5 Ways To Create Passive Income & Achieve Financial Independence

By Tyler Basu

There are two kinds of income. There’s the kind that you actively work for, and then there’s the kind that comes to you because someone (or something) else is doing the work for you.

Active income is the income that you earn by actively trading your time for it. Passive income is income that you earn without having to trade your time for it, because you have other people or systems in place that are doing the work for you.

Keep in mind that most forms of passive income are not completely passive – there is definitely some ongoing maintenance required to keep the income coming in.

WORKING HARD VS. WORKING SMART

To create a stream of passive income, there is definitely work involved. But most of that work is done up front, one time. This is what makes passive income so much more attractive than active income. Instead of constantly trading your time for money, you trade your time once, to set something up that pays you over and over again indefinitely. You work hard and you work smart.

Listed below are 5 different ways to create passive income. Each requires a fair amount of work upfront, but once that initial work is done, you will be rewarded with ongoing income for as long as you care to maintain them.
1. Create A High-Traffic Blog

Most of us know what a blog is, but just in case you don’t, here’s a quick definition: a blog is a website that is updated frequently with content (usually written articles), intended to inform and/or entertain its readers. Most blogs tend to focus on a specific topic such as motivation, politics, relationships, health, or fitness, just to name a few.

Creating a blog is not difficult. Creating a high-traffic blog is. A high-traffic blog is one that attracts tens of thousands, or even better, millions of visitors on a regular basis. Addicted2Success.com, for example, is one of the most popular motivation & success blogs online today, receiving several million visitors per month. Its founder Joel Brown invested a lot of time and energy upfront writing hundreds of articles, building an audience, and developing the site to the level that its at today. Now Joel has a team of writers contributing new content to his site on a regular basis, and the revenue from the Google Ads on the site generate a consistent income of over 6 figures per year.
2. Write A Book

If you’re an aspiring writer, now is one of the best times ever to generate revenue from your book sales without securing a deal with a traditional publisher. Amazon.com, the largest online retailer of books in the entire world, is enabling self-published authors from all over the world to sell their books on Amazon in both ebook and paperback format with their Kindle Direct Publishing (KDP) and CreateSpace platforms.

How it works is very simple. You write your book, upload it to KDP or CreateSpace (or both) along with a cover image and description, and Amazon will handle the rest. Your book will appear on Amazon.com and whenever someone buys it, Amazon will send the book to them and split the sales revenue with you. With KDP, if you price your book between $2.99 and $9.99, you get to keep 70% of the royalty from the book, while Amazon keeps the other 30%.

Many self-published authors are enjoying consistent incomes from the sales of their books, ranging from a few hundred dollars all the way up to tens of thousands of dollars per month and beyond.
3. Set Up A Membership Website

Membership websites, often called continuity programs, are a great way to generate passive income. Essentially, you set up a website that provides valuable information and/or training exclusively to people who pay a monthly subscription fee to access the content. Most of the work is done up front (creating the site). After that your job is to market your website so that people continue to become members, and you continue to provide them with valuable content so that they don’t cancel their subscription. OptimizePress is a popular platform for setting up a membership website.
4. Create An Online Course

If you have a particular skill that others would be willing to pay to learn from you, you can package your expertise into a course and sell it online. There are several ways to create content for an online course. One option is to conduct live training and record the session. Another option is to record a lecture on your computer using Microsoft PowerPoint while recording your voice. A third option is to reach out to experts in a specific niche, interview them, and then sell the collection of the interviews.

With all of these options, you create a course one time, and as long as you are continuously marketing it, you can expect to generate continuous sales of your course. A great platform that allows you to do this is Udemy.com. They even have affiliates that can help sell your course for you in exchange for a percentage of the sale.
5. Invest In Real Estate

Investing in real estate continues to be one of the best ways to build wealth over the long run. Essentially, you buy a property, you rent it out, and as long as the rental income exceeds the costs of owning the property, you generate positive cash flow each month (aka passive income).

Here’s an example:

You buy an apartment in a growing region where rental demand is strong. The cost of the apartment is $200,000. You put down $40,000 of your own money, and you obtain a mortgage for the remaining $160,000. Your monthly mortgage payments are approximately $900 per month, plus an additional $300 per month for property taxes, insurance, utilities, etc. Your total cost to own the apartment is $1,200 per month. You rent it out for $1,400. In this scenario, your monthly cash flow is $200, plus your mortgage is being paid off by your tenants. When the mortgage is eventually paid off, your monthly cash flow will increase significantly. Plus, if at any point in the future you decide to sell the property, you will profit from its increase in value.
Summary

There are literally dozens, if not hundreds of different ways to create streams of passive income. The ones listed above are some of the most common ones available to ordinary individuals with minimal business or investing experience. They all require hard work up front, but if you do it right, they are all capable of providing you with ongoing passive income.

FOCUS ON ONE INCOME STREAM AT A TIME

Don’t mistake the mistake of trying to set up multiple streams of passive income all at the same time. Focus on setting up one, and once it is set up and requires minimal time to maintain, then focus on setting up another. Repeat this process over and over again until the combined income from all your passive income streams exceeds your active income.

Once your passive income exceeds your active income, you become financially independent. You can do what you want with your time. You can work because you want to, and not because you have to. You become financially free.

Culled from: http://chattingwithchampions.com