Let’s start with the passive income ideas: there are many legitimate and proven ways to generate passive income, either to augment your current employment income from a full-time job or to help you retire early. Now, for the bad news: there are some big, scary and costly pitfalls that could turn your financial dream into a lasting nightmare.
Passive Income Ideas to Assist you to Make Money
To help you avoid this pain and suffering, here are four passive income that you need to avoid — or else!
Myth #1: You won’t have to do any work at all.
Unless you outsource absolutely everything, then you should expect to put in at least a little work — and sometimes a lot of work — to generate passive income. For example, if you start a blog, then you’ll need to create (or at least, review and approve) an ongoing stream of fresh, relevant content.
If you invest in real estate, you’ll need to keep a close eye on the marketplace and economy to know when it makes sense to renovate, leverage your property to add to your portfolio, and so on. However, don’t let this get you down: generating passive income is typically far less strenuous and much more enjoyable than working at a full-time job every day of the week (and sometimes on the weekend, too!).
Myth #2: You’ll be generating passive income within hours or days.
While it’s possible that you’ll “strike oil” immediately — after all, anything is possible — you should be prepared for a longer path before you start generating passive income. This doesn’t mean that you need to wait years and years. If you have the right plan and resources, then you should be breaking even and making a profit within the first year; and perhaps within a few months.
Myth #3: Real estate is always the safest form of passive income.
While it’s true that investing in real estate can be quite profitable — especially if you generate rental income. While your property or properties increase in value — it’s a mistake to assume that a real estate is basically a money-making machine. You need to do your homework, invest wisely, and work with good partners. And experts who will help you along the way.
Myth #4: You don’t have to pay taxes on passive income.
Unfortunately, this isn’t true at all. Regardless of where you live, you’ll need to declare your passive income on your yearly tax return (business, personal or both). However, you will also be able to deduct legitimate expenses, take advantage of deductions, and depending on your age. Moreover, income tax bracket you might not owe much — or any — tax at all. Talk to a qualified and experienced business attorney about whether it’s in your best interest to operate as a sole proprietor or obtain articles of incorporation.
The Bottom Line
Passive income ideas can be highly rewarding — especially if it allows you to retire early or, at least, work less. So that you can spend more time with your family, your friends, enjoying your hobbies, and of course reading helpful articles online! Making sure that you don’t believe any of the myths described above will go a long way to ensuring that your journey to passive income is fruitful — instead of futile.