One of the key ways expounded by most who have already become financially independent is to start earning a passive income. Most millennials aspire to have a passive income either to accelerate financial independence or to increase their "fun money". One way i like to think of a side hustle is to think of it as an additional member who is part of your household who brings in money. Eg Your net worth is 50L and you earn interest at 8%, you could think of it as a member in your household whose yearly CTC is 4lakhs per annum.
What is passive income?
Passive income is money that is earned when you don't actively work for it apart from the effort you put in at the start. To contrast this with active income, this could be the daily 9-5 job where you have to put in effort on a daily basis in order to get paid a salary.
What are some ways to earn a passive income?
1. Financial products
There are a plethora of financial products like Fixed Deposits, Dividend Producing stocks, P2P lending, Mutual funds etc etc where you can earn once you have invested the money upfront. This will grow basis the asset class you have taken, be cognizant of the possible risks before investing in each of these products.
Blogging could be a way to earn a great income. However blogging requires consistency of effort over a long period of time. You may only start to see some results 6 months after you start and reasonable results 18 months down the line. Some ways to earn through blogging would be - Ad revenue, Affiliate income, Products/Services that you could sell through your blog.
3. Creating an online course
If you are an authority in your field, you could create an online course and sell that to people who are willing to learn that topic. This will require effort upfront to structure, create and promote the content. But once this bit and the initial push is done, it becomes passive and you have to do minimal check-ins from day to day.
4. Setting up an e-commerce site
If you can find a niche demand for products/services, you could setup an e-commerce site using Shopify and start selling. If you already have a semi-popular following on social media, this could be a great way to leverage your followers. A small word of caution, this will involve a higher upfront monetary investment than other aspects. To illustrate and example, this could be on the lines of fashion, apparel, jewelry or any niche that you could find really.
5. Taking up a consulting gig
This is not a passive approach to earn additional income, it is quite the opposite really. But i have decided to mention this here as this could have the highest upside in your side hustle income while starting out. To get a reasonable return on the other mentioned side gigs will take some time. However, if you network well and price yourself well, you could land yourself a consulting gig in your area of expertise which pays reasonably well. Most of the time, you might get paid a higher hourly amount than your salary with none of the overheads! You could also sign up on services like Fiverr, Upwork etc to freelance and earn an additional income.
A passive income/side hustle can accelerate your financial independence journey. Side hustles do however come with certain caveats, there is upfront investment that is required in terms of money or effort or both. These are a couple of ideas to get you started thinking on a side hustle. What are some of the ways you are interested in or are already doing? Let me know in the comments section below.