According to CNBC, the top 1% of income earners worldwide earn 39% of the global income, with 29% of their earnings coming from investments. Passive income, earned through smart investments and minimal effort, has become a popular way to boost one’s income. In fact, the top 0.1%, are reliant on their investments for 35% of their income. But to invest, or gain required skill from stock market paid course, you need to have a passive income source too!
One must note that passive income doesn’t mean that they don’t need to work! One must invest time or money to create something upfront. This product or service will then help you to generate income down the road, with smaller efforts along the way. If you’re looking to increase your earnings and achieve financial freedom, consider these seven proven ways to generate passive income. Let’s Begin!
Dividend Investing: A Steady Stream of Income
Indian investors find a higher emotional value to high dividend-yield companies. A testament to that is more than 70% of companies from the BSE 500 pay dividends every year. Dividend income can be an excellent source of passive income while enjoying capital appreciation on your invested stocks. Carefully chosen dividend stocks with good fundamentals from Online Stock Market Courses in India could provide a consistent stream of income, making them a valuable addition to your portfolio.
In this video, we have told you, step by step guide with which you can build a dividend portfolio with compromising on capital appreciation which you wouldn’t even find in a stock market webinar!
Corporate Bonds: A Safer Investment Option
Investing in corporate bonds offers another opportunity for passive income taught in best stock market course. Private corporations are in constant need of funds as they could be expanding or launching a new product. Such companies raise capital either through debt or equity instruments.
These debt instruments, with specific tenures and interest rates, provide periodic coupon payments to bondholders. While corporate bonds carry higher risk compared to government bonds, they also offer higher returns. Always check the credit rating before investing to ensure the issuer’s financial stability. These factors will help you make decision whether to invest here or not!
P2P Lending: Invest into People
Peer-to-peer lending platforms connect lenders directly with borrowers, offering both secured and unsecured loans. By funding individual or business loans, you can earn interest on the amounts you lend. As with any investment, there is some risk of default, but diversification can help mitigate this risk.
P2P lending is generally done through online platforms that match lenders with the potential borrowers. Lenders can use this information to make an informed choice and send a proposal to fund the borrower. Offers are accepted on first come first serve basis. A lender can fund up to 10% of a borrower’s total loan requirement.
How does P2P lending work?
Peer-to-peer lending is a fairly straightforward process. All the transactions are carried out through a specialized online platform. The steps below describe the general P2P lending process:
- A potential borrower interested in obtaining a loan completes an online application on P2P lending platform.
- The platform assesses the application and determines the risk and credit rating of the applicant. Then, the applicant is assigned with the appropriate interest rate.
- When the application is approved, the applicant receives the available options from the investors based on his credit rating and assigned interest rates.
- The applicant can evaluate the suggested options and choose one of them.
- The applicant is responsible for paying periodic (usually monthly) interest payments and repaying the principal amount at maturity.
The company that maintains the online platform charges a fee for both borrowers and investors for the provided services.
Is P2P lending legal in India?
P2P lending is legal in India and in August 2017, the Reserve Bank of India has classified all the P2P lending sites under Non-Banking Financial Companies (NBFC).
Is P2P lending safe?
The risk involved with peer-to-peer lending is the risk of default by the borrower, that is, the borrower doesn’t pay the interest and the principal amount. If a borrower defaults, a P2P platform can assist the lenders in recovery and file legal notice against the defaulter. But that is all what platforms can do.
You can check platforms such as Faircent which is India’s first peer-to-peer (P2P) lending platform to receive a Certificate of Registration (CoR) as an NBFC-P2P from the Reserve Bank of India (RBI).
This table shows the list of borrowers at Faircent with the names, tenure for the loan, rate at which the loan was taken, amount borrowed, paid and payment due.
Passive Income through Trading
To create passive income through trading one would need more time compared to other types of passive income opportunities. To build this income stream through trading, a solid understanding of the stock market, trading psychology and trading strategies from stock market courses for beginners is required. Here is a link of the top stock market course in India: <Link>
To elaborate, one needs to learn technical analysis, risk management, position sizing and relevant concepts. As taught in stock market courses online free with certificate, there are three types of trading through which one can build a passive income stream:
- Day Trading: Day trading involves buying and selling securities such as stocks, or derivatives within the same trading day. Day traders closely monitor the market and close all their positions before the market closes to avoid overnight exposure. To place their trades, intraday traders rely on technical analysis, charts, and indicators which they have learnt from stock market course in Noida to make quick trading decisions. Day trading requires active participation, constant monitoring, and quick execution of trades.
