What is passive income and what are the ways to increase passive income?



What is passive income and what are a few ways to increase passive income?

What is passive income?

Passive income is that source of income that comes in your bank account even if  you have little or no  involvement in the source of that income  stream i.e. you might be chilling with your niggas at a  hill  station and your  bank account would still  keep getting credited each and every day without you being actively involved in the setup from where the income arrives. 

What are a few ways to increase passive income?

Real Estate Investment: 

This is a two-way return model. The first is the capital appreciation of the property and the second is the rental income from that property. Another benefit of Investing in real estate is that the profit earned from the sale of a property comes under the purview of capital gains tax. The tax on capital gains is only 20% instead of the 30% on salaried income( earnings being greater than 1000000).

Investment in stocks:

One could take delivery of stocks of reputed and financially stable companies. Once you become shareholders you also become entitled to bonus shared as well as dividend income. Simultaneously the stock prices also appreciate as time passes and therefore a good income can be earned from this kind of investment. One thing to keep in mind is that stocks are a bit risky and therefore it is advised to be invested for a longer time to have the best possible returns(usually 5 years at least).

Pay off Debts:

The interest paid on debts results in a significant reduction of your wealth. You also can't enjoy financial freedom as you are worried about interest payments every month. You have more disposable income when you pay your debts early and can further invest that money in other assets thereby having to invest even the interest amount that you would have paid to the banks otherwise. 

Rent out unused rooms:

Sometimes there are income sources right in front of you and you aren't aware. If you have empty rooms in your house that are not used regularly, you could rent the room and earn some side income. Also, it doesn't hurt to have some company if you are a bachelor. You could use the services of a maid to provide better services to guests and list your property on Airbnb. 

E-book publishing:

This step involves writing any content that people might find attractive and willing to pay a small amount of money to know about. You can also ask ghostwriters to write books for you for certain payment and you could publish the same on online portals (like amazon kindle)  after acquiring full rights over the content. This generates a steady monthly income if the book is well marketed and you don’t have to wait a long time for cash inflows through these as the books just take 24-48 hours to get published. Few things you need to have in your mind while publishing EBooks is that you need to have an appealing cover page and a fascinating book description that would make people engaged with the writers’ views. 

Lead generation website:

Local businesses carve out a minimal amount from their profits to be given as a commission to people who could provide with leads of prospective clients. Suppose you have a financial blog and you provide people with some insights about investing, then if they contact you for some help you could refer them to experienced finance professional. This way both you and the finance professional end up in a well off place.

Multiple kiosks related businesses:

There are few businesses which do not need a lot of responsibility, i.e. the idea sells on its own. For example, a tea kiosk in a mall or a busy street could earn quite a handsome amount. Usually, kiosks do not need a complex infrastructure and therefore you can afford to open multiple kiosks at different locations. The management of these could be done by using internet-based security and a manager could be appointed for every region with 7-8 kiosks. 
Also since kiosks don't require heavy investment in infrastructure, winding up a kiosk that is not very profitable is an easy task as compared to buying out brick and mortar spaces.

Follow @rdhmfinance on instagram for latest updates.

Thanks for reading!
Please comment on any financial query you had like me to address. I will try to post something worthwhile. 

Coming up Next: What is insurance and what type of insurance you should aim to take?

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