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How to Start Earning Passive Income

Image courtesy of Denise Cheng
Image courtesy of Denise Cheng

Many people dream of being able to earn a passive income. This is where you have income coming in which you have not had to work for. This can include interest on savings and return on investments, for example. On a larger scale it can mean dividends form stocks and shares or rental from property. It can also include pension income. Basically it means any income that you receive where you are not actively involved in earning it.

Passive income tends to be something that you build up slowly. You will not be able to leave your job overnight and start earning passively unless you retire and have a good pension scheme. This is what many people do and it can work out well for them. However, there are many people that would like to start having a passive income at an earlier age. This will allow them to retire earlier or to work less days in the week. There are many things that you can try in order to achieve this.

To start with you will need to take a look at your personal finances. You need to consider your savings, debts and where you might find the money you need to invest in order to start bringing in an income. If you are considering using savings income to start with, then it can be worth paying off your debts first. The interest on your debts is likely to be more than anything you get back from savings, so by paying off the debts, although you will not be making passive income, you will be better off financially.

However, you may decide to invest instead. This could be in a managed fund, unmanaged fund, specific shares or even a house. These can all potentially bring in a passive income and possibly you will get a bigger return than you would on any debts that you have. However, there is a risk. Only invest money that you can afford to lose. Slowly build up your investments as you can afford to and to start with it could be wise to reinvest any returns that you get in the way of interest, dividends or rent. Then you will be able to keep building up the fund until you have enough to live off.

You could also write songs, books, poems, apps or produce prints which you can put up for sale online and earn income from. Although there is work to start with in producing the item, once it is done, you can leave it for sale and let the payments come in. This may only be a small income, but the more that you can write or produce or the better you promote the ones that you have, the higher the income generated by them is likely to be.

Whether you are investing time or money, make sure that you research well and make sure that what you are doing is likely to be successful. Consider how much risk you are willing to take and how much risk you can afford to take. Think about where your skills and enthusiasm lie and whether you want to work on a big project, like a rental property or would rather let a fund manager do all of the work.




Rachel Henderson is a professional freelance writer from the UK. She writes on many subjects but specialises in personal finance. As well as contributing to various blogs and websites she has her own website tracking her own money making process and sells her books through

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