7 Passive Income Sources To Achieve Financial Freedom

by James on 02/15/2010

Image of many pots with grapefruit trees growing

Most of you already have earned income (salary or wage) and even some portfolio income (stocks, mutual funds, etc). What an accomplishment! Whew! As great an achievement as this is, it probably won’t get you financial freedom anytime soon. You need to add a different type of income stream to your bottom line. This is called passive income. In this article, we’ll talk about what passive income is, what some examples are and how it will help us achieve financial freedom!

What is passive income?

Wikipedia defines passive income (residual income) as a rent received on a regular basis, with little effort required to maintain it. The key here is “with little effort required to maintain it”, as possible. You wouldn’t have the “freedom” part of financial freedom if you had to work hard to maintain the income! Working hard to maintain your income… doesn’t that sound exactly like your job?! Ugh. So the goal is to generate enough residual income to cover all of your bills each month regardless of whether you work or play!

What are some examples of passive income sources?

1. Build a real business. What the heck is a real business? A real business is when you can walk away from it for a year and return to see it flourishing without you having been there. If you can’t do this, then all you have created for yourself is a job.

2. Real estate. When purchased properly and good tenants are selected, income properties are an incredible wealth building asset.

3. Copyrighted material. Are you a photographer, web developer, graphic designer, illustrator, videographer, or writer? If so, you can create content that can be sold over and over again in high volume if marketed and sold through the proper channels.

4. Invent something that everyone needs. Do you have an idea for an invention? Or, an idea on how to improve a current product? If so, this may be the avenue for you. Once again, marketing will be the key to success.

5. Join affiliate programs. Many companies are offering you a reward for getting customers to buy their products or services. If you can generate enough referrals, this could become an excellent passive income source.

6. Offer an automatic service. Hosting websites is a great example. Hardly anything is required once a website is designed and developed. How about a coin operated car wash? Those things can be money making machines! Sit back and just collect the monthly checks!

7. Sell advertisements. Do you have a website with some traffic? Why not capitalize on this by adding Google’s AdSense to generate some income? Or, sell advertisement space to non-competing businesses in your industry.

How long does it take to achieve financial freedom with passive income?

I’ll let you know once I get there, however, it varies from person to person. If you have a solid plan of action and you follow it, you can get there more quickly. It is a step-by-step process.

Say you would like to have a grapefruit tree farm someday. You need to start growing your grapefruit trees now. Why? Because it takes many years before the trees produce fruit. Little by little, use pots to plant more seeds now. When you are ready, find a piece of land and plant the trees. After you have taken good care of the trees for a certain period of time, they will start to grow fruit for you. The more trees you have, the more fruit you have.

What passive income streams will I be using to achieve financial freedom?

The grapefruit tree farm, of course! :) It actually could work, however, I will try to use every passive income source listed above. Why? The more passive streams of income you have, the less risk there is. If one source dries up, you’ll still have others bringing in money.

In the coming articles, we’ll discuss many of the sources in more detail.

In the meantime, I hope this is a good starting point for you to get some passive streams of income! If you have other ideas for passive income sources, please leave a comment!

Related posts:

  1. Financial Freedom: Why And How Will I Achieve It?
  2. Income Types: Earned, Portfolio and Passive
  3. Financial Freedom Action Plan: Educate Thyself
  4. Financial Freedom Action Plan: Take Action Already!

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