There are numerous forms of passive income. Some of the top passive income concepts are listed below:
Idea Number One: Rental Income
Owning land, property, or even storage space can be an excellent source of passive income. Many people decide to become landlords.
This means you work hard to save the funds needed to purchase your first rental property.
In today’s economic climate, this is a risky decision. More crucially, real estate has very little liquidity. It is not the simplest or most secure approach to passive income.
Moderate risk. You may run the danger of selecting a bad location, having the house vacant for long periods of time, and other risks.
Moderate reward. Since 2016, the average property growth rate in India has been estimated to be 5.4% every fiscal year.
Long-term perspective Purchasing a home can take years, if not decades.
2nd Thought: Mutual Funds
One of the best ways to produce passive income is to invest in mutual funds. Mutual funds can be chosen based on your risk tolerance and time horizon.
This means that you can not only passively create wealth, but you can also choose how much risk you are willing to take. You can build the ideal portfolio for your financial goals if you have a trained professional to guide you through the process.
Low to high risk. You can select funds that are known to be low risk, such as liquid funds, or high risk, such as foreign funds.
Reward ranges from low to high. In India, mutual funds have traditionally achieved returns ranging from 4 to 16%.
Time horizon: medium to long term. It usually takes at least three years to get a sizable amount of passive income from mutual funds.
Idea 3: Invest in stocks
Investing in stocks is another excellent option to get passive income. This, of course, necessitates a certain amount of competence and understanding. While stocks have the potential to create a lot of passive income, it is advisable to invest in stocks with the help of a professional advisor.
The risk is high. Stock selecting can take hours of research and occasional readjustments based on financial goals and market conditions unless you have a trained financial advisor on your side.
Moderate to high reward. There are dividend-paying equities that are well-known as one of the top sources of passive income.
Long-term perspective Solid stocks with strong fundamentals have historically been profitable over a five-year period.
4th Concept: Peer-to-Peer Lending
P2P lending is a type of alternative investment. You will essentially be lending money to borrowers while earning interest. It is best to invest in peer-to-peer lending through a reputable intermediary. This manner, you invest money while significantly lowering the risk involved with P2P lending.
Moderate risk. Cube’s P2P partners, LiquiLoans and Faircent, are both RBI-regulated, with LiquiLoans holding the distinction of being the world’s first P2P platform to be rated by a credit rating agency (CRISIL).
Moderate reward. Cube Wealth P2P lending can yield up to 12% returns with recurrent payouts, making it a source of passive income.
The timeframe is short. On average, P2P loan programs last 3 months to 3 years.
5th Concept: Asset Leasing
You can make passive income by leasing assets. You can become an investor who leases tangible assets such as cars, furniture, and equipment, as well as intangible assets such as copyrights.
For the term of the lease, you will receive interest (passive income) as well as the principal amount from the lessee.
Moderately high risk. Cube’s partner Grip makes certain that all lessees have been thoroughly verified and are creditworthy.
The reward is moderately high. Grip Asset Leasing can earn up to 12% post-tax returns on Cube in the form of monthly dividends.
The timeframe is short. On average, asset leasing plans last 11 months to two years.