Passive Income in 2021

1. Passive Income in 2021 littlsesaves.com / --

2. Introduction Hi my name is Abhi. I am from the southern part of India. Little Saves is my website chronicling my journey towards my investment goal of 5-to-5-in-12. I wish to follow this rigorous path and prove to my self and the world that little saves can give big returns and that it is possible for one to make crores and achieve ?nancial independence without sacri?cing sleep, family time and health. Thank you for downloading this ebook. My aim is to educate the readers on how to earn passive income from different streams to help you achieve ?nancial independence. Abhi Little Saves / --

3. Topics What is Passive Income - De?nition, Bene?ts and Examples Passive Income Ideas - 9 Best ways to earn extra money in 2021 / --

4. What is Passive Income – Definition, Benefits and Examples / Page 4

5. What is Passive Income – De?nition, Bene?ts and Examples Since childhood, you must have been taught about working hard and learning every possible skill for your ?nancial success and stable future. All these skillsets are supposed to be put into our regular job which takes almost 8-9 hours/day during the whole contract period. Through our active job is the pillar of our incomes, there is something else that every all people do in order to secure and boost their ?nancial status. That is to earn extra money by creating a stable source of passive income. The concept or idea of Passive income has a number of myths such as, it is free, it is useless, so on and so forth. We are going to discuss every query you might have regarding passive income in this article. What is passive income? “Passive income is money earned with little to zero effort”, this is what you might have heard about passive incomes and that perhaps, might have drawn your attention towards it. Well, that is only half the truth. Here is our de?nition of passive income. Passive income is a regular ?ow of income, created by spending effort, time, and money upfront and then reducing the active participation at a later stage, at which point money is earned with little to no effort. In passive income, you are going to generate very little cash in the beginning, with failure and frustration as add-ons. But these challenging scenario is going to be the pillar of your patience, experience as well as income level. The more you fail, the more you learn and the more you will earn. Page 5 /

6. What are the benefits of passive income? Passive income is not just about earning extra money, it is also about thinking long term and creating a number of income sources that buy you ?nancial freedom to do what you want. It has certain perks and bene?ts that are important for ?nancial growth: 1. Over a period of time, you will reach ?nancial freedom and can quit your regular job if required. 2. You will always have cash in hand which creates extra security. 3. Do you know how the rich gets richer? By reinvesting. Your portfolio income can be reinvested to further grow your wealth. 4. It will strengthen your retirement corpus and help you go for early retirement. 5. Additional income and ?nancial stability gives you emotional happiness and time to do things you care about. Now, let us see what makes passive income different from other sources of income. Active or standard income vs passive income In traditional or active income, you perform some job and you get paid for your time, effort, and skills. When earning money passively, you have already done some work or invested money, time or energy. You are simply earning a steady stream of revenue that is recurring in nature. This could be from any source such as a Fixed deposit that pays interest, stocks you bought those pay dividends or even a REIT or rental property that gives you a recurring rental income. There is just one criterion for side income to be classi?ed as Passive. That is, it should not require much work from you. You should be getting the money without exerting effort or investments at the later stage. Page 6 /

7. Example of passive income If you are a partner in a business and are working there, the money you earn from it is standard income. Instead, if you are a sleeping partner in the business, the money you get from it is passive cash, as you are not putting in any effort into that business. And, passive income gives/saves you something more valuable than money which is Time! Time is the most valuable and proportional asset each individual on this planet has and how one utilizes it changes the game. For e.g., if you have a passive income stream in a real estate investment trust, you get the extra time to invest somewhere else. In the active income, you have to regularly trade your time for money while passive income is time-independent. Types of passive income generating sources Generating cash without doing work is not easy during the initial stage. You need to put in hard and smart work to be able to have money coming to you every month. All sources that provide a passive return can be classi?ed under two major headings based on your major input being time or money. Income earned by investing This is when you have cash in-hand and make passive income investment that is optimized to give you a monthly income. This type of investment income generate regular, recurring cash?ow for you that grows over a period of time. The effort required for this is lesser compared with other passive income opportunity. Page 7 /

