Passive Investing 101: Understanding the Advantages of Passive Investments
Passive income such as real estate investment is one of the key factors that an individual can gain wealth. Passive investment is a strategy for investment which aims to maximize returns on the long run, through keeping the amount of selling and buying to a minimum level. The basic concept of passive investing is avoiding fees and dragging on the performance that can potentially happen from frequent traditional trading. Passive investment is not a source of immediate or fast wealth build-up, rather it takes a slow process but steady wealth over time. Passive investment is also called buy-and-hold strategy, wherein an investor buys a security with the intention of owning it for many years. Passive investment investors are not after the profit gained through short-term price fluctuations, also known as “time the market”, but rather the positive returns gained in a given enough time.
What are the passive income strategies? The different types of passive income are real estate or rental income, interest income, royalty income, dividend income, membership fees, advertising income, affiliate income, business income, pension income and donation income. You can enjoy your holiday vacation locally or abroad and still earn without too much effort, through real estate investments, because these can be leased such as building and office spaces. The sooner and the younger you invest on real estate properties, the sooner and the longer you will taste the sweet of this kind of passive income. You can also obtain passive income through movable rental properties such as machinery, equipment and vehicles.
For interest income, you have to work harder and frugal to have enough money in order to gain a considerable high interest such as your investments in bank deposits and lending to your debtors. Royalty income can be obtained though royalty fees by publishing a book, being a songwriter or being a great singer, from licenses for using software, your photos for being a professional photographer and trademark for franchising . Dividend income is a passive income earned through stocks or shares of a corporation, and it involves a higher risk though. An investor in dividend income must be guided by the right knowledge, skills and attitude to the proper discipline about investing in stocks and other securities. You can earn membership revenue through golf club, fitness gym, and membership websites that contain useful and unique contents where users or members pay a regular membership fee to be able to access those contents. Your website can earn membership fees in a form of software, applications, podcast, videos, articles and scripts. Advertising and affiliate sources of passive income can be earned by generating blogs and websites through direct advertising, third-party advertising and affiliate marketing.