Passive Investing 101: Understanding the Advantages of Passive Investments
Passive income is one of the many things you can invest on to build your wealth, and one of the most effective form is through real estate. Passive investment is a strategy for investment which aims to maximize returns on the long run, through keeping the amount of selling and buying to a minimum level. The main concept of passive investment is avoiding fees and drag on the performance that can potentially occur in frequent trading. Passive investment is not an immediate source of income to build wealth in a fast-paced manner, rather it takes a slow process but steady wealth over time. Passive investment is also referred to as buy-and-hold strategy, wherein it involves the process of buying a security with the intention of owning it for a specific number of years. Investors in passive investments are not after the profit gained through short-term price fluctuations or “time the market”, but rather the positive returns gained in a given enough time.
What are the passive income strategies? The types of passive income-generating sources are rental income, real estate, interest income, royalty income, dividend income, membership fees, advertising income, affiliate income, business income, pension income and donation income. You can enjoy your holiday vacation locally or abroad and still earn without too much effort, through real estate investments, because these can be leased such as building and office spaces. The younger you invest on real estate income, the sooner and the longer you will taste the sweet of this kind of passive income. Rental income can also be obtained through movable properties like vehicles and equipment.
For interest income, you have to work harder and frugal to have enough money in order to gain a considerable high interest such as your investments in bank deposits and lending to your debtors. Royalty income can be earned through royalty fees by publishing a book, writing a song or being a great singer, from licenses for using software, your photos for being a professional photographer and trademark for franchising. Dividend income if managed properly can minimize the risks involved in dividend income earned though stocks and shares of an ownership of a corporation. In dividend income, an investor must be guided by the right knowledge, skills and attitude to the proper discipline about investing in stocks and other securities. Membership fees can be a source of revenue such as in golf club, fitness gym, and membership websites that contain useful and unique contents where users or members pay a regular membership fee to be able to access those contents. Your website can earn membership fees in a form of software, applications, podcast, videos, articles and scripts. Advertising and affiliate income can be earned by generating blogs and websites through direct advertising, third-party advertising and affiliate marketing.