- Swing Trading: Swing trading aims to capture short-term price movements over a period of a few days to several weeks. Swing traders seek to profit from both upward and downward price swings within a bigger trend. They analyse technical indicators, chart patterns, and market sentiment to identify potential entry and exit points. Swing trading requires less time commitment compared to day trading, as positions are typically held for a few days or a week. It is often the most popular choice of students enrolled in stock market courses in Chennai.
- Position Trading: Position trading takes a longer-term approach, with trades held for weeks, months, or years, without the goal of earning via dividends. Positional traders focus on identifying larger trends and riding the momentum of these trends. They analyse fundamental factors such as company financials, industry trends, technical factors and macroeconomic conditions to make trading decisions. Position trading requires patience and the ability to withstand short-term market fluctuations without making frequent trades.
One of the ways to have a passive income is to sign up on a platform to promote affiliate products or services. The platform could be a website, blog, YouTube channel, podcast, or social media presence. The secret sauce to profit in such scenario is consistently creating high-quality content that attracts and engages your audience.
One you join an affiliate program, you will receive unique affiliate links or banners that track your referrals. The strategy would be strategically incorporating these links within your content, ensuring they are visible but not overly intrusive. One must also include various techniques like text links, product reviews, comparison tables, or call-to-action buttons to encourage clicks and conversions.
This income stream is perfect for people who have considerable following on social media platforms.
It’s a fact that attractive rental income can help you earn a high real rate of return in the long-term. Rental income also gives you the benefit of a regular income, which keeps increasing every year to remain in sync with inflation.
Before you invest in a property, it’s crucial to figure out how much rental income you should expect. The rental return may vary depending on the city, location, population, etc. Also, the rental income on residential and commercial property differs significantly. Usually, returns as a rental income on commercial properties is higher than residential properties. However, you don’t get a tax benefit and easier loan support when buying a commercial property.
Second is the choice of property location plays a very important role to ensure a smooth inflow of rental income. If you are purchasing a residential property, it should have easy access to roads, metro stations, and railway stations along with other physical infrastructures.
Usually, people who find a rental home, also look for social infrastructures in the vicinity like schools, colleges, malls, supermarkets, multiplexes, hospitals, clubs, hotels, parks, and so on. It’s always tricky to select between the commercial and residential property; so, evaluate both the options carefully before taking the final call.
Also, according to a popular rule of thumb, it’s said that your property should ideally generate at least 3% of its current value in a year. That means, if the current value of your property is Rs 1 crore, it should earn at least Rs 3 lakh in a year (i.e., Rs 25,000 in a month).
Become an Insurance Agent:
A POSP or point of salesperson is one who is involved in selling insurance policies. To become a POSP insurance agent, you need to complete a mandatory exam by IRDAI and a 15-hour training session. It is a good way of generating passive income because you don’t need to be actively involved full-time and can sell insurance policies in your free time. Moreover, the best part of becoming a POSP agent is that there is no investment required in the process, you just need a smartphone and a stable internet connection. It is important to note that the more insurance policies you sell, the more passive income you can generate by becoming a POSP agent.
Bonus: Became mutual fund distributor
If you have knowledge about mutual funds, then one could become mutual fund distributor and earn commissions by selling them. Distributors of mutual fund products have been earning a passive income called the trail commission. This is paid on the value of the investment, as long as the investor stays invested in the fund. As the fund grows in value, the distributor that sold the product earns a passive income on it. Many distributors have built a large enough corpus to earn adequate passive incomes from the money they got into the fund.
Step 1: Clear NISM-Series-V-A: Mutual Fund Distributors Certification Examination
Step 2: Get your AMFI Registration Number (ARN)
Step 3: Get empanelled with different Mutual Funds directly or join online mutual fund distribution platform.
These are some ways through which you can build your passive income. This way you can start with additional passive sources of income!