Passive Investing 101: Understanding the Advantages of Passive Investments
Passive income such as investing in real estate is one of the many things you can invest on in order to build your wealth. Passive investing is a type of investment strategy aiming to maximize returns on the long run, through keeping the amount of selling and buying to a minimum level. The main concept of passive investment is avoiding fees and drag on the performance that can potentially occur in frequent trading. Passive investment is not for quick returns, rather it takes a slow process but steady wealth over time. Passive investment is also called buy-and-hold strategy, wherein an investor buys a security with the intention of owning it for many years. Investors in passive investments are not after the profit gained through short-term price fluctuations or “time the market”, but rather the positive returns gained in a given enough time.
What are the strategies in passive investing? The types of passive income-generating sources are rental income, real estate, interest income, royalty income, dividend income, membership fees, advertising income, affiliate income, business income, pension income and donation income. Enjoy your vacation locally or abroad but still earn through real estate investments, because these can be leased such as building and office spaces, and you can earn without too much effort. The sooner and the younger you invest on real estate properties, the sooner and the longer you will taste the sweet of this kind of passive income. Rental income can also be obtained through movable properties like vehicles and equipment.
Interest income are your earnings obtained from lending or your cash deposit in banks. Royalty income can be earned through royalty fees by publishing a book, writing a song or being a great singer, from licenses for using software, your photos for being a professional photographer and trademark for franchising. Dividend income if managed properly can minimize the risks involved in dividend income earned though stocks and shares of an ownership of a corporation. An investor in dividend income must be guided by the right knowledge, skills and attitude to the proper discipline about investing in stocks and other securities. Membership revenues can be earned through golf club, fitness gym, and membership websites that contain useful and unique contents where users or members pay a regular membership fee to be able to access those contents. The contents of your website can earn membership fees in a form of software, applications, podcast, videos, articles and scripts. Advertising and affiliate sources of passive income can be earned by generating blogs and websites through direct advertising, third-party advertising and affiliate marketing.