Passive Income

Tips: How to earn passive income?


Making a lot of money without having to work hard: That sounds like a dream. But it does not have to be a dream. Especially through networking and digitalisation, there are opportunities to earn a more or less fixed income without having to do too much. Such income is called passive income. Passive, because the effort you have to make to get the revenue does not directly translate into revenue. On the other hand, it also becomes clear that something has to be done to generate such revenue. There are three characteristics that characterize this concept. 


The three characteristics are a scalable business model, the indirectness between labor input and income and the relative uncertainty about the amount of income. The business model chosen for revenue is always designed to increase revenue without having to increase manufacturing, infrastructure or other fixed costs accordingly. Regardless of the workload means that the income is relatively independent of the effort to obtain. The time and effort invested in building the business model pays off when the business model runs. If this is the case, the effort and investments are limited or do not directly affect income and its amount. Finally, this type of income is characterized by the fact that one does not know in advance whether and how high the income will be that one will achieve with the business model. 


In fact, several different ways are possible to generate passive revenue. Basically, these options are divided into two categories, residual income and portfolio income.  Residual income is characterized by the fact that the use of labor is required to build the business model. In the case of the portfolio income, the revenues are made possible by the use of money.


In order to be able to use this variant of the passive revenue, a sum of money must accordingly be available in order to invest this as profitably as possible. This principle is realized, for example, in classical saving. The use of funds generates income through interest without having to do much for it. In times of low interest rates, many investors switch to other higher-paying assets. For example, in stocks and bonds. Another way of portfolio income is so-called crowdinvesting, for example in real estate. You invest in a real estate project together with other investors in order to achieve a return. Real estate is particularly suitable for this type of investment because it is relatively stable in value. Crowdinvesting, ie the joint investment of many small investors, makes it possible to participate in projects that usually only large investors can invest in. A similar variant of the portfolio income is the P2P loan. Here you act as a lender for other private persons. The latter two options, crowdinvesting and P2P credit, are realized via Internet platforms that bring together investors and beneficiaries.


 Residual income is achieved through the use of labor. These are, for example, revenue through advertising or so-called affiliate marketing. This requires a website where the ad is placed. This website must have a high number of visitors, who then use the switched advertising to buy products or services. The operation of the switched advertising brings the website owner a share of the sales proceeds or a lump sum by the use of the advertising material. Both are automatically recorded and billed. Another possibility of residual income is the production of digital offers. This includes, for example, books, videos, photos and the like. The sale of these digital products generates passive cash flow. It is also possible to combine it with affiliate marketing.


If you want to generate passive revenues for yourself, you should not choose any option. First of all, you should determine all possibilities and variants how income can be passively generated. The further possibilities to consider should fit your own lifestyle. In this way, up to five alternatives should be shortlisted. These alternatives should now be examined with the question of whether they can be implemented well and how they can function as they were imagined. When choosing the right alternative, the benefits should always be kept in mind. For this it is important to record and evaluate the expenses and income. For this purpose, a list is available in which meticulously the funds used but also the income generated are recorded. One should set a deadline by which to sort out the income alternatives that offer little or no return. In this way, only those options should be left that are suitable for further implementation as a passive source of income. 


With the knowledge acquired so far, we conclude that this is an alternative to the residual income. In times of internet and digitalisation it has become easy to build your own blog. The blog can cover many topics. Niche topics are particularly well-suited because the number of travel blogs or book review blogs are very high and not easy to achieve a good position among them. In order to generate revenue, the blog must be well attended. The more visitors the blog has, the higher the likelihood and number that visitors to the blog will activate the advertising. The higher the flow of visitors, the higher the reputation of the blog, this has with potential advertising partners. Various affiliate measures can be integrated in the blog. For example, banner advertising or pay per click. In the last variant, the blog operator deserves every click made by a visitor to the integrated in the blog page advertising. 


Passive income is possible if you have found the right business model for yourself. Portfolio income and residual income are differentiated. Less time-consuming is the portfolio income. However, this requires the use of money. Residual income is earned from work.