Invest in resource royalty trusts. Royalty trusts are investment vehicles provided by major banks that provide royalty payments from the extraction of natural resources, like coal and natural gas. The trust itself has no involvement in the mining or production of these materials, but earns regular royalty payments that are then distributed to shareholders. The exact royalty payment depends on the volume of resource sales and the market price of the resources, but investors are seeing high yields, sometime higher than 10 percent.
While selling leads is a lot less lucrative than earning life insurance commissions, I realized over time that selling life insurance was way too much work. If I was going to keep things going, I would need to hire people, manage a team, and put in a lot of hours. I wasn’t really interested in doing any of that, which is why I opted to start selling leads instead. Now that I do, I’m bringing in passive income with hardly effort on my part.
I have done everything on this list except for invest through Robo-Advisors, and there are a few on this list that have a soft spot in my heart (because I consider them absolutely effortless) and a few that I feel required a little more effort than the term ‘passive income’ allows for. Nonetheless, whether it is passive or not really that passive, these are the best ways to earn money without spending 8 hours a day earning the money, know what I mean?
Why passive income is important?
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The United States Internal Revenue Service categorizes income as active income, passive income, or portfolio income. It defines passive income as only coming from two sources, or "passive activities": rental activity or "trade or business activities in which you do not materially participate." Other financial and government institutions also recognize it as an income obtained as a result of capital growth or in relation to negative gearing. Passive income is usually taxable.
When money is loaned to a partnership or an S-corporation acting as a pass-through entity (essentially, a business that is designed to reduce the effects of double taxation) by that entity’s owner, the interest income on that loan to the portfolio income can qualify as passive income. According to the IRS, “Certain self-charged interest income or deductions may be treated as passive activity gross income or passive activity deductions if the loan proceeds are used in a passive activity.”
passive income methods
There are dozens of ways to generate passive income. However, the option you select has to do with two metrics: time and money. Either you have a lot of time or a lot of money. Most people usually don't have both. But, if you have a lot of money, generating passive income almost instantly is easy. You can buy up some real estate and begin enjoying rental income. Or, you can invest in a dividend fund or some other investment vehicle that will begin generating a steady income for you.