Here are some examples of passive income that work in more ways than one. Many people have wrong ideas about what passive income is, how to aim for it and achieve it. Tell people the truth about the passive income – income without continual effort is a myth – they refuse to believe it. You simply cannot “set and forget about it”
Be it dividend income from stocks, interest from fixed deposits, affiliate income, royalty income from books, art etc. no sort of passive income is “constant”. If the idea is to get “some income” that decreases with time then one can set and forget. Surely that is how we dream about passive income. For constant income, we need to churn the pot.
As we have discussed earlier, the effort associated with the churning is not really effort if it is something we truly love doing: Passive income is a crucial part of your retirement plan: How to get started
Passive income can be broadly categorized into two ways: (1) income from assets – stocks, FDs (lending), real estate, ad space (in your property, website) etc. (2) income from expertise/creativity/influence – ad income (sponsorships), affiliate income, royalty from books, art, music.
Passive income examples
Income from assets is out of reach for most young earners. So let us leave that out. Here are some specific examples of passive income. We shall discuss how they would work in more than one way below.
- Shiela runs a YouTube channel on cooking. She creates “members-only” videos on “how to cook with only two-ingredients”; “The best spices are found here” etc. Channel memberships are a way to get recurring income in exchange for premium content, badges etc. Only 2-3% of her subscribers are members and many cancel but the total number of active members are more or less steady.
- Srinath sells merchandise via Youtube (bags, accessories, tee-shirts etc) in collaboration with Teespring. He also sells his designs to other stores. It is not grand income but he haves a few thousand ₹ each month.
- Vijay writes a blog based on US holidays and shopping season. He is based in India but the site exclusively discusses only US-related stuff. For example List of movies to watch Christmas; Ways to celebrate the fourth of July weekend. His traffic is extremely seasonal but because his niche is US-based he is able to work with premium advertisers and get ad income. It is not regular but when it comes it is good.
- A travel agency is trying to expand its business. It seeks online discoverability. That is clients from social media, email, Google and YouTube.
- So it creates a series of free guides (say pdf files).
- When to travel to Japan?
- Do and don’ts when you arrive in Croatia etc
- Then it creates a paid guide
- How to get deep-discounted airfares
- So it creates a series of free guides (say pdf files).
- A financial advisor is trying to increase her income
- She creates a free guide: “how 20-somethings can save tax, invest right and spend worry-free”
- And a paid guide: “How NRIs can lower their tax outgo”
We can list any number of such examples. Notice the passive income product need not be “digital” and the service provider who wishes to capitalise on the passive product need not be “online”. It is a misconception that passive income is “soft” income. Also see: I want to earn money online where should I start?
How passive income works in more ways than one
What many young earners fail to recognise is that a passive income stream serves as a visiting card or an invitation to earn more via other opportunities. Do the same thing for a long time and you get called an “expert”. Shiela above could get her cookery show on TV or a book deal. These are additional sources of active or passive income after witnessing expertise on display in an existing passive income product.
In fact, even a free offering can be a passive income product. That “free guide” passively helps the travel agency or a financial advisor, a dentist, CA, physiotherapist or a mattress showroom get new business.
Why? That free (or paid) guide is distilled expertise and experience on display. We see this, we go, “this person, this agency, know what they are talking about” and start engaging with them.
Passive income should be considered as a platform to expand a business and income via additional means. It is the start of new adventures, not an end.
Who cares if the income from that “investment guide for NRIs” is barely enough to offset website hosting costs. If its mere presence can inspire confidence and comfort in the minds of potential clients – say even one client a month – it has “passively” done its job.
We need to change the way we think about passive income. Regular income, however small, is a huge deal. It can open up a world of new possibilities for us. This is the foundation for an income that would last a lifetime.
“How to get people to pay for your skills” aka “Earn from Skills” is a new course that discusses a complete framework to build online visibility with your skills; Create a community of readers and viewers based on expertise and trust and generate an income that will gradually grow to become significant.
