If you’re trying to make more money, chances are you’ve heard the phrase, multiple income streams. However, there are two main types of income streams that you can use, and they are quite different. The first is known as active – and as the name implies, this is a type of income that you actually have to work for. Examples of active streams of income include running a part time internet business in addition to your work, or something that requires you to actually DO something to earn that money.
Passive streams of income make up the second type. These are the most popular, simply because you don’t have to worry about investing your most important quality – time. If you are already working a full time job, you may not have the kind of time necessary to develop an active stream of income. However, there are numerous kinds of passive streams of income that will reap the same benefits with a lot less effort. Let’s cover just a few examples.
Investments –
This is probably the most common form of passive income. You invest a little money, the stock does well, you cash in. It’s easy, quick and requires no effort on your part. While there is some risk involved, with proper research you can lessen this risk and reap the rewards.
Rental Properties –
This is a bit of a hybrid between the two types and the degree that it trends towards passive will depend on whether or not you have a property management company assisting you. In this event, this is a great form of passive income that is usually quite reliable. If you’ve got someone handling the maintenance, rent collection and other landlord duties, you’ll just have to collect the check every month. While you will have to pay that management company, it’s well worth it since you won’t have to deal with these issues.
Interest Payments –
Whether it’s from a P2P loan, a certificate of deposit or a savings account, interest payments are the easiest form of passive income. They also have some of the lowest rates of return but are generally considered to be quite safe. This is the perfect place to start if you’re completely new to building multiple streams of income and you can pick up a lot of helpful knowledge along the way.
Variations on a Theme –
There are numerous types of non-traditional forms of passive income streams that are variations on the themes mentioned above. Basically, anything that makes you extra money without requiring any work on your part can be considered passive.
When managed correctly, passive income streams are a vital part of your future financial planning. Many will keep returning long after you are retired and can serve as a cushion to keep you living your life the way you want to. The best way to take advantage of the situation is to implement both active and passive income streams so that you can have the best of both worlds and keep building up your bank account.
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