Are you searching for information on active income vs passive income? If so, this is a very common question to ask that investors have when they are just getting started with learning more about how to create passive income streams.
In this article I will break down active income versus passive income and offer you tips on how to create passive income.
Understanding Active Income vs Passive Income
In today’s world, a lot of entrepreneurs and investors confuse active income ideas vs passive income because many they get caught up in the idea of creating side hustles and think that those side hustles are generating passive income for them.
Active income is income that you receive payment for which can be in the form of a salary, commission, tips, or wages. As long as you have to be involved in managing an income stream, and you get paid for that time, this can be considered to be an ‘active income’.
If you’re serious about what is passive income, keep in mind that if an income stream requires you to spend more than 4 hours per month of your time, it can be defined as being active income.
Now, before you start out wondering if I’m against active income, the answer is I’m not. Almost everybody has to start with at least one active income stream. Unless you inherited your fortune, you need to have at least one job to pay your bills, expenses, and provide you with the cash flow that you need to invest and create your first passive income stream.
When choosing an active income stream, your goal should be to choose a job, or a business, that will provide you with enough cash flow every month to cover all of your expenses and enable you to comfortably invest into passive income streams.
Earlier, I mentioned the topic of side hustles. Keep in mind that side hustles are not necessarily a bad thing, especially if they don’t get in the way of your ability to invest in multiple passive income opportunities.
If you’re currently working a full-time job, obviously you can’t be everywhere at one time so you may want to consider starting an internet-based side hustle like local business digital marketing, PPC marketing, or another type of online side hustle that you can manage from your laptop and an internet connection.
What Is Passive Income?
Now that I’ve broken down active income, I want to spend some time talking about my favorite topic, passive income.
Passive income is earnings that come from a business, rental property, limited partnership, or income stream that you are not actively involved with managing every month.
You may have to set up a passive income stream one time to get it to start producing income, or you may have to spend a couple of hours per month managing it but, as long as that income stream doesn’t require you to be physically present or managing it regularly, it can continue to be defined as a passive income stream.
Which Passive Income Streams Should You Start?
One of the great things about this day & age that we live in is that there are a wide variety of passive income streams that anyone can start. What’s even better is that the internet gives us the ability to invest in passive income streams all over the world so that we can be 100% location independent while growing our net worth.
Some of the best passive income streams that you should consider investing in include the following:
Digital Passive Income Streams – If you feel comfortable using the internet, you should consider getting started with Active affiliate marketing, CPA marketing or you may want to think about creating your own digital products to sell online.
Buy An Existing Business – Another solid way for establishing a passive income stream is to invest in an existing business. Keep in mind that coronavirus has changed the economy in 2020 so investing in a restaurant would not be a good idea for at least the next couple of years but, you may want to consider investing in a service-based business like a general construction company, delivery service, copy service, mobile locksmith, or a car wash.
Invest Passively In Real Estate – Let’s say that you’re thinking about investing in real estate but, you’re not ready to purchase your first rental property yet. No problem! You should consider investing in real estate passively by investing in a Real Estate Investment Trust, crowdfunding, or by purchasing mortgage notes. Each way is an excellent method for investing in real estate without having to physically hold or manage properties yourself.
Start A Service Based Business – If you’re ready to start a physical business of your own, you may want to consider starting a service-based business like a laundry service because most people hate doing their laundry and if you own a washer and dryer, why not make money from those appliances that you already own?
Make Your Money Work For You – Another easy way to get started with creating passive income streams is to make your money work for you by investing in dividend stocks, high-interest CDs, bond ladders, or high-interest savings accounts.
Invest In Real Estate To Create Passive Income
As a long-time, real estate investor, I encourage every investor to have real estate in their portfolios because real estate continues to provide a steady and consistent return on investment even during times of economic uncertainty.
What type of real estate should you invest in? Your answer to this question relates to what your preferences are. You may be thinking about investing in a single-family home, commercial property, or multi-family property.
In my experience, I’ve found multifamily properties to be the best real estate investment that money can buy because, with a multi-family property, you have all of your units under one roof and multiple units are easier to manage than multiple single-family homes.
Is rental income passive income? Yes! Besides this, another great reason to consider investing in multifamily properties is that we live in a nation of renters and there’s never been a greater demand for rental properties in the United States than right now.
Contact Trier Capital
Are you ready to invest in multifamily real estate but, you don’t have the time, energy, or desire to search for multi-family properties yourself? If so, I invite you to learn more about the benefits of partnering with my company, Trier Capital.
We are a private equity firm that makes it easy for you to passively invest in lucrative apartment building syndications.
Our simple step-by-step process allows you to accelerate your wealth creation so you can live a magnificent life on your terms, whether that means traveling the world, spending more time with family and friends, or making an impact.
To learn more about the benefits that come from partnering with Trier Capital, contact us today by calling (630) 229-2383 or click here to connect with us online.