How to Benefit from Passive Income

The article was originally published on Santander.

Aside from working, we have many other ways to earn money. Putting our savings to use, managing assets we own, or even using our talent and skills can all be good ways of making “passive” income.

Sara has loved history since she was little. She even chose to become a teacher. A few months ago, she decided that she would go on holiday every year to a different country to see first-hand where things she teaches about took place.

But when she began to draw up a budget and plan her first trip, she quickly realized that she would need more money than she had anticipated and began to think of ways she could supplement her wages as a teacher.

Having explored various options, the concept of passive income caught her attention. Though passive income isn’t something new, technological advancement has created numerous new ways for people to earn it.

What is passive income?

Passive income is money we can earn regularly without the same time or work commitment that earning active income (from a job) entails. Setting up a source of passive income does require some money and effort; but once it’s up and running, you’ll need to do little or nothing to keep it up.

Whatever our goal is, the benefits of earning passive income include making saving a more common practice, not depending on wages as our sole source of income, and buffering our finances from contingencies.

It helps our financial health. It is also something many people can earn in a number of ways.

The most common ways of earning passive income

Sara must look at a number of personal and professional factors to make the right choice that will help her achieve her financial goal: extra income for the trip she is planning.

Here are some things she could choose to do:

  • Rent out property. Renting out a home, office space, a storeroom or a garage space is a traditional way of earning passive income. For Sara, it is one of the most appealing options, as she could rent the empty room in her flat for as long as she needs to on collaborative economy websites and apps. She could also rent out her entire flat while travelling to earn even more money.
  • Investing in financial products. Investment (or mutual) funds are some of the most popular instruments people seek to get a return on their money. Sara thought it would be a good idea to seek expert advice in order to choose the best product for her profile and needs, based on how long she wants to hold the investment and the return she wants to get. She’s aIso keen to invest in sustainable funds that earn a return while supporting responsible projects that share her environmental and social values.
  • Creating digital content. Creating digital content has been gaining in popularity in recent years because of social networks and specialized websites that pay users for the content they post. Sara could create an online history course to sell on an e-learning platform, write and market an e-book, or share the photographs from her travels with an image bank that pays her each time they’re downloaded. Generally, this type of content requires more effort at the outset or in the creation stage.
  • Selling second-hand items. Selling used and unwanted things (like electronics, clothing and furniture) is becoming popular because it gives them a second life and helps reduce our consumption of resources at an attractive price. There are apps and websites where you can post items to sell for some extra money. If you have things to sell, this kind of passive income is easy, and getting started doesn’t involve a big commitment of time or money.
  • Monetizing talent. Just as you can earn income from creating content in the virtual world, the same goes for the real world. Artistic talent such as painting, sculpting or handicraft can earn you a nice stream of passive income. Whatever you create should be something you are passionate about. And it shouldn’t take you too long to bring to market.

Passive income mistakes

A lot of myths and misinformation about passive income could ruin your chances of achieving financial goals or even cause you to give up.

It’s a common misconception that results are immediate. You should set a reasonable, realistic time frame for earning income right from the start. Persistence is a key to success.

Another mistake is thinking that “passive” means not having to do anything at all. While this type of income does not require the same effort and commitment of a traditional job, it is very important — especially at the beginning — to do the legwork needed to make your project profitable.

Passive income does not mean easy money: writing an e-book, painting or recording a course calls for skills that not everyone has. The same goes for we investing in the financial products or buying a flat to rent out, which ccertainly require time and effort.

Do we need to declare passive income?

Most passive income qualifies as a business activity subject to taxation since it essentially comes from a service or the sale of virtual or physical goods in exchange for money. However, it may be tax-exempt or taxed based on how much you earn and how often under the laws of your country.

How to Earn Passive Income with Foundation Capital

If you want to generate a sustainable passive income stream, Foundation Capital is one of the most reliable organizations to invest in.  Our process has been refined, perfected, and proven over the past 12 years of renting our clients’ assets to the construction industry.

For more detailed information on how to make a capital investment in construction with Foundation Capital, as well as the terms, conditions, and risks, refer to the following FAQs and guides:

(Support) What Is Foundation Capital and How We Invest?

(Support) Construction Investments Vs. Others

(Support) Foundation Capital FAQ Library

(Support) Schedule Your Free Consultation

(Social Media) Foundation Capital Facebook

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