8. 1. Decide how much you can invest 2. Decide your time frames on when you want to retire, how soon you need the monthly passive income etc 3. Identify the different investment opportunity available to you in your budget and time frame 4. Execute and make the investments 5. Be patient and wait for the money to start trickling in Remember, to be cautious when investing, seek help from a ?nancial advisor or a retirement planner when taking big decisions. Income earned by effort You may not have much money, but have great skills. Then you can put the effort to create something that will get you money regularly. Videos that you create can generate advertisement income on Youtube. Books you write can generate royalty, apps you build that people continue to buy are all examples of this. 1. List down all the skills that you are a master of 2. Figure out how you can monetize these skills 3. If there are skills that you are not a master of yet, learn till people are willing to pay you for it How to earn passive money? There are a lot of creative ways you can create passive income streams and start earning money every month. Step 1: Assess what your strengths and capabilities are. Step 2: Clearly understand how much time and money you can invest in order to pursue the passive income idea you select. Step 3: Go through our list of passive income strategies and additional income ideas to ?nd out what is the best one for you to start earning. Page 8 /

9. If you work in a high salaried company or have a good strong business, then you can choose some of the investment sources that provide a monthly return on your investment. On the other hand, if you are studying, working, on a low salary or don’t have a job then, choose a way where you monetize your skills and abilities to create streams of income. Here are some passive income strategies you can adopt for your self. Passive income strategies Some of the passive income strategies you can apply to earn money passively by investing: Starting a blog by writing articles, uploading video content on Youtube. Internationally providing your service as a freelancer via Fiverr, Freelancers, etc. Leverage your fan following and become an in?uencer in your ?eld. Af?liate marketing is one of the best passive revenue streams done worldwide. If you are interested in af?liate marketing there are a tonne of options such as Amazon, JVZoo and more. Amazon Af?liate is one of the well-known Af?liate programs as it gives you a diverse selection of products to market and the payout is regular and lucrative. Creating a coaching business or tutoring one on one or in groups and one of the best extra income sources for students. Page 9 /

10. Here are a few other additional income generating ideas that require less time and more upfront investment. Invest in fixed deposits: They provide a stable and low-risk low return investment option. Invest in dividend stocks: Investing in the stock market is high risk and high returns. You can earn dividend (note: in some stocks dividend payouts happen annually and some stocks don’t pay dividends or have low dividend yield) and also pro?t from the increase in stock price. Dividend stocks are typically stable companies that pay a dividend periodically without fail and can improve your cash ?ow. Invest in mutual funds or ETFs: You can consider investing in mutual fund or ETFs that would appreciate over a long period of time. While this will not directly give you recurring income, the money invested will grow over a period of time. This can then be moved to a ?xed deposit which can give you the recurring income at that time in the future. Loans/P2P lending: Loans are given out to generate interest. Risk varies depending on the customers and the locations you lend to. P2P lending and Peer-to-peer loans are becoming very common these days. Rental income: Investing in real estate can become a cash cow if invested right. Invest your money in buying a residential property or commercial property. You earn rent and the value of the property will increase with time. Also, check out our detailed list of passive income ideas to build your income stream. Page 10 /

11. Some passive income myths busted The lazy way to earn money This myth about earning money passively is all about what grabs the reader’s attention. Well by far, you have come to know that it is not at all true. One is supposed to create a concrete plan along with strong backups, do a lot of research and experiment, put in a lot of time, money, effort, and energy to create the source of extra cash ?ow. There is nothing lazy about generating money on the side. Low income generated People think that these are very low income sources and not worth the effort. Hence they give up even before they give it a shot. In the initial phase, there will be nil to less amount of economic return. But with time, as the exposure and value of your investment increase, cash ?ow and earned income will automatically increase. Starting will de?nitely test your patience level! But learn to be patient. Check out Abhi’s Financial Independence journey updates. It took over a year to start seeing decent returns. Persistence pays. Not long-lasting This completely depends on the effort that one puts in and the smart planning that goes into designing your income generating strategy. The amount of research done and future security will decide the life of your passive income source. Even if there is any sign of collapsing in the future, one should be able to predict that at an earlier stage. Plan in advance and keep monitoring, doing periodic reviews of your investment portfolio and income streams. Page 11 /

