You've probably heard the old saying about not putting all of your eggs in one basket, but can the old way of doing business really translate over into the digital information age? Absolutely. No matter what sources of passive income you are focusing on, it's always a great idea to find the perfect balance between your resources and your passive income streams, thus giving you the best shot at becoming financially independent while keeping you out of the daily 9 to 5 grind.
What are Multiple Sources of Passive Income?
Having multiple sources of passive income is no different from having multiple sources of income in real life—it's like having two jobs. The only difference here is that multiple sources of passive income will typically require the same amount of work—no more, no less—as a single source of income. That means you are earning twice the profit for the same amount of work. If you have three passive income streams, you earn three times the profit—great, right?
Actually, yes! Passive income doesn't become less passive when you add another stream, it stays the same. For example, if you have a review website and you are affiliate marketing, throwing up another page with an affiliate link creates another passive income stream. You don't have to do any extra work aside from writing (or outsourcing) the review. In fact, adding content to your website will actually bring in more traffic, making your job less involved!
But that's more of a passive income stream than a source of passive income. To truly get multiple sources of passive income, you'll likely have to create a few stream generators. For instance, looking at your review website as one source of passive income with many streams is great. Then, if you start investing in real estate, that's another source of passive income. Add some eBook sales and you now have three sources of passive income, each with the possibility for multiple passive income streams.
Why is it Important to Have Multiple Sources of Passive Income?
Aside from the obvious (making more money), it's important to have multiple sources of passive income for one simple reason: if and/or when one passive income stream dries up, it won't break your bank. You see, unlike active income, one of the major goals of passive income earning is to not live paycheck to paycheck. Why? Because it's simple to never have to do that again: multiple sources of passive income.
Let's say that as a business standards, you will always have at least 25% of your passive income coming in better than expected, 50% coming in as expected and 25% either under-performing or drying up. Now, if you have only one source of passive income and it's in the 25% of amazing earnings, great! The only thing is, don't expect it to stay there forever.
Even in the biggest trades and industries today, the market is volatile and ever-changing. A smart way of hedging your bets is to have all of your eggs spread out to a number of baskets so that one bad break or unlucky streak won't break you. This way, even if your biggest passive income stream turns to the bottom 25% of performers, you'll still be earning on the standard 50% and high-earning 25% in the meantime.
Then, as you tweak your under-performing passive income streams, you'll be able to get them back on track, even if you have to dump a little time or money into them. This is just an inevitable part of any business—you'll have hot streaks and cold streaks. The important part is to have enough streaks in play so that the hot covers the cold and the bulk of the income consistently rolls in. When this happens, you're not just earning passive income, you're earning smart passive income.
What are the Best Sources of Passive Income?
So, what are the best ways to go about generating multiple sources of passive income? Well, that depends on your skill level, willingness to invest and/or amount of time you'd like to put into creating passive income. Below are a few of the most successful sources of passive income along with a few facts that will help you decide whether it's the right passive income source for you:
- Affiliate Marketing. Affiliate marketing is not only an excellent source of passive income because it is not time consuming, but also because you can make a lot of money once you know what you are doing. To that end, there's a ton of information out there on affiliate marketing, much of it in this blog. This makes it one of the most popular entry level sources of passive income while still remaining one of the most lucrative.
- Writing an eBook. Another excellent source of passive income is the selling of information, most commonly in an eBook or report. This is pretty straightforward and long-lasting as far as passive income sources go: you write the eBook (or have it outsourced), then you sell it online. Since every sale comes after the fact, it is the ultimate passive income source in terms of doing work once and getting consistent income from it.
- Investing in Real Estate. Another great source of passive income is investing in real estate. Whether you are just flipping properties at profits or renting the property out to renters, the only downside here is that this source of passive income will take some startup capital, unless you rent out things you already own (e.g. cars, apartments, houses, etc.).
So, which passive income source suits your lifestyle the best? The only way to figure that out is to try out a few different passive income generators. For the most part, you can find simple plug-and-go turnkey passive income sources online. These will give you the best chance to make money as you test the field.
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