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 an investing strategy which aims to maximize returns on the long run, through keeping the amount of selling and buying to a minimum level. The basic concept of passive investing is avoiding fees and dragging on the performance that can potentially happen from frequent traditional 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 called buy-and-hold strategy, wherein an investor buys a security with the intention of owning it for many 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 different types of passive income are real estate or rental income, interest income, royalty income, dividend income, membership fees, advertising income, affiliate income, business income, pension income and donation income. Real estate properties can be leased such as building and office spaces, so you can earn without too much effort. The sooner and the younger you invest on real estate properties, the sooner and the longer you will taste the sweet of this kind of passive income. You can also earn passive income through movable rental properties such as vehicles and other equipment.
For interest income, you must have enough money in order to gain interest such as your investments in bank deposits and lending to your debtors. Royalty income can be earned through royalty fees paid by those who are interested with your talent such as by publishing a book for being a popular writer, writing a song or being a great singer to earn music royalty fee, from licenses for using software, your photos for being a professional photographer and trademark for franchising. Dividend income is a passive income earned through stocks or shares of a corporation, and it involves a higher risk though. 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. The contents of your website can be 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.