12. Limitations of passive income Like every other thing in the world, passive income too has a few limitations. It will be a bit stressful at times, personal time will be compromised, ?nancial loss may occur in case of un-calculated investment, etc. All these obstacles will be there for a period of time and can be managed by balancing the pressure and being a little bit ?exible. Keep your eyes trained on the ultimate goal of achieving Financial Independence. If your long term plan is to quit, visualize the day you will tell your boss that you Quit! Importance of generating passive income in FIRE FIRE is all about how you reach Financial Independence to Retire Early . Financial Independence and Retire Early is a movement that motivates people to create a ?nancially secure position in life for themselves and then retire earlier than usual. Once you retire, you need a steady stream of money to stay retired. The money can be in the form of rental income, dividend stocks or other side hustle sources that generate extra income. This money should cover all your expenses for the rest of your life. Additionally, this should also handle the increase in your expenses due to in?ation. This is why it is important to be Financially independent, in the sense, you are generating suf?cient income passively so that you are not dependent on your job for your living expenses. Some frequently asked questions What are some examples of passive income? Some good examples of passive income are rental income, interest on deposits, dividends from stocks, earnings from royalty, pensions. Page 12 /

13. How long should passive income give returns for? It is mostly perpetual in nature and will go on as long as the underlying source is active. Eg: In rental income, you will keep getting rent from the house as long as the house is in good condition and occupied. What is the difference between passive and regular income? For active/standard/normal income you need to work and put your efforts in order to earn money. Passive on the other hand is money you earn without putting in efforts. Is passive income taxable? Yes, money earned as passively is taxable similar to other income. In India for example, there may be different classi?cations and tax structures. Income earned from Fixed Deposit upto Rs.10,000 is tax free (up to Rs.50,000 for Senior citizens). Similarly, there are other tax exemptions and tax classes on royalties, patents, dividends etc. Rental income is taxed as normal income. Where to get passive income? You can get passive income from any source that pays a return on your investment. Or you can create assets that can earn you money such as music, apps, videos, writing, educational course content etc. Is pension or provident fund a passive income source? Yes, it is. Pension and Provident funds are what you accumulate working previously. Later on, once you retire, the money is paid to you without you needing to work or put in any effort. Page 13 /

14. How is passive income different from residual income? Passive income is recurring monthly income. Residual income is the balance of money that is left over after all other expenses are covered. Passive money you earn can grow, but residual will only diminish. How much passive income do I need to retire? This depends on your lifestyle and when you are planning to retire. A simple way to calculate is to use the 4% rule . Just take your current monthly expense, multiply that by 12, then multiply that by 25. This is the amount you will need to retire. It varies person to person and you will need to calculate it and plan properly. Page 14 / --

15. Passive Income Ideas - 9 Best ways to earn extra money in 2021 / Page 15

16. Now, let's further dive into some passive income ideas that are going to unlock different streams of passive incomes for you. 1. Cashbacks & Rewards This has to be the easiest form of passive incomes without any hassle or complex passive income strategy. Trust me, this is a form of income that anyone can do! I netted over Rs.12,000 from this in 2020 alone. I have made over Rs.40,000 via cashback, rewards, and airline miles. Read my 2020 update here . As someone’s grandma once said, “A rupee saved, is a rupee earned and is passive income”. Take this stream seriously. By planning your purchases and availing of the discounts available to you, you get to continue enjoying your current standard of living, while spending lesser. 2. Passive income through Property Real Estate Investment Trust (REIT) Investment in real estate can create a huge fortune depending on the goals of the investor. If invested in a genuine REIT, even with low funds, one can invest in different prime locations. Incomes generated depends on the owner’s risk tolerance. These investments primarily include residential lands and commercial properties. A few risk factors include signi?cant upfront capital and debt from the bank. Page 16 /

