While money doesn’t grow on trees (even though it’s made of paper), there are ways you can make it — and grow it — with little to no effort, like through passive income, which comes in a few forms.
Passive income is money earned daily with minimal upkeep. Oftentimes, it’s a second (or even third) stream of income aside from your daily job and is a great way to jumpstart entrepreneurship, save for that vacation you’ve been trying to take, or add to your physician retirement plan. Some forms of passive income include rental income, investing in stocks or bonds, and monetizing a blog.
It can be a great way to increase your earnings while having more control over where you spend your time and energy. Achieving a consistent flow of passive income will allow for more free time, work and location flexibility, and potential tax benefits.
Passive income, however, is an investment. To make money while saving time and energy, you’ll have to spend at least one of the three first. In the beginning, making passive income will take serious active commitment — whether it be time researching an investment, creating and launching a blog or product, or saving money to purchase a rental property or real estate. Before you make money in your sleep, you might have to invest some.
The basic types of passive income, defined by the IRS, are rental property or businesses in which the individual doesn’t participate in an active role (like being paid out as a shareholder). But if you’re worried about not having enough money to invest in something that big without putting yourself between a rock and a hard place, there are other, more fundamental options, too.
Here are a few ways you could earn passive income with less effort than a full-time job:
High-Yield Savings Account
If you’re conservative in your investing, you can make passive income through your savings by putting your money into a high-yield savings account. These savings accounts are virtually risk-free up to a certain amount due to FDIC insurance. They are easily accessible, but due to today’s interest rates, this strategy is unlikely to provide a substantial income.
Investments That Generate Passive Income
Certain investments in your portfolio can create long-term, passive streams of income. These investment options include dividend stocks, in which companies pay a share of their earnings to their shareholders, or investing in bonds, or fixed income, in which debt is issued by companies or government agencies. In return, they make cash payments to bondholders.
Income Streams Through Content Creation or a Personal Project
Passive income can also come from a passion project that you’ve been putting off. If there’s something you love to do, or something you’re an expert at — an instrument you love to play, or if you make short films in your free time — you can have your hobby make you money by publishing an e-book or starting an online course.
Services like Amazon Kindle Direct Publish and websites like Skillshare allow you to reach a wider audience and sell your book or service with the click of a mouse.
Using Your Current Assets
You can also make money with the things you already currently own. You can rent out an extra room in your house. Or, with companies like Carvertse or Wrapify, you can make money anytime you drive by having an advertisement on your car. Or, with less commitment, you can rent your snow blower or power hose through services like Loanables.
Investing your time or money now into passive income opportunities will allow you more time and money for your future, like taking vacations, buying a home, or retiring early. On any scale, whether you’re buying a building for rental income or earning interest on your savings account, who can say no to an extra flow of income?
Working with a trusted financial advisor will help you to find a passive income-generating plan that is the best fit for you and launch you further towards your long-term goals. At IMAFS, our goal is to ensure you achieve yours. We make investing for doctors easy by offering fee-only holistic financial and retirement planning services to help you accomplish financial security.