Passive income is a source of income that requires little or no effort from you. It basically lets you earn more money while you keep your full-time job. There are many kinds of passive income. And sometimes, people resort to what they thought as passive, but actually putting a lot of hours to it – This really not passive at all, but it is more like a second job.
What’s Considered Passive?
In my opinion, if it requires less than 3 – 5 hours per week, I would consider it as passive. Keep in mind, some of these passive income “job” may requires a lot of hours to setup in the beginning. But, it will not require a lot of your time afterwards. For example:
- Invest in the Stock Market – This is probably the easiest to setup. Opening a brokerage account takes a few seconds. Once you fund your account, you are ready to trade. Keep in mind that it will require you to do some research to pick the right investment (stocks, or mutual funds). I consider this passive because once you find your stock picks, typically you will want to follow that particular stocks – especially if you are trading daily. Be sure to also diversify your investment. Do not lump it all in one stock – the risk is too big.
- Rental Income – this will require a lot of hours in the beginning. As a real estate investor myself, I have put a lot of hours of area research. Once everything setup, it is great way to get extra income. Occasionally, there will be maintenance calls and such. However, this should not be a problem with proper management.
There are many others such as Peer to Peer Lending, Blogging, Create Youtube Channels, and many more. The list is endless.
What’s Considered Second Job?
Let’s just say that if you have to put constant hours to keep the source of income going, then it is more like a second job. For example, driving for Uber can be a good source of income. It is definitely a second job. Another example would be, if you have creativity in your hands, then you start making things to sell on Etsy. I also consider this as a second job.
There are many others that really is borderline passive or second job category.
What’s really important here is your willingness. Ideally, having another source of income without putting too much effort is the goal. At the end of the day, we should all assess our capability and what we really enjoy doing.
Lastly, I want to say that having an extra source of income is a MUST. It will get you to your goals faster. Imagine all those extra income will pay your debt faster. Wouldn’t it be great?
Find something that is really require you minimum hours with maximum income. And of course, it is gotta be something that you enjoy to do! Have fun!