17. Rental Incomes Another very popular passive income stream is renting property. It has been around in India for the past 2000 years! Now, off late more avenues have opened up for you to make money out of your property. The usual. Buy the property, rent it out, sip your lemonade as money pours in. Keep in mind that, the income generated from investing in real estate can earn better IRR from several other sources. Nevertheless, there is risk of value of land dropping and property expenses. Plus rent can vary depending on the location. For 2021, are you availing Tax bene?ts for home loans? If not, you can consider investing in a property, at a good location, with a reputed builder, and rent it. This way you get a tax break on the loan principal and interest. HRA bene?ts will be available too for your current house. This needs to be declared and taxes paid on the rent received. Subletting your property as a source of passive income Air BnB took the world by storm. Leverage this concept to earn extra cash on the side. Turn your house into a mini-vacation stay or hotel and make money off unused rooms. I have a couple of friends in Chennai, Mumbai, and Bangalore who have generated a pro?table income out of this. 1. Find a good platform such as Airbnb , Vrbo , or several other Indian ones that are available. 2. Renovate the room to make it suitable for guests 3. Rent out a room or two from your house 4. People will be able to book your room for a ?xed period 5. Earn rent as people book your room Overall, the house is yours, you get to enjoy it for a larger period. On the minus side, less privacy and matters of security and safety to be considered. Page 17 /

18. Few other incomes from property worth mentioning Depending on your area or locality, these pay well. Rent out your rooftop for cafes Front wall can have a Billboard How about a telecom tower on your terrace? Have a huge backyard or garden? Rent it out for tuitions and classes or even events. Don’t prefer the AirBnB route? Here is an alternate way for monetizing un-utilized rooms. Rent them out as storage space to friends. We do this in our ancestral house which we barely use. A couple of rooms have been given to people to simply store their junk. It is accessed very rarely, people do not invade your privacy. 3. Fixed Deposits & Investments Debt Funds This is my personal favorite. I have a good chunk of my investments in reliable Debt funds. Their exposure to equity and other market factors is far lower than ETFs and other funds. I highly recommend this to investors with low-risk tolerance. These funds are liquid and usually come with no Exit Load penalty. I am currently getting about 9.4% from my Debt fund investments. ET Money is a great app to help pick out some good debt funds. Interest earned from Fixed Deposits This passive income source is somewhat liquid, safe but the returns are not that good. As of now, the FD rates in India are between 4% to 6.5%. Consider maintaining an FD as part of your portfolio. The portion of your investments in this should be depending on your risk appetite and age. Fixed deposits are a lot more stable and secure compared to other sources. Page 18 /

19. Mutual Funds So far, in the ?rst half of December, I have investments in Mutual funds that have gone from +28% and -8% and bounced back to a 12% rate of return. Depending on your risk appetite choose your allocation of funds (I allocate equally across High, Mid, and Small caps). It is best to go the SIP (systematic investment plan) way, where you invest a ?xed amount each month (kind of like recurring deposits) into select funds. This way, irrespective of the market being up or down, your investment will average out. Stocks Risky and volatile. Investing in stocks can yield different results depending on how you approach it. If you are day trading, swing trading, prepare to lose your money. This is not for the common passive returns seeker. Algo traders and huge volume traders will take your money in a jiffy. Instead, choose fundamentally sound businesses. Companies that grow, are of value and most importantly pay you dividends. These stocks are a great source of extra money that will hit your account every once in a while and appreciate as the company grows. 4. Dividend Stocks Stock dividend is the pro?t that is paid to the shareholders in shares instead of cash. The greatest advantage of a dividend stock is that shareholders are not required to pay taxes on the value. Investing in a stock dividend is generally considered better than a cash dividend as it gives the shareholders the choice of keeping their pro?t or turning it to cash whenever they desire to do so. Page 19 /

20. 5. Side Hustles and Income from Online jobs This century has seen numerous opportunities for you and me to make money from the internet. There is some work involved and you need to have some skills. But all of these are good money earning schemes where working from home is an add-on Money from Web development/Programming: With everything going digital and online, developing new programming skills has become every man’s job. Though it might take some time to hone the skills of a programmer, with time and effort one can master it perfectly. There are so many platforms for freelancers like Freelancer and Upwork . Have I mentioned, I used to make about Rs.20,000 a month during my college days. This is for a couple of weekends of work on WordPress for clients. And if you are a ninja in coding, you can build websites from scratch and earn thousands of bucks with it. You can make money over your weekends in several ways: Building websites Doing research work Writing copy or blog posts Data entry Earn money with your creativity Have you ever heard of Fiverr ? Do you have creative or other viable skills? Head over, you can score gigs for making logos, designing business cards, banners, brochures, infographics, editing images, making videos and music for others. Fiverr is no longer stuck