Passive income is one of the best ways to make money as by definition this income is obtained with no direct work involved in the process. Passive income streams can come from a multitude of different sources but usually they are rental properties, interest or revenue from advertising or royalties and dividends from owning stocks and bonds. To get passive income you will need some kind of a capital that you can invest to get that passive income from those investments. Usually the rates that you get from various passive income streams range from 0.1% up to 10% or more annually. Usually this return of investment has two sides where at the one side you can get high returns with high risk but at the other side you get low returns but with a very low risk. So depending on your risk tolerance and your capital size you can either choose to grow that capital slowly with low risk investments or try to grow it quickly with high risk investments. Of course there are also some investment types where you can get a passive income stream that has high interest as well as is relatively low risk but that kind of deals you wont get just asking around and usually you will either have to invent them yourself or find some very influential money managers to get in on the action.
If you manage to obtain enough capital then you can create various passive income streams that can make enough money so that you don’t have to work and you can start to finally live the life that you have always wanted. This process of getting enough money from your passive income streams is usually called the financial freedom and it is very appealing to a lot of people but in reality just a few individuals really manage to get to this level. And even if you are not able to completely get to that level even getting half the required monthly income from passive income streams can be a great boost to your finances as then you can work less or find a job that you really like.
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There are various passive income streams but the most common are:
- Real estate income – One of the best known passive income categories is real estate rentals where you buy a property and then lend it out getting a montly income from that rent. Real estate return of investment can be anywhere from 5% up to 20% annually and if you manage to get a 20% annual return of investment then in 5 years you will have recovered your initial investment.
- Royalties – If you are an author, filmmaker or musician then you can create your art and later sell it without the need to actively work getting that money. There are many musicians, filmmakers, authors and artists that have created great masterpieces early on in their carrier and are getting enough monthly royalties to stop working completely!
- Website income – If you have a website you can monetize it by selling advertisement space or promoting other people products to get a commission from each sale. If you can create a website that attracts thousands of visitors and can get some advertisers to pay you money then you have effectively created a passive income stream that will make you money even when you are sleeping.
- Interest – If you have large money reserves and you either put them into a savings account or lend that money away then you can receive monthly or yearly interest payments that can be considered a passive income. These interest payment can range from 1% to 20% annually depending on what kind of loans are you supplying or where you are keeping those savings.
Dividends – And the last passive income stream that is also very common is getting dividends or capital gains from your investments in stocks and bonds. If you invest money into company stocks and those companies then pay dividend to all their shareholders then you are getting a passive income stream without actively involving yourself in the companies processes.
