If you’re thinking about creating a passive income stream, check out these 12 strategies and learn what it takes to be successful with them, while also understanding the risks associated with each idea. 12 passive income ideas for building wealth You may have to keep your product updated or your rental property well-maintained, in order to keep the passive dollars flowing.īut if you’re committed to the strategy, it can be a great way to generate income and you’ll create some extra financial security for yourself along the way. In practice, you may do some or all of the work upfront, but passive income often involves some additional labor along the way, too. “It has a ‘get-rich-quick’ appeal … but in the end, it still involves work.

“Many people think that passive income is about getting something for nothing,” says financial coach and retired hedge fund manager Todd Tresidder. The Internal Revenue Service (IRS) says passive income can come from two sources: rental property or a business in which one does not actively participate, such as being paid book royalties or stock dividends. Passive income includes regular earnings from a source other than an employer or contractor. Either way, a passive income gives you extra security.Īnd if you’re worried about being able to save enough of your earnings to meet your retirement goals, building wealth through passive income is a strategy that might appeal to you, too. With passive income you can have money coming in even as you pursue your primary job, or if you’re able to build up a solid stream of passive income, you might want to kick back a little. With the pandemic throwing the job situation of many Americans into disarray, passive income helps you bridge the gap if you suddenly become unemployed or even if you voluntarily take time away from work. Passive income can be a great way to help you generate extra cash flow, and the economic upheaval largely caused by the COVID-19 crisis is a testament to the value of having multiple streams of income.

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