Earning money without having to do anything for it? That is what we call Passive Income. According to the dictionary, ‘Passive’ means Without doing anything, not active.<\/p>\n\n\n\n
It’s a dream for many people: Earning money without doing anything.<\/p>\n\n\n\n
We live in a time when it’s easier than ever: Getting rich while sleeping.<\/p>\n\n\n\n
Passive Income is an essential part of achieving Financial Freedom. People with a full-time job work an average of 1800 hours per year. With an average hourly wage (see CBS) in the Netherlands of \u20ac25, this amounts to \u20ac48,600, including vacation pay. After taxes, there is \u20ac37,388 left. Even if you could save \u20ac25,000 of this, it would still take 40 years to save a million.<\/p>\n\n\n\n
Working for an hourly wage is a good example of Active Income. You invest your time and get a reward for it. The more challenging and unique the work, the higher your reward. But you are still limited by the amount of time and energy you have. It’s impossible to work thirty hours a day.<\/p>\n\n\n\n
That’s why most people who want to achieve Financial Freedom have a source of income that requires little effort. They have a mechanism to automatically earn money. They are no longer dependent on their time and energy. Instead, they have set up a system that works for them, and it can even work 24 hours a day!<\/p>\n\n\n\n
Passive Income is also often used to pay for a hobby or passion. Suppose you are very good at a particular game, you could start a vlog explaining how to beat certain levels or players. You post this vlog online with advertisements, and for each ad played, you get a few cents.<\/p>\n\n\n\n
The advantage: If your videos are well-watched, you can earn money while others watch your video, even while you sleep!<\/p>\n\n\n\n
On YouTube, many people make Tutorials (Explanatory Videos). Sometimes they don’t get paid much for the video but receive free tools from well-known brands to feature in their videos.<\/p>\n\n\n\n
Suppose you enjoy drawing and create a cartoon of a platypus that loves rock music, you could make those designs available on shirts, mugs, and posters. You do something fun and can also earn some money from it.<\/p>\n\n\n\n
Suppose you are one of the people earning an average of \u20ac25 per hour, and you manage to generate a Passive Income of \u20ac200 per month. You could tell your employer that you want to work one day less per month from now on. You can spend that time on your hobbies, friends, family, or further growing your passive income.<\/p>\n\n\n\n
In this article, we will explain the different types of Passive Income, where and how you can start building Passive Income, and list the benefits once again.<\/p>\n\n\n\n
Of course, it’s not all sunshine and roses, so we’ll also explain the challenges and risks, and finally, give you tips for success!<\/p>\n\n\n\n
Below we explain the types of Passive Income. Ferdy.com mainly focuses on WordPress and Affiliate Marketing, but to be comprehensive, you’ll get a summary of all possible sources of Passive Income. For online earning, you’ll find all the articles you need to be successful on Ferdy.com.<\/p>\n\n\n\n
Anyone who has browsed the Quote 500 (list of the 500 richest people in the Netherlands) cannot miss it: The people on this list have largely built their wealth through real estate income.<\/p>\n\n\n\n
But what exactly is real estate? Simply put, it consists of fixed assets. Think of a building, a piece of land, and everything attached to it.<\/p>\n\n\n\n
By owning real estate, it is possible to receive monthly rent from people who need your property. Besides the rent, it is often the case that a building increases in value over time, so you can sell it at a profit later on.<\/p>\n\n\n\n
The advantages of Passive Income through Real Estate are that real estate has always increased in value over the centuries; it is reliable and likely to keep rising. You can also increase the rent a little each year. If you receive \u20ac100 per month in your first year, it could be \u20ac200 in the second year and \u20ac300 in the third.<\/p>\n\n\n\n
The downside of Passive Income through Real Estate is that it costs quite a bit of money to buy your first investment property, even if you want to do this with a loan, you still need a significant amount of capital.<\/p>\n\n\n\n
