A short guide to passive income

What is passive income? Passive income is basically money you make with little to no work on your part after you have set it up. It sounds great but in reality it does require some time, and sometimes some money. There are a few different passive income strategies, and I'll outline them in this post.

Peer to Peer lending. This can be a risky one, although the average return of investment is quite high, there is always the risk of default as the loans are unsecured. You need to diversify your lending portfolio by having many smaller loans, and also check the past data on borrowers to ensure you are lending to someone reliable. It isn't entirely passive but you do need to pay attention to your loans and reinvest. If you're interested in this the Reddit community Borrow could be a good place to get started otherwise check out my guide on peer to peer lending.
Affiliate marketing. This isn't exactly passive as there is a lot of work involved in setting up a website, getting traffic to it and ensuring there is new content posted frequently, I'll be posting various guides on getting set up with this sort of thing, Google AdSense and other affiliate programs. Many people use AdSense very well to generate a lot of money for themselves, and especially if you are more technologically adept this can be a great choice for passive income, here is my guide on starting a website for a passive income.

Rental properties Another stream of passive income that can be debated somewhat is rental income. This has been around for a long time and can often be a lot more work than you would expect, it also does require some money to get started, if you don't happen to have multiple properties lying around, you can get started via AirBnB, just renting out a room in your house.

Is buying rental properties for you? Before you look at purchasing properties specifically for renting you need to look at what return on investment you can expect from that property, the costs and expenses you will incur and the risks of owning it, you also need to consider whether there is a market for the type of property you are looking at, and whether you can get good tenants. A number of estate agents offer full management where they will look after the house, renting it out, checking it periodically, and all maintenance the tenant requires in exchange for around 10-13% of the rent, this can be a great option to make renting properties out much more passive as all you have to do is check the money is coming into your bank!

Dividends. This is one of the most consistent forms of passive income, dividend paying stocks are some of the most reliable in the stock market, When you buy dividend stocks you get paid dividends, and with enough time you can build a diversified portfolio and hopefully it will have enough income to support your lifestyle. What are dividends?

Information products One of the first ones to come to mind is books, CDs, DVDs etc., the royalties can be great if you have an incredibly successful product but the reality is that unless writing is your passion, a book is probably not going to be a good time investment for you. If you do enjoy writing, consider self publishing in order to make a little bit of money out of your passion.