If you’ve ever thought how great it would be to do absolutely nothing and still earn money, you’ll be pleased to hear there is actually a way to do this. It’s called passive income. And the goal with it is to have an income stream — or ideally, several streams — that brings in money without you having to put in too much effort to earn it.
“Passive income is essentially income that comes in without an employer,” says Gerry Incollingo, MD of LCI Partners, a firm specialising in wealth, property and lending.
“The idea with it that you have money coming in while you are doing your normal job and that it doesn’t add too much extra stress on you. It’s a great way to help you generate extra cash flow, especially if something unforeseen like a global pandemic comes up.”
Sounds pretty great, right? But while passive income can see you reaping great financial rewards, it does require some research, planning and setting up.
The most important thing to keep in mind with passive income is that you don’t want passive income to take up too much of your time and resources, and, also, that you want to make sure you choose a method that has a good chance of getting you a good result, says Incollingo.
So, with that in mind, what are some ways you can earn passive income? While there are countless ways to earn it, ahead, Incollingo shares a few of his favourites.
Use a Micro-Investing App
Micro-investing apps, such as Raiz, Spaceship Voyager and CommSec Pocket, are a great way of not only saving small amounts of money by regularly putting it away to invest in the app, but also of accumulating interest.
Buy a Rental Property
If you have money sitting in the bank, why not invest not into a rental property? As long as it’s positively geared (meaning it’s generating more in rental income than it costs in loan repayments, strata fees and other expenses), you can be earning a few extra hundred dollars per month. It’s even better to have a rental agent since they can take care of everything for you, making it passive.
However, it’s important you run the numbers before you invest. Calculate what it will cost to run the property including rates versus the rental costs, to see if you’ll be getting a positively geared property. Examine the competition in the area. If lots of properties are available to rent, often you will see real estate agents torpedoing the rents just to get the place filled. You want to be in an area that has a low turnover of renters.
Invest In Shares
Shares are another great way of making a passive income, especially if you choose the right company to invest in. If you’re not too familiar with the share market, go for blue-chip shares, which are shares of companies that are well-known and highly respected.
Also, with the share market, it’s never a good idea to put all your money in high-risk shares. If you do want to try the high-risk share market, only put a bit of money in there and put the rest of it in a more stable bet.
Sell Information Products
If you are an expert in a certain field and have helpful information to share that you can easily package up and well — like a guide to successful Facebook advertising or how to do your own tax return — you can easily make passive income through that. You’ll just need to make sure people know how to locate and buy your information. Selling it on a marketplace, such as Amazon, could be a good idea.
Rent Out Your Car, Car Space or Storage Space
If you have a car, car space or storage space that you aren’t using much or not at all, you might want to consider renting it out to earn some extra cash. For the car rental, you can set it up on Car Next Door or Drive My Car, or by posting a listing a Gumtree.