Want to make money from your money? Want your money to multiply itself while you are sleeping? Then this post is for you.
What is Passive income?
Passive income is income that requires little to no effort to earn and maintain. It is called progressive passive income when the earner expends little effort to grow the income. Examples of passive income include rental income and any business activities in which the earner does not materially participate.
In this post let us see some options which will generate passive income for you once you have put that head start and given the threshold to your way of generating income.
1. Dividend Paying Stocks
What is a Dividend stock?
In simple language a dividend is a share of company’s profits which the company pay-outs quarterly or annually according to the company policy. It is more favorable than investing in a regular stock as it gives you regular income in the form of cash. Rather to sell out the stocks to gain money you get a share of company’s profit.
What is Dividend yield?
Dividend Yield= (Annual Dividend/Stock Price) *100
Total Return= Dividend Yield + Price Change
Dividend yield is expressed as a percentage of profit shared on the stock price and returned annually.
A good yield is around 4-6%
Now Be aware of the companies saying their dividend yields as 100% or even 2000% as generally the companies in India set a particular face value of their stocks and advertise the dividend yield on their face value. If the face value of a company is Rs.10 and if it yielded 400% i.e. 4 times increment will yield you only (Rs. 10 * 4) = Rs.40. So, beware of the terminologies used in this market which can confuse you and your money couldn’t get returns which you expected.
Important: Before investing see the actual stock returns of the company in last 1-3 Years. Only the company which grows on stock over the year can yield you actual good returns with dividend stocks.
For e.g. IndiaBulls Housing Loan advertised a 19% dividend yield while in the last 1 year the stocks fell for -72%
The graph above shows the rapid depreciation of the stock price for IndiaBulls HSG
For a period of 1 year.
So, always see the stock trends of the company before you invest in their dividend stocks and carefully read their terms of services for the dividend stocks.
Some good performing Dividend Stocks of India are:
1. Proctor and Gamble health (FMCG sector)
Dividend yield: 10.23%
1-year return 42.25%
2. ESAB India
Dividend yield: 7.3%
1-year return: 37.3%
Dividend yield: 5.4%
1-year return: 19.1%
4. REC (Rural electrification board)
Dividend yield: 8.2%
1-year return: 10.74%
2. Affiliate Marketing
What is affiliate marketing?
Affiliate marketing is a type of performance-based marketing in which a business rewards one or more affiliates for each visitor or customer brought by the affiliate's own marketing efforts.
In simple words, affiliate marketing is simply a method in which you advertise other’s products through your website or social media. Generally, an affiliate link is provided by the company to you once you become an affiliate associate. Then you can advertise that link in your personal blog or website or through the social media according to your digital marketing skills. If anyone clicks on that link and purchases any product through that link, you get a fair share of commission directly into your bank account.
The most popular affiliate marketing strategy in India will be to become an amazon associate.
You can easily become a member for amazon associate and apply for affiliate marketing. They will be doing a quick background check of your website/blog before giving you the approval, it is a fairly easy process afterwards you will advertise and earn for each product purchases through your link.
One major advantage of being an amazon associate is that not only it gives you commission for the product mentioned in the link but gives you the commission on the whole cart the customer paid for.
Blogging is the easiest way to earn a passive income. You have to just maintain consistency on your blog and optimize it to appear in the search engine results which is also called SEO (Search Engine Optimization).
(In our previous article we wrote about a course which gives you fundamentals of digital marketing which will give you greater insights into the digital world if you want to create a blog/website. Too see it Click Here.)
There are various methods you can start a blog. You can start it for free also. Sites like blogger.com & wordpress.com give you easy and user-friendly tools to set up your blog using very modern and aesthetically pleasing templates.
But free is not always the good solution out there as the free blogs will have their own branding and the URL will also contain their name. For a full personal touch, you will have to purchase a domain name of your choice from sites like GoDaddy,
BigRock or Google Domains (a ‘.com’ domain will cost you around Rs. 860 per year). And then you have to purchase a web hosting plan. I personally recommend SiteGround.com (plan costs around 5$ a month) for this purpose as they provide a free SSL certificate to your WordPress blog. Generally, there is very little technicalities involved but a WordPress blog has a fair share of plugins which you would want to incorporate in your blog so it is pleasing to look and has a powerful SEO.
If you do not want any of the technicalities to come in between you and your beautiful blog then you can always opt for website builders which are way easy to implement and design and offers a powerful set of tools for editing, SEO, marketing, E-mail campaigning, etc. Website builders like Wix.com or SquareSpace.com provide very elegant and beautiful templates for your website/blog which gives a very professional touch to it. But they do their best only when a premium plan is bought. SqaureSpace is a bit expensive where as Wix.com offers a discount for Indian Customers.
