Passive income can be a significant additional source of fund for many people, especially during the impact of the pandemic period. It can prove to be a valuable lifeline during these tough times, considering the effect of the lockdown imposed by the federal republic of Nigeria.
Passive income can help keep your income flow steady when you lose a job or even trying to save up for retirement.
What is passive income?
Passive income is a means of regular earnings from an alternative source other than salaries or wages. It can come from different sources like rental properties or a business venture in which one isn’t actively involved.
In reality, passive income does not entirely mean you fold your arms while the funds flow in. It means you must have worked upfront to save some money that you could put into one or two business ventures as an investment. Sometimes, you even have to do some work along the way like maintaining the car you put up for uber services.
5 passive income ideas for building wealth
It might be hard to gather enough money to build an investment that will create wealth for you in terms of passive income in these tough times. However, there are several strategies you can use to build wealth with resources that are available to you.
They include the following;
- Selling information online and offline.
The most powerful in the world today are the ones with the most information at their disposal. One popular strategy for passive income is setting up an information product or service. You can set up a training program where you train people through online or offline channels for a fee. You can also start a blog that will inform and educate your target audience on a particular area of expertise
Information products or services can deliver a superb income stream because you make money easily. However, the excellent income streams are not consistent, thereby allowing room for doubts. You only have to strong and focused on rising above the challenges
- Rental income
Rent is one of the most effective ways to earn passive income, but it often requires more attention than usually expected. You have to take the time to make it a profitable investment to see the value in your investment. It would be advisable if you always considered the cost of maintaining the property as well as the financial risk of owning the property to determine how much return you want on the investment.
Rent can be very profitable too, but you are often faced with the risk of a tenant who refuses to pay rent or pays late and damages the property. In this light, to preserve your income from this investment, you need to draw a distinct agreement legally binding by law.
- Affiliate marketing
This is slightly related to option one above. Affiliate marketing is one of the most resourceful as well as a fast-paced source of passive income currently in Nigeria. It involves website owners, YouTubers, social media “influencers” or bloggers promote third party’s products or services on their platform. There are several methods this could be done depending on the objective of the seller. It could be done via a web link, sponsored blog or social media posts and much more.
The financial reward could either come in commission or a one-time payment. However, if you are starting, you will need some time to build content that will generate enough traffic or followers to your platform
- Savings accounts
You can also earn passive income by creating your wealth with one of the many digital banks where you receive interest monthly. Like we have rightly mentioned, you must have worked upfront in some cases of passive income. In this case, maintain a savings account for like a year, then sit back and watch the interest rise.
Your best option in terms of a savings account is going with a digital bank because they typically offer higher interest rates. However, apart from fluctuating interest rates, you also face the risk of losing your investment to a failed bank. Digital banks are too fragile and don’t have a strong foundation like the traditional banks.
- Bonds and Treasury Bills
One of the ways of building passive income is by investing in government bonds and treasury bills. Treasury bills are short term investments usually within a year, while bonds are long term investments, generally more than one year. You can earn a good income from these investments monthly by collecting interest payments until it matures. You also have the option of sticking out your investment upon maturity so that you keep the flow of passive income steady.
The question remains “how many streams of income should I have?” There is no perfect advice when it comes to creating several income streams. Your choice should always depend on your present financial capabilities and your future financial goals.