Every aspiring millionaire knows that saving can only do so much. Keeping portions of your paycheck in the bank is a good start. But not doing anything other than that will not get you anywhere near your dream life.
As Warren Buffett said, you should find a way to make money even while you sleep. This means investing in ventures that will generate passive income.
However, before you start scouring the internet for ways to earn passive income, you have some things to do first. One is to have the main source of income and two is to have an emergency fund.
Establishing your main source of income
People tend to have that fear of missing out. That’s natural. Especially when you see other people making big money with their investments. You want to dive into whatever they are doing just so you can experience the same gains. You might even be thinking to quit your job to focus on your investments. Word of caution: don’t. At least not yet.
Investments are risky. You can’t just jump into a new venture without a solid plan B, a fallback. Or in this case, a plan A. Make your job or business your plan A and other passive income sources as plans B, C, and so on. If you have a business, make sure it’s prosperous. Or that it makes enough to sustain you.
If you don’t have a business yet and are looking to get into it, you can consider some options. What are you good at? What is something you enjoy that you can sell?
If you don’t want to start from scratch but you have the capital, you can consider venturing into multi-unit franchise business opportunities. This saves you time conceptualizing and building your brand. Once you have your main source of income in place, you’re ready for the next step.
Setting aside an emergency fund
An emergency fund is a safety net. If your business, job, or investments fail, you can still sustain yourself for months. There are many suggestions as to how much you should put away. But most agree that it should at least be 3 months’ worth of expenses. If you have a high income, you can save more than that.
How do you know how much to save? Make a list of all the necessary expenses you make in a month. Include rent, groceries, and insurance premiums. Don’t include expenses on leisure such as dining out and traveling. It’s best to use high-interest savings accounts for your emergency fund. Once that is settled, you may now start investing in passive income ventures. Here are some passive income ideas you can do.
You don’t need to have huge capital to make money out of real estate properties. If you have a spare room in your house, you can rent it out. Or transform your garage into a space for rent. If you have the money, go buy an apartment in a high-demand city. Real estate properties enjoy high-value appreciation.
You can also invest in real estate without having to own any property. You can do that through real estate investment trusts (REITs). Along with other investors, you create a money pool to invest in real estate companies.
Stocks and Cryptocurrencies
Investing in stocks and crypto is difficult. It requires extensive research to be familiar with market trends that affect price action. However, it’s not impossible to do. A rule of thumb: do not invest what you cannot afford to lose.
These two are great investments provided that you study them carefully. However, cryptocurrencies are much more volatile. The price action changes in just a few seconds. Be careful of that. Aside from trading stocks, there are certain companies that give out dividends to stockholders. That also makes a great passive income.
Use your hobbies and passion
A great way of making passive income is by doing something you love. If you are an artsy person, you can sell designs online. Sites like Etsy are a great way to sell arts and designs.
If you like reading, you can record yourself reading out loud. Audiobook companies pay for projects like this. If you like writing, you can create blogs. They may not make much, but they are still considered passive income.
Having multiple streams of income is key to building wealth. But you don’t have to invest in every venture possible. You can still choose what you enjoy or what gives you more freedom. It also helps if you know what your financial goals are.