Make money without having to work hard – who does not want that? Most people dream of getting rich fast and achieving financial independence. But the fewest actually succeed in this step. Anyone who believes that they can build up great wealth in a very short time without any effort with passive income will be disappointed.
Without touching a finger, you simply can not make money. However, if you have some patience and your goal is to achieve financial independence someday, passive sources of income will be a great way to financially support your future secure. Especially for entrepreneurs and the self-employed, who want to build an additional income in addition to their main job, passive income can be a good source of income. Even with just a few hours a week, you can already record a decent additional income.
Because financial freedom is a luxurious state that many people strive for but at least reach it, we’ve started a series of articles that show you 7 smart businesses that make money while you sleep. But first, we want to clarify what residual income is.
7 smart businesses that make money while you sleep
Once you’ve made a passive income stream flow, it takes comparatively little work to keep it from drying up. Some residual income paths can only be tapped by a certain starting capital, others go without financial investment.
1. Interest and dividends
A classic source of passive income is regular income through interest and dividends. However, this requires a start-up capital that you can invest in.
When you look at interest rates as a passive source of income, you’re probably thinking, how can I make a lot of money from it? The interest rates have been in the basement for a long time and seem to continue to decline. That’s right. The trigger for this was and still is the financial crisis and the adjustment of the monetary policy of the ECB, which tries to restart the weakening economy by lowering interest rates. If you want to know more details about why interest rates are so low, you can read this here.
However, the fact is that there were other times as well. Just a few years ago, interest rates were significantly higher. And who says that in the distant future cannot be like this again? To get higher interest rates, you should invest your money in a time deposit account. Here are the term and your interest rate set in advance.
2. Online money transactions
Money multiplies when it is invested or lent and repaid, including interest. In principle, nothing will change in the digital era. However, there is now also the opportunity online to make your money available to others while making a profit. Of course, this is also risky with reputable providers. In return, you can still expect high-interest rates here, while zero interest rates are causing investors to go offline.
3. Real estate as a yielding object
With the ownership of real estate alone cannot make money. Most people dream of owning their own home someday. For this, they often take high loans. For years, they then have to pay the repayment and interest on the bank. In addition, homeowners have to expect repair costs from time to time.
Real estate only becomes interesting for passive income if it is used as a yielding object and not for own use. In the case of real estate for re-letting, regular cash flow can be generated through rental payments. According to a study by the German Institute for Economic Research (DIW)With rented housing a return of on average, 2 to 3 percent is generated, which is not particularly high compared to other investment opportunities. The study found that the return on 25% of real estate investments is 0%. Negative is the return at 8.5%. With a total of 7 million real estate tenants, about 2.3 million people earn no money with the rental. On the other hand, around 18% of owners with their leased real estate generate a decent return of 5% or more.
4. Monetize the blog or website with advertising
Blog and website operators have many options for making money online. Prerequisite for this, however, is, first of all, to provide enough traffic on your own website. After all, the flow of visitors ultimately determines how much money can be earned by leasing advertising space or using affiliate links. The higher the traffic of a website, the more people see the ads and the more interesting the website or blog is to potential advertisers. In order to generate the highest possible flow of visitors, you should provide extensive content and know-how on a niche topic.
If you run your own website or blog, you can sell advertising there yourself . Especially for blogs with high traffic, the sale of advertising space such as banner advertising offers a lucrative income opportunity.
Even with “pay per click” advertising, such as Google AdSense, can generate considerable revenue. Google AdSense is the first startup option for most people when it comes to making money on the Internet, because of its entry-level friendliness. Google analyzes your website and then displays matching ads. You always earn money when someone clicks on the Google AdSense ad. Pay per click varies by topic and can range from a few cents to several euros.
Since Google does not endorse link rentals and rates them negatively, they should be used more discreetly and cautiously. Properly done, even smaller websites can benefit extremely from this passive revenue option. For example, SeedingUp is a provider that helps locate link rental customers.
In conjunction with automation, dropshipping, also known as drop shipping, is an excellent way to passively generate income as an online merchant.
The trick lies in this form of business in logistics: While goods are usually sent from wholesaler to retailer, from where they then find their way to the customer, dropshipping (German also: direct trading) waives this intermediate step. As a merchant, you are still the link between wholesale and end users, but the merchandise takes the direct route to your customers.
Since you as an online retailer usually do not even have to keep showpieces ready, it can make sense to forego the corresponding intermediate logistical step. Sometimes you carry less shipping costs, so you may be able to offer your customers more attractive prices.
6. Digital info products
Online sales of info products is another way to build a passive income. As with the drop shipping, you have the advantage that you as a dealer saves storage costs because space takes e-books and videos only on the respective storage medium.
This form of passive income was reserved exclusively for authors in pre-digital times. In the offline world, they can only seldom live on income from their books. Online, as the author of e-books, you have many more options because you do not have to go through a publisher’s detour and do not necessarily have to spend money on a lector or designer for your cover.
This, of course, means that the quality of e-books is often far behind that of print media, but as long as the product offers added value and a degree of user-friendliness, it’s good enough. Since a good product does not market itself, good online marketing is a must if you want to earn an attractive additional income through e-books. Here again, you have the advantage that you can automate the sales process. As more and more people own e-book readers, the market is also growing for e-books on special and specialist topics.
7. Creative ways to passive income
Are you writing? Do you draw? Do you take a photo? Are you a virtuoso Pixelschubser? Do you shoot movies? Do you know how to design print templates for the 3D printer? Creative work is hard bread, but can also be used to make money online. The YouTube hit that generates ad revenue is a classic example of passive income through creative work on the Internet.
And so it continues
Now you know more than 7 smart businesses that make money while you sleep. You feel this article as not yet detailed enough? Do you want to know more about the individual sources of income? Then you should not miss the next posts in this series of articles under any circumstances. We have selected the most important of the 7 passive sources of revenue and will go into more detail about each option, such as online money transactions, advertising on the blog or website, dropshipping, digital info products and creative ways to make a passive income. In the next post, you’ll learn how to increase your money online with crowd investing, crowdlending, and peer-2-peer lending.
We hope you enjoyed the post and wish that you can use some of the strategies to build a passive income. What have you already experienced? Have you already established a passive flow of money online? Would you like to add something or give feedback? We are happy about every comment from you!