The concept of making an income stream without having to work might sound like a fantasy but I can assure you that it is real and there are a variety of ways to do it. This list contains the top 5 best passive income strategies to start in 2020.
Investing in the stock market can be a great way to earn passive income if done correctly. The stock market in the short term is nearly unpredictable especially in 2020 and trying to time the market has proven to rarely pay off. There are two ways you can make money investing in the market, share price growth, and dividend payouts. For example, if you buy a share of a specific company or an index fund and the value of your share increases, you can sell and reap the profits. But if the share price instead decreases and you sell, you will have to then bear a loss. On the bright side whether your share is losing value or gaining value most companies pay out dividends which is a small percentage payment based on how many shares you own as a reward for investing in their companies. The dividend percentage varies between companies and not all companies have them. The strategy that has historically proven to have the best percentage return is buying shares in a fund that encompasses a large portion of the economy and holding that investment long-term. Some years the economy may struggle while in other years they flourish but on average you can expect an annual 7% return on investment when investing in index funds such as the S&P 500 Index, the Russell 2000 Index, and the Vanguard Total Stock Market Index just to name a few.
Starting a business typically is fiscal labor, and time-intensive but turning a functioning business into a self-sustaining system can become an extremely lucrative passive income stream. Whether your business is selling a product, providing a service, etc. the idea of minimizing personal effort while maintaining growth and revenue is very much possible. Hiring management or virtual assistants can relieve enormous pressure off your shoulders and free up your time. As long as your account for the salary expense of the person put in place to run your business and you remain profitable then it is almost a no-brainer to shift into a more passive structure. The personal hired often will have greater education and experience which can lead to increased levels of success within your business while creating a steady source of passive income for you.
3. Real estate
There are numerous strategies to make money in real estate such as flipping single-family homes, renting out commercial properties, and investing for long-term property appreciation just to name a few. One strategy stands out as being the most efficient passive income source which is buying residential properties and renting them out. There is an initial effort required to find a property that can be a profitable rental and also find trustworthy tenets, but once this is completed there are three potential passive income streams that can come from a single property. The first and most obvious is the rental payments, you will require the tenant to pay you to rent each month at a greater price than your monthly mortgage expense. This will result in steady passive income every month so long as your property is not vacant. The second stream comes from appreciation which is when a property increases in value. Typically, the inflation rate in the United States Of America is near %2 every year, consequentially the cost of everything will increase at a similar rate. Meaning on average every year you own a house it will increase in value. Although this income is less liquid compared to rental payments, it should still be viewed as a serious passive income source. The third form of making money passively from the same property is the idea that besides the upfront down payment a tenet will be paying down your mortgage, essentially slowly buying the house for you. With these three passive income streams combined, you can understand why real estate investing is so popular.
YouTube is a very unique platform where anyone can create content in video format whether educational, entertainment, etc. and potentially make money from it. The process of creating a channel and building an audience is no easy task typically requiring an investment in equipment, constant uploads, and quality editing. The revenue that can be made from uploading videos comes from advertisements or paid product placements and varies depending on the video’s views. The passive income aspect of YouTube is present when a video has the ability to stay relevant for a significant length of time, bringing in monetized income long after it was originally posted. If you can master YouTube’s algorithm, you can unlock a passive income stream from videos you’ve posted that continue to get views and attention.
Blogs function similarly to YouTube in how content that is published today can stay relevant and continue to stay monetized years later. Although Blogs are not in video format and aren’t posted on a single well-known platform. Typically you have to purchase a domain name, and create a website surrounding a specific topic, edit the theme, add photos, publish content, etc. After the website has been created you will have to drive traffic to your website by publishing content consistently and understanding algorithms such as Google SEO (Search Engine Optimization). This will increase the number of people visiting your site and allow you to monetize your blog. Websites can be monetized in a few ways such as affiliate marketing, advertisements, email marketing, selling courses or books, etc. Once a blog is being monetized you can enjoy the passive income stream that stems from a previous post’s ability to continue to get visited.