This is for anyone looking to earn extra income (aka side hustle) or passive income; anyone who wants to start a blog or YouTube channel or build a social media following; for entrepreneurs; small business owners; anyone who would like to build a business by showcasing their expertise, for example, financial advisors, insurance advisors, software consultants, writers, just about any service that requires an online presence. Check out the course contents + FAQ + 1st lecture
About The Author
Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over nine years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation to promote unbiased, commission-free investment advice.Use our Robo-advisory Excel Template for a start-to-finish financial plan! Now with a new demo video! ⇐ More than 800 investors and advisors use this!
Our flagship course! Learn to manage your portfolio like a pro to achieve your goals regardless of market conditions! ⇐ More than 2700 investors and advisors are part of our exclusive community! Get clarity on how to plan for your goals and achieve the necessary corpus no matter what the market condition is!! Watch the first lecture for free! One-time payment! No recurring fees! Life-long access to videos! Reduce fear, uncertainty and doubt while investing! Learn how to plan for your goals before and after retirement with confidence.
Our new course! Increase your income by getting people to pay for your skills! ⇐ More than 620 salaried employees, entrepreneurs and financial advisors are part of our exclusive community! Learn how to get people to pay for your skills! Whether you are a professional or small business owner who wants more clients via online visibility or a salaried person wanting a side income or passive income, we will show you how to achieve this by showcasing your skills and building a community that trusts you and pays you! (watch 1st lecture for free). One-time payment! No recurring fees! Life-long access to videos!
My new book for kids: “Chinchu gets a superpower!” is now available!
Must-read book even for adults! This is something that every parent should teach their kids right from their young age. The importance of money management and decision making based on their wants and needs. Very nicely written in simple terms. - Arun.Buy the book: Chinchu gets a superpower for your child!
How to profit from content writing: Our new ebook for those interested in getting side income via content writing. It is available at a 50% discount for Rs. 500 only!
Want to check if the market is overvalued or undervalued? Use our market valuation tool (will work with any index!), or you buy the new Tactical Buy/Sell timing tool!
We publish mutual fund screeners and momentum, low volatility stock screeners .every month.
About freefincal & its content policy Freefincal is a News Media Organization dedicated to providing original analysis, reports, reviews and insights on developments in mutual funds, stocks, investing, retirement and personal finance. We do so without conflict of interest and bias. Follow us on Google News. Freefincal serves more than three million readers a year (5 million page views) with articles based only on factual information and detailed analysis by its authors. All statements made will be verified from credible and knowledgeable sources before publication. Freefincal does not publish any paid articles, promotions, PR, satire or opinions without data. All opinions presented will only be inferences backed by verifiable, reproducible evidence/data. Contact information: letters {at} freefincal {dot} com (sponsored posts or paid collaborations will not be entertained)
Connect with us on social media
- Twitter @freefincal
- Subscribe to our Youtube Videos
- Posts feed via Feedburner.
Our publications
You Can Be Rich Too with Goal-Based Investing
Published by CNBC TV18, this book is meant to help you ask the right questions, seek the correct answers, and since it comes with nine online calculators, you can also create custom solutions for your lifestyle! Get it now. It is also available in Kindle format.Gamechanger: Forget Startups, Join Corporate & Still Live the Rich Life You Want
This book is meant for young earners to get their basics right from day one! It will also help you travel to exotic places at a low cost! Get it or gift it to a young earner.Your Ultimate Guide to Travel
This is an in-depth dive analysis into vacation planning, finding cheap flights, budget accommodation, what to do when travelling, how travelling slowly is better financially and psychologically with links to the web pages and hand-holding at every step. Get the pdf for Rs 199 (instant download)Free android apps
- All calculators from our book, “You can be Rich Too” are now available on Google Play!
- Install the Financial Freedom App! (Google Play Store)
- Install Freefincal Retirement Planner App! (Google Play Store)
- Find out if you have enough to say "goodbye" to your employer (Google Play Store)