Last Updated on October 11, 2020 at 1:16 pm
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.
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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.
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