What is passive income and how can you create it?

There are two types of passive income: residual and leveraged.

Both types become passive after some initial work, meaning once you’ve set up the income stream, it continues to bring you money without you having to spend all your time working for it.

Residual Income

Residual income is money made over a period of time, such as:

• Rent from property you own
• Commission from a client who renews an account on a yearly basis
• Selling a book or video to accompany a class you teach
• Creating a e-books or online products and selling it online via your blog
• Making photos available as a stock image for various companies
• Owning a business and hiring someone trustworthy to run it for you

These are all examples of passive income streams you set up, get running, and over time do the heavy lifting for you.

Many times, you can create passive income by delegating tasks to someone else to free up your own time for other things.

Leveraged Income

Leveraged income is when you get other people to work and create income for you. For example, you could:

• Sell an e-book online through affiliates
• Franchise your business out to other people
• Build a downline in a multi-level marketing (MLM) organization and receive commission from what people below you sell

There are different ways to create leveraged income streams. The great thing is it only takes some initial effort for all of these, and then it becomes passive.

Some home-based passive income streams you may want to consider

1. eBay. Find a wholesaler you can work with and set up your own eBay store. You can buy wholesale and let the distribution company do the physical product handling and shipping. On eBay, there’s a market for nearly every product you can imagine.
2. Google Adsense. With Google Adsense, you can set up ads on your website and automatically generate passive income from people who click on the links in the ads.
3. Affiliate programs. Sign up for affiliate programs for products other people create. You advertise the products on your website and through email campaigns. Most of these programs pay you commissions based on your sales.
4. CafePress. CafePress.com is a website that sets you up an online shop of your own, selling personalized mouse pads, t-shirts, coffee mugs, and other items with graphics you create. The graphics can be a picture, cute saying, or whatever you desire. It costs you nothing to get started.
5. Artwork. If you’re a photographer, you can submit your photos to websites that sell images as stock pictures for various publications. You’ll receive royalties every time your picture is sold.
6. Blogging. If you’re passionate about something, blog about it. There are always people out there who share your passion or want to learn about something new. Put some ads on your blog and you can generate a nice passive income stream. It won’t happen all at once, but over time if you blog regularly you will see an income spring to life.

Generating passive income is all about “setting it and forgetting it.” Once you get the passive income stream set up and automated, it can involve very little further work.

It’s not likely you will get rich through your passive income streams, but setting these up can make a real difference in your finances.  

Feed traffic to them via articles and links and you will feel the power of the Internet generating passive income you can write home about.

Charles is studying how to command success and luck in life and Online Marketing.