Once you have created your blog and you have managed to optimize the SEO of blog so well that it automatically appears in the search results. Next step is to monetize your blog so you can earn from your blog. The easiest way to monetize a blog is by using Google Ad-sense. Register your blog/website for Ad-sense and you will earn by showing up ads in your site. Other ways to earn are by doing paid promotion or reviews in your blog. After you have set up everything, you have to just sleep and rest of the things will be taken care by the search.
Note: A good blog which is ranked in google search must contain lots of high-quality original content with articles having more than 1000 words.
(If you want a comprehensive tutorial on how to set up a blog please let me know in the comments. I will prepare a step by step guide if I get enough responses.)
4. Create your own Digital Product
The other source of passive income in our list is creating a digital product of your own. A digital product is anything which one can consume digitally on their smartphones, I-Pads, Kindle, Macs, PCs, etc. It can be an E-book, or an audible book, a mobile app or anything else you could come up with. Which you are confident of and can market it to sell. Once again you can put ads in Social media to promote your content. You can target a certain audience which you think will be interested in purchasing your digital good.
The most profitable way that can ensure passive income in a long term is a mobile app. You can hire a developer from fiverr.com or can learn things on your own to start mobile app development. After you have the perfect idea for an app and you are able to develop it, next step is to monetize your app. You can do it through Google Ad-sense or in-app purchases.
Next up is an e-book. There are lots of content on which you can write an e-book. “If you are good at something you should never do it free”, you may have heard of this line so why not put up your expertise and pen down it to an e-book. A professional quality e-book which can benefit others will surely help you increase up your sales. You can always choose digital marketing to market your e-book and reach the perfect audience suited to it.
If you have expertise in a particular field like web development or software development or graphics designing, why not make a course on How-to’s of the field and make a good quality course which you can advertise and sell. Udemy is a platform where you can list your course as an instructor and sell it there.
Now this is a bit of a hard way but you can generate a very handsome amount of income by making YouTube videos. Nothing is impossible as they say if at all you maintain consistency and have the ability to produce a good quality content which viewers can stick to view.
To produce a good quality content, you generally don’t need expensive equipment. If the information provide is relevant and interesting, a smartphone camera will also do the job. If you are going to start a YouTube channel one thing you can invest upon is a good quality microphone to record the voice-overs. The main problem I have seen in a lot of channels is the lack of good sound equipment. And do not forget to edit your videos and color grade it to give it that professional look.
6. Drop Shipping
What is Drop Shipping?
According to shopify.in, Drop shipping is a retail fulfillment method where a store doesn't keep the products it sells in stock. Instead, when a store sells a product using the drop shipping model, it purchases the item from a third party and has it shipped directly to the customer.
In simple words you act as an intermediate between the retailer and the customer. Well its inappropriate to term it as an intermediate also, first let us understand this business model.
For e.g., You have a site of yours which has good reach as you have invested your time and money into this. Now you list the product of a retailer or any small business owner on your website and accept orders at a higher price than the goods provider. Now you transfer the order to the retailer and give the amount which he asked which is less than your list price and order the same good to the customers address through the retailer. The price difference is your main profit gain, other gains can be ads displayed on your site.
Now there are many disadvantages also in this business model which is beautifully explained in Hindi in the following YouTube video.
You can start your business by doing drop shipping from shopify. You can start from as low as less than Rs. 2K in investment.
7. Buy a Blog/Website and earn from its revenue.
One of the ways to build a passive income source without sweating even a drop is by buying a pre-made blog/website which is successful and generates at least a 30k visitors per month and the website should have been monetized before hands.
Initial investment will be heavy but afterwards it will be smooth. Research the performance of the blog/site you are planning to buy in advance so that you can have a good Return-of-investment.
8. Rental Income
Now this one we all know but again it is a great source of steady income. Renting out your property is like generating salary without even working. But do you know that rental income is also taxable. Better luck to those who pull it off without paying a penny to the government.
Not only you can rent your building, apartment or flat you can Rent out your car also. Platforms like Drivezy, Zoom Car, etc. pay you monthly rent for renting out your cars/bikes to them. It may depreciate the value of your car/bike though as you never know how the renter will treat your property.
If you don’t have a car and your parking space is vacant, you can rent the parking space too. In metro cities there is a huge scarcity of parking space. Even in the societal apartment you live some may have not purchased a parking facility. You can start earning at least Rs. 1k-3k renting out your parking space depending upon the city you live in and your neighborhood quality. You can even rent a storage facility if you own one.
9. Selling your own Merchandise
If there is a small business in your locality who can print custom t-shirts for you. Then why not take that small business online. Just make an e-commerce site for custom t-shirts get orders online, make those orders to the business and deliver it on your own by tying up with a shipment provider.
There are thousands of ideas of setting up a merch store and earning. You can take ideas from the site Bewakoof.com.
If you want detailed instructions in any of the above field feel free to comment down guys and share your views. Or drop a line of suggestion in the footer area of the webpage.
The sole aim of ThePaisaBachao.com is to save your or your father's hard earned money by providing details like this which will help you save your earnings and have a better future in our aim to become financially independent individuals.