Passive income refers to an income that one has to put little or no effort into. As opposed to the standard active income earned from a traditional job, passive income generates hands-off revenue, allowing people to focus on other aspects of their lives. As per Kavan Choksi / カヴァン・ チョクシ, to earn a passive income, one does not have to work on the front end to set everything up. This income can come from sources like rental properties, investments, royalties, and more. Passive income is all about building income streams that work for a person, and not the other way round. One must prioritize setting up systems that can generate income on autopilot.
Kavan Choksi / カヴァン・ チョクシ highlights a few common ways to earn a passive income
Income is considered to be the cornerstone of wealth building. To increase their income, one does not always have to take on extra work. By generating income streams that work for them in the background, passive income opens the door to superior financial freedom and flexibility. Passive income can help people to:
- Earn more money
- Diversify their income streams
- Maintain financial stability even if they lose their day job
- Retire early with a steady stream of income
Passive income is typically defined as a regular cash flow that does not require much effort or time to maintain. It can include money from certain types of investments, rent from property one owns, revenue from side hustles that do not require ongoing work, and more. Here are a few of the most popular ways to earn a passive income:
- Rental properties: Investing in real estate and renting out properties to tenants is one of the simplest ways to build passive income. By owning and leasing commercial or residential properties, one can earn regular rental payments from tenants, which would create a consistent cash flow.
- Dividend investing: Dividend stocks refer to the shares of companies that distribute a portion of their profits to the shareholders. One can earn passive income through regular payouts by investing in dividend-paying stocks. Investors may even reinvest the money they get as a dividend to scale up their passive income.
- Rental platform: If one has an old boat, trailer, or truck collecting dust in the garage, it would be a good idea to list them on peer-to-peer rental platforms and rent out these items for short-term use. This would help earn passive income from possessions that are rarely used and enjoy extra cash flow.
- High-yield savings or checking accounts: Even though it might not be as immediately gratifying or high earning as the other methods discussed above, putting money in a high-yield account would be a reliable way to generate passive income through interest payments over time.
As per Kavan Choksi / カヴァン・ チョクシ, whether a person is looking ahead to retirement or just wants to make a little extra cash, it is prudent to explore ways to generate a passive income stream.
