipped by Amazon. Amazon charges a fee for this, which quickly pays for itself if you have enough customers.

Conclusion

Passive income is in vogue. No matter if it is a hobby or a serious option to gain financial independence. There are various ways to build a passive income. Most models can be implemented via the Internet.

If you want to earn significant passive income, you will have to invest some time. Start-up capital is often necessary. Passive income should be built up in small steps. Under no circumstances should you hastily quit your job and rely solely on passive income.

Leave a Comment

Your email address will not be published. Required fields are marked *