March 31st, 2012
An average person can generate passive income in many ways. This means that it is not only the rich that can generate passive income. Everybody can but not in the same way. For an average person, his salary is the only source of income he can generate. Beyond his knowledge, it is also possible to get some extra income even without trying to start big.
Our salary is precious to us. But aside from our salary we can earn a decent amount from what little money we have. The first thing we should do is to save money. Saving money requires discipline. Around us, there are many things that force us to buy what is beyond our immediate need. We must agree that to generate passive income, we need enough capital. We are just confused how enough is enough. Whenever our income increases, we tend to spend more, too. This is the biggest challenge to generate passive income.
We don’t necessarily save all our hard-earned money to raise the needed capital to invest. What we need is to calculate the cost of our daily necessities and identify the priorities. More often than not, we prioritize which we should spend for. To generate passive income has been forgotten by many as the first thing in mind. If we set aside a little every time we receive our salary, such money will become big over time. It is easier said than done. However, that is not a hard thing to do. Our first priority must be to generate passive income.
Usually, we believe that only a big capital is able to generate passive income and it is beyond our limit. Perhaps, it is true. It is true if we continue to believe so. These days, everything is possible. Long time ago, we had to prepare large amount of capital because the required minimum capital for almost all types of investment was also large. Nowadays, the internet offers many options to generate passive income.
In stock market, we can start trading if we have at least $2,000 or even less. If you choose to invest in stock market for a little amount of money, the dividend will not be much attractive no matter how good the company is. However, you can generate passive income through buying and selling of stocks. There is risk involved in trading stocks. But if you are very familiar with the basic tools on how to manage the risk, stock market will be very much exciting and promising.
If you are a conservative type of investors with little amount of money and who are willing to wait for long, you may choose a managed portfolio such as the mutual fund. In mutual fund, you can put your money in and pull out any time you prefer. The minimum capital is not large, either. Your money invested is pooled together with the money invested by many individual investors. This money is the fund being used to invest in different portfolios of investment. You may generate passive income here through stock valuation and through stock dividends of the fund’s portfolios. When the fund grows, you money will, too.
Now, if you are a risk taker who wants to take advantage of the profit potential of a volatile market, you may also trade currencies for as little as $500 or even less. To generate passive income here, you must be a carry trader type of investors who speculate a long-term bull trend and earn from a currency’s roll over rate while enjoying your price margin or floating profit. But this is only true in a very good market condition. In this type of investment, only 5% or so of those who try become professional traders. It doesn’t mean that it is impossible to earn here. In fact, currency trading has the highest profit potential due to high leverage. What actually this market requires is a deep understanding of the underlying fundamental and technical reason why a certain currency moves in one direction. In other words, skills are required here. On the other hand, this is the cheapest way to generate passive income. It is also the most liquid market you may invest in. But this is the least passive of all types of passive income. Investment here is neither dependent on the market, nor on a currency. It depends on you and what kind of trader you are. If you choose to generate passive income here, you should try a demo account first in order to test your trading strategy before investing in live account.
However, there are still many of us who resort to the traditional way to generate passive income. One can put up a food cart business, or buy a car to make it a taxi cab. If you already own a small unit of apartment, you can have it rented. You may procure some cheaper sports equipment and put up a gym in your community. Business is by far the most popular source of income. The problem is that most people try the same. Thus, competition gets even tougher.
A food cart business can be a very lucrative option to generate passive income. Inside the malls, a lot of food carts line up. One may think that such a business is not permanent. Surprisingly, these small carts have been growing in numbers. To operate such a business is not really difficult. Since it is small, the operation is simple and the cost is less. But it sells like hot cake.
Operating a taxi cab is as easy as ABC. The ideal circumstance in this is when the taxi unit is 100% owned by you. This alternative source of income is suitable for those who already have at least one fuel-efficient car.
An average person who has inherited a small house and lot or an apartment unit may rent it out to generate passive income. The proceeds from renting out your apartment can be used to pay another housing loan. Such a system is for a long-term investment. Using our properties to generate passive income for longer investment is a wise decision we can make. Using them to earn a living can be short-lived because our property depreciates overtime. Though the value of land is appreciating, structural maintenance is costly. Aside from that, tenants may come and go. So, you have to be more creative in utilizing your possessions.
You can also convert your property to a fitness gym. Sports equipment depreciates very slowly. Nowadays, many people are crazy about health and fitness. There is a big market for that and this industry has been growing consistently. As our society becomes more and more stressful, people give more and more emphasis on coping up stress. Such a growing demand is a good opportunity to generate passive income. While your customers pay for the energy they consume, you are paid for the less effort you exert.
Now, there is also an alternative to traditional business. This business is known as online business. You may create and sell digital products. All such transactions are now done online. There are wide varieties of online businesses you can choose from. What online business requires is your creativity. Everybody here is doing everything to drive the traffic to their sites and that will force us to think of better strategies. Though the competition is tough, the room for growth is big. What is important is that you can start here any time with less capital and less risk.