This might be the easiest way to get Passive Income. Companies need money and sell pieces of the company to people willing to pay for it, which is called shares. If you own a share of a company, you share in the profits. Some companies pay a portion of the profits to their shareholders, called Dividends.<\/p>\n\n\n\n
If you buy a share of Shell, you receive a bit of dividend every year. Before the COVID-19 crisis, this was about \u20ac1.60 per year. After the COVID-19 crisis, it is about \u20ac0.80 per year on average, but the shares were also much cheaper then.<\/p>\n\n\n\n
Shares can increase in value but also decrease. If you don’t want to be too involved (because that wouldn’t be ‘passive’), you can buy investment funds. These are packages containing multiple shares from different countries and industries. If the oil industry does poorly, the tech companies like Apple and Philips might do well.<\/p>\n\n\n\n
Funds also pay out dividends annually or quarterly. Sometimes you get more from the fund and sometimes it’s deposited into your account.<\/p>\n\n\n\n
The advantage of Passive Income through Stocks and Investment Funds is that you can start with little money. When you receive your dividend income, you can use it to buy more shares, which also generate returns on your investments.<\/p>\n\n\n\n
The downside of Passive Income through Stocks and Investment Funds is that you can deal with rising and falling markets. Experts say you shouldn’t invest money you can’t afford to lose.<\/p>\n\n\n\n
Another downside is that many banks and funds charge for transactions but also for ‘management fees’. Some banks even ask for 2% of your deposit, even if they make losses with the funds.<\/p>\n\n\n\n
If you buy a share at DeGiro, there is a fixed cost of \u20ac3 per purchase. It doesn’t matter if you buy 10 or 20 shares, the amount is fixed. A share of Shell now costs \u20ac34, so with \u20ac3 costs added, you pay \u20ac37 for one share.<\/p>\n\n\n\n
It is best to set aside a higher amount so you can buy more shares at once.<\/p>\n\n\n\n
If you are the creator of something good, there are many people and companies who want to use it. In exchange for using your creative idea, they pay a fee.<\/p>\n\n\n\n
Mariah Carey, for example, released the song ‘All I Want for Christmas’ in 1994. Since then, she receives between \u20ac2.5 and \u20ac3 million PER YEAR!<\/p>\n\n\n\n
If you are creative, you can come up with things that others use and pay for. If you write a book, you can receive a small amount per book sold. Or if you invent a technique used by other companies, you can receive monthly payments for it.<\/p>\n\n\n\n
There are people who can’t sing but write song lyrics for big artists. They also receive a small amount for each album sold or each time their song is played on Spotify.<\/p>\n\n\n\n
The advantages of Passive Income from Royalties are that if you create something highly desired, you can earn a lot quickly. And often for a very long time. There are laws about how long you can hold certain rights, but often this doesn’t end within a person’s lifetime.<\/p>\n\n\n\n
A downside is that nowadays, anyone with a computer can share their ideas with the whole world. It is much harder to get discovered, and you really have to be exceptional. And what about Artificial Intelligence? It can write complete song lyrics without anyone doing anything.<\/p>\n\n\n\n
In 1998, my father gave me an article from a magazine. It told the story of a man who was one of the first to build a successful dropshipping business.<\/p>\n\n\n\n
His website sold wooden shoes (Clogs) to Americans. They could place orders using a form and paid with a credit card. When the payment was received, an automatic message went to a clog maker for the order. The clog maker made the shoes and sent them by post to America.<\/p>\n\n\n\n
The man who built the website earned 800 guilders (about 400 euros) per hour, 24 hours a day, and he no longer had to do anything for it.<\/p>\n\n\n\n
Nowadays, dropshipping is not so special. For example, if you go to Bol.com, you will find products sold through dropshipping. Sometimes from Bol.com’s warehouse itself, but more often websites have a direct link to the supplier without the website owner’s intervention!<\/p>\n\n\n\n
E-books are also very commonly sold. Suppose you are very good at making dashboards in Power BI; you can easily create an ‘epub’ via Word, the format in which e-books are made.<\/p>\n\n\n\n
At Ferdy.com, we will teach you how to build your own webshop, create a dropshipping website, or publish an e-book.<\/p>\n\n\n\n
The advantages of Passive Income from Online Business Models are that they are scalable. If you don’t have stock with dropshipping, you can sell unlimitedly without risk from unsold inventory.<\/p>\n\n\n\n
Disadvantages of Passive Income from Online Business Models: A lot of competition, you need unique products and ensure you add value faster and cheaper than others.<\/p>\n\n\n\n
“You need money to make money” is a common saying, and it holds some truth. It’s much easier to earn money if you have some savings or inheritance to start with.<\/p>\n\n\n\n
When you deposit your money in a (savings) bank account, you earn interest on it. As of 2024, this interest is significantly higher than it was a few years ago when you nearly had to pay to keep your money in the bank. Those who have been around longer might remember interest rates of 6% and 7% on savings!<\/p>\n\n\n\n
To earn more interest, you could start a savings plan with your bank. You agree to deposit a certain amount each month and not withdraw the money. Banks value this certainty and are willing to pay more if you commit your money for ten years.<\/p>\n\n\n\n
You can also lend your money to crowdfunding websites like Collincrowdfunding.nl or geldvoorelkaar.nl. Here, you lend money to entrepreneurs who need capital for their businesses. They might pay up to 9% per year for these loans.<\/p>\n\n\n\n
Advantages of passive income from savings and investment plans include the ease of getting started. You often receive returns monthly, quarterly, or annually, allowing you to reinvest quickly.<\/p>\n\n\n\n
Disadvantages include the risk involved. Banks often say that interest is a risk premium. The higher the risk, the higher the interest rate. If an entrepreneur on a crowdfunding platform goes bankrupt, you lose your investment. Therefore, never invest all your money in one venture, as you could lose everything!<\/p>\n\n\n\n
Content essentially means “material.” If you create a website about the best way to make oliebollen (Dutch doughnuts), you write the texts and create the content. If you add a YouTube channel, the videos you produce are the content.<\/p>\n\n\n\n
The online world is tough but fair: If you create good content, people will want to read, watch, or listen to it. If it’s good enough, people may even be willing to pay for it.<\/p>\n\n\n\n
For example, some psychologists release weekly podcasts on mental health. The podcasts are free to listen to, but if you want access to premium content, you can subscribe for a monthly fee.<\/p>\n\n\n\n
Or, if you make instructional videos on how to get rounder glutes through training, you can place them behind a “paywall” on platforms like Huddle. You charge a monthly fee, granting subscribers unlimited access to your videos and articles.<\/p>\n\n\n\n
Advantages of passive income from content creation include enhanced visibility and value if your content is good. You can earn a lot, even long after creating the content. Plus, if you write, speak, or vlog about topics you enjoy, you get double the reward!<\/p>\n\n\n\n
Disadvantages include dealing with people trying to take your ideas, high competition, and the significant time investment required to create good content.<\/p>\n\n\n\n
To explain affiliate marketing, let’s use an example. Suppose you have a friend who just started an accounting firm and is looking for clients. You offer to find clients for him and agree on a reward for each client you refer.<\/p>\n\n\n\n
On the internet, you see many forms of affiliate marketing. Someone who runs a blog (Publisher) about skincare might include links\/ads that lead to a luxury skincare brand (Merchant). These links are unique to the Publisher, and when someone clicks on such a link, it’s immediately clear who referred the customer due to the unique link. If the customer makes a purchase, you receive a portion of the sale or even a share of the subscription revenue as long as the person remains a customer.<\/p>\n\n\n\n
You now have a clear understanding of what passive income is and its uses. We’ve concluded the article with examples of passive income.<\/p>\n\n\n\n
We are eager to help you take the next steps.<\/p>\n","protected":false},"excerpt":{"rendered":"
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