As passive as it may sound, ‘Passive’ income is the money you make with little or no effort. It is like making the initial effort to open a water tap; the water (money, in this case) keeps flowing by itself. To further increase the cash flow, you may put in extra effort and ‘unscrew’ the money tap further. We share passive income ideas in this article, helping you start earning money while you remain in the hibernation phase.

What is passive income?

Simply put, a passive income is received with minimum or zero effort. Continuing with the ‘tap’ example, you only need to know which ‘tap’(income source) to open and by how much. You want to open the tap that fills up your swimming pool so you can swim in it anytime. You wouldn’t want to open a bathroom sink tap with a hole at the bottom.

Keep reading till the end for practical passive income ideas and steps to get it.

Most passive income sources require you to get involved once (at the time of setup) and rarely look back unless you wish to put in extra effort to improve your passive income cash flow. Let us discuss practical examples.

Passive income generation ideas

Here are a few Sureshot ideas to generate passive income:

Peer lending

When you lend money through conventional money lending methods, you are required to get fully involved. Activities like day-to-day reconciliation and follow-ups take up a lot of time and effort. Such activities can easily be outsourced or, instead, crowd-sourced. You can do this through an online platform managed by a professional corporation. Such a platform will have individual lenders like yourself collaborating through your funds to give out loans. You have to do “Nothing” once you commit the money to lend.

Steps to follow:

• Go online and find the lending platform that you prefer
• Do some research on past returns or minimum guaranteed returns
• Enjoy the effortless income stream while you hibernate

Dividend funds or stocks

Do your research once and buy publicly traded stocks of a company with good-standing status. As an owner of the company, you will receive a portion of its profits regularly. If you are lazy or need to learn how to research companies, you can follow a more leisurely path of investing in mutual funds.

Moreover, mutual funds help diversify your investments across various companies across sectors.

Steps to follow:

• Just go online and search through various Mutual Fund options, and look at their historical returns.
• Choose the investment that suits your risk appetite and enjoy returns while you hibernate

Real Estate

It is ancient wisdom that real estate will continue to give returns over extended periods. This wisdom still holds today. However, it does not mean you must buy a property to earn a return. The regular maintenance and upkeep required in the physical property will not classify it as a passive investment.

You need to put your money into a Real Estate Fund managed by a REIT (Real Estate Investment Trust). REIT buys properties, manages them for rental income, or may buy at a low price to sell it off after holding for a period. But as a passive investor, you don’t need to worry about anything.

Steps to follow:

• Just go through the fund statement that outlines the investment strategy being undertaken by a REIT.
• Look at the term sheet and put your money in and reap returns while you hibernate.