Some of the world’s wealthiest people claim that passive income is the key to financial independence. That’s because in most full-time, permanent roles, no matter how hard you work, your earnings remain capped. But the profits you receive from a passive income are virtually unlimited.
The appeal of passive income is that you can make money while you sleep. That is, you do not have to be actively involved in the process of generating this income.
Take a look at savings accounts that pay interest. The interest you earn is an example of a passive income. But there are more effective ways to generate a significant passive income in 2020. Here are four passive income ideas to help boost your earnings and grow your wealth.
1. Investments and stocks
Investing is a prime example of passive income, and there are plenty of investment options to choose from, even for beginners. When most people consider investing, they think about buying property or shares. But many investment options do not require significant capital to get started.
Some examples include earning interest from dividends, trading cryptocurrency and investing in index funds. Index funds or exchange-traded funds (ETFs) allow you to invest in multiple companies simultaneously. In Australia, Vanguard's Australian Shares Index Fund tracks the ASX 300, an index of Australia's largest 300 companies. Since index funds require minimal management, they are considered a sound passive investment strategy. Remember to consult a financial advisor though, before undertaking any investment plan.
2. Sell digital products
A great way to make extra income is to create something that other people can buy. However, making physical products to sell can often be time-consuming, and it’s definitely not passive!
When you sell a digital product, you only need to create one product which can then be sold to multiple customers, time and time again. Some examples of digital products include eBooks, design templates (such as resume templates), graphic designs, photos or software programs.
Many digital product sellers feature their products on sites like Etsy, Amazon, Gumroad or Shopify. These platforms allow you to create your listing, set a price and find customers who are interested in your products.
3. Become a content creator
What do bloggers, YouTubers and social media stars have in common? Answer: they’re all content creators.
Information is priceless, and as a content creator, you can make a passive income by creating valuable content and sharing it with an audience.
Most people know that influencers can monetise their platform by creating sponsored posts or selling their own products, but they can also earn a passive income through advertisements and affiliate commissions.
Becoming a successful content creator requires a fair amount of upfront work to generate a meaningful, recurring passive income over time, but the rewards can be quite significant.
4. Outsource your services
If you have a service-based offering, outsourcing is the most effective way to scale your business and earn a passive income. Outsourcing means that you are sub-contracting work to an external supplier.
You can outsource entire projects or just tasks you don’t have the time or ability to dedicate yourself to anymore. Outsourcing is a great way to not only generate a passive income but also allows you to focus on running the critical parts of your business that you enjoy.
These are just a small selection of the passive income ideas you can pursue. Many of them can start even while you are working or running your business full-time. There may be some setup costs involved in implementing these alternative income streams, but having your money work for you (as opposed to the other way around) is the best way to secure a prosperous financial future.
Are you interested in learning more about business? Check out Open Colleges’ selection of Business courses to find the right path to equip you with the skills you need to succeed. Every course utilises advice from industry experts on how to take the next steps to further your career and become your own boss.