How Passive Income Can Help You to Earn Financial Freedom
Are you reading blogs recently which are based on passive income? You may have found one common point in each blog for sure. ‘After your retirement, you can earn good money with a meager effort.’
You may think; “Oh! It’s so easy to earn money in a passive way.”
Read the blog to find out everything about passive income. What does passive income mean? What are the income options included in it?
First, get a brief idea of what passive income is
When you’re earning money every month without being actively involved, it will be referred to as passive income.
What do you mean by active involvement?
You are going to the office regularly. You are getting a salary each month. This is your active income.
Indirect involvement means you are working from your home at your suitable time rather than going to an office regularly.
The core point of passive income is your indirect involvement.
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How you can use passive income to gain monetary freedom when you retire
Take a look at the options that fall under the passive income category.
Invest in the stock market that’ll give you dividends.
Invest in REIT (Real Estate Investment Trust).
P2P or Peer to Peer lending.
Invest in CD or Certificate of Deposits.
Try making a saving-focused-budget.
Take an elaborate look at how you can reap some retirement benefits with passive income
Read these 5 sub-points which are written on passive income options. You may view a clear and elaborate picture how passive income may help you to earn money.
1. Stocks - You may invest an amount in the stock market to get twin benefits.
Your stocks may give you dividends per annum. You can earn some money too after selling your stocks in the stock market.
You have to make a deep research on the stock market to choose which stock can give you profitable returns in the future. Only a profitable stock can help you to earn some money either on the dividend or by selling it.
2. REIT (Real Estate Investment Trust) - The REIT leases real estate properties and collects rents from them to earn money.
You, as a shareholder, will earn a fortune when the REIT or Real Estate Investment Trust will generate profit. Generally, they distribute the profit as dividends among the shareholders.
3. P2P or Person to Person lending - You may lend an amount to a borrower who may be unqualified to get a regular loan.
You have to choose a lending platform first.
The current P2P lenders that are making good business, are ‘Lending Club’, ‘Prosper Marketplace’, and ‘Upstart’.
You can invest in one of these P2P lending platforms. You may earn a profit with a minimum of a 4% interest rate.
4, Investment in Certificate of Deposit or CD- You may be thinking why I have put a CD in the indirect involvement process of passive income.
Well, it falls under the low-risk investment category. So, the return will not be a hefty one.
Now, several banks have devised 5 years of CD plans. You may get around a 2% return on your investment.
5. Make a budget with a focus on savings - Start making a budget with the prime focus on savings.
A proper budget can save you at least 20% of the money than your previous expenses.
You can search for budget-making apps on the internet. The apps will help in creating your budget.
While you are doing 9 to 5 jobs, you may choose these ways that may generate passive income after you retire.
Try consolidating your credit card debts to get relief from multiple debt burden
Try for debt consolidation if you have multiple credit card debts.
You can save an amount every month on interest payments with debt consolidation.
What will be my benefit if I opt for debt consolidation?
l You can consolidate debt in 3 ways. These are the debt consolidation program, balance transfer method, and debt consolidation loan.
l The debt consolidation program will help you to cut the interest rate on your multiple debts. A reduced interest rate means you are going to save your money every month on interest payments.
Make a solo payment per month to the debt consolidation firm. They will distribute the amount among your creditors. You won’t have to remember multiple payment dates anymore.
l You can transfer your outstanding balance from one credit card to another credit card through the balance transfer method.
The new credit card will offer you an introductory period benefit. In the introductory period, you can repay the outstanding balance with a zero-percent interest rate or with a minimum interest rate.
It is another way open to you to save some money passively. You can use the money to invest in the stock market, or save it in a bank.
l You can choose a debt consolidation loan as your third option.
You may get a new loan at a reduced interest rate if you have 700 points or above credit score. The new interest rate should be lower than the average of your previous loan interest rates.
First, pay off all your previous debts with the new loan amount.
Secondly, pay off your new loan through comparatively lower single monthly payments to your new creditor.
Another important thing, you should start contributing to a retirement fund at an early age so that you can take advantage of compound interest.
However, concentrate on passive income avenues and brainstorm new ideas at your leisure time; a new earning mechanism will open its door before you.