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Creating a strong investment portfolio is a reliable way to generate passive income.
Some people try building businesses or producing work that earns royalties, but these options can be challenging and may not yield significant results.
As a financial planner, I must admit that truly passive income is often more of an ideal than reality. If it were easy to create passive income without effort, we’d all be doing it!
However, there are some legitimate ideas you can pursue to build your own passive income stream. Here are three paths to consider:
1. Build a strong investment portfolio
Contribute to investments during your working years and create a diversified portfolio that will increase in value over time. You can convert those higher-valued assets back to cash without doing additional work, or receive income from them directly via dividends.
This approach takes effort upfront, but it’s achievable and accessible for most people. It also gives you control over the process – the more you save and less you spend, the faster you’ll build up your portfolio.
2. Start a business (or invest in one)
Create a business that operates without you by hiring employees who deliver your service or create your product. This can be done in any industry or field and gives you freedom to create something that aligns with your skills or experience.
While not all businesses succeed, some successful ones can grow to the point where you can earn passive income from them.
Alternatively, you can invest in an existing business and receive ownership stakes in exchange for a portion of revenues. However, this approach carries risk and requires significant upfront capital.
3. Leverage your current work for future royalties
Sell the rights to a valuable asset, such as intellectual property or a story/script that can be turned into a film. You can also create educational resources like books, courses, or other materials that people want to purchase, allowing you to earn recurring future income in the form of royalties.
This path is narrow and not available to everyone, but it provides an avenue for passive income if your skills align with this model of monetization.
Source: https://www.businessinsider.com/financial-planner-realistic-passive-income-ideas-2024-8