Passive income can be a great way to help you generate extra cash flow, whether you’re running a side hustle or just trying to get a little extra dough each month, especially as inflation runs through the economy. Passive income can help you earn more during the good times and tide you over if you suddenly become unemployed, if you voluntarily take time away from work or if inflation keeps chipping away at your purchasing power. Here are some ideas that can get you passive income through the right kind of investment to help you through these turbulent times.
Investing in rentals
Investing in rental properties is an effective way to earn passive income. But it often requires more work than people expect. If you don’t take the time to learn how to make it a profitable venture, you could lose your investment and then some. That said, if you do it right, you have the opportunity to earn passive income from rental properties. To get this right, determine three key factors first;
- How much return you want on the investment
- The property’s total costs and expenses
- The financial risks of owning the property
There are a few questions to consider which is essentially a risk assessment.
- Is there a market for your property?
- What if you get a tenant who pays late or damages the property?
- What if you’re unable to rent out your property?
Any of these factors can negatively impact your passive income and economic downturns like the current one in Sri Lanka, can pose challenges too. You may suddenly have tenants who can no longer pay their rent, while you may still have a mortgage of your own to pay. Or you may not be able to rent the home out for as much as you could before, as incomes decline. You may want to weigh these risks and have contingency plans in place to protect yourself.
Get yourself into affiliate marketing
With affiliate marketing, website owners, social media “influencers” or bloggers promote a third party’s product by including a link to the product on their site or social media account. Amazon might be the best-known affiliate partner, but eBay, Awin and ShareASale are among the larger names, too. And Instagram and TikTok have now become huge platforms for those looking to grow a following and promote products. You could also consider growing an email list to draw attention to your blog or otherwise direct people to products and services that they might want.
Affiliate marketing is considered passive because, in theory, you can earn money just by adding a link to your site or social media account. But, in reality, you won’t earn anything if you can’t attract readers to your site to click on the link and/or buy something.
So what are the risks involved? If you are just starting out, you will have to take time to create content and build traffic. It can take significant time to build a following, and you will have to find the right formula for attracting that audience, which is a process that itself might take a while. Worse, once you’ve spent all that energy, your audience may be prone to going to the next popular influencer, trend or social media platform.
Then what is the opportunity? When a visitor clicks on the link and makes a purchase from a third-party affiliate, the site owner (in other words, you) earns a commission. This commission might range from 3 to 7 percent, so it will likely take significant traffic to your site to generate serious income. But if you can grow your following or have a more lucrative niche (such as software, financial services or fitness), you may be able to make some serious return on investment.
These are just two of the ways in which you can make passive income as a return on investment. It is always advisable to have alternate sources of income such as these while we navigate through an economic crisis.
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