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9 Tips to Help You Create Passive Income for Life

by Jason on October 25, 2010

Once you’ve had a taste of passive income, it’s hard to deny it can become almost habit forming.

Seeing and understanding how your money can work for you, and create money of its own with little or no work from you, is a wonderful feeling.

It is often the feeling of independence – financial independence that is.

Simply put, passive income is income that requires little or no work upon your part once the income stream is put in place.

Certainly there WILL be some work at the beginning to get the passive income stream set up, and there will be some supervisory work or updating work along the way.

But, many passive income streams are quite self-sufficient, meaning you largely get to sit back and watch your money grow.

But getting a passive income stream started may at times be easier said than done.

Here are some tips that could help you create your own smart passive income.

1. Ease of Accessibility

A passive income might be generated by something as simple as investing your money in an interest earning savings account, savings bond or certificate of deposit that gives you returns on a regular basis.

Such investments however, might call for the investment institution to retain your money for a particular period of time, charging a penalty should you require your money back before the maturity date.

It is often important to bear in mind how accessible you need your investment to be before turning it into a passive form of income.

2. Look For What You Love

Not all forms of passive income require a monetary investment though.  Things you already love to do might earn you a passive income.

Selling artwork you’ve created, earning residuals from articles you’ve written, or earning advertising revenue from a blog you’ve created could all be fun or easy ways for you to earn passive income by way of a passion.

3. Ample Opportunity

If you aren’t sure what type of passive income streams are out there or which ones might be right for you, consider doing a little Internet research.

The Internet has opened plenty of avenues and opportunities for passive incomes and there is a variety of advice out there upon the topic.

Taking an hour or two to search and read about forms of passive income could help you come to a decision on what type might work for you.

4. Due Diligence

While the Internet can be a great source of information on passive incomes and may provide certain opportunities, it’s important to go into such opportunities with your eyes open.

There are sites on which to set up a revenue producing blog, sites that allow you to write articles for residuals that earn money over time, and a variety of other ways of earning a passive income by way of the Internet, but you could get burned jumping too quickly at such options.

Not all such sites are reputable, and sometimes the ones that are could leave you doing a lot of startup work for very little return over the long run.

This is why it can be important to conduct your due diligence to ensure your work is met with proper reward.

5. The Quick Money Isn’t Usually the Best Money

Tying in with due diligence is the fact that quick money isn’t usually the best bet when it comes to passive income.

While some forms of passive income might offer you an up front payment for your time invested, it is also important to consider what your work might be worth over the long term.

An example of this would be selling an internet article to a client for $5 upfront when that article used elsewhere could make you $25 or more in residual or advertising revenue over the course of a year.

6. Diversify

As with investing, when it comes to passive income streams, you may not want to put all your eggs in one basket.

Diversifying your passive income can help you protect yourself against downturns in the economy or keep your income streams flowing when one or more of those income sources is turned down to a trickle.

7. Don’t Let Your Forms of Passive Income Stagnate

While passive incomes streams may not always require a lot of work once in place, they still require supervision and updating from time to time.

Keeping your passive incomes streams up to date and relevant by checking up on them, updating them or reinvesting in them can mean that they remain efficient revenue producers for you.

8. Be On the Lookout for New Opportunities

As times change so might your opportunities for passive income.

Being on the lookout for new passive income opportunities, whether they are online, by way of interest earning investments, real estate, or whatever, can help keep you diversify and take advantage of new income sources.

9. Network

Networking through friends, family, and associates can help you stay apprised of new passive income opportunities.

Networking can also help provide you with advice, ways of earning or increasing current passive income streams or finding and developing new ones.

This has been a guest post by Tom Becker, who writes for Money Choices, a leading Australian money comparison service where you can compare savings accounts and various other types of financial products.

This post was included in the Best of Money Carnival hosted by The Financial Blogger, and the Yakezie Carnival hosted by Saved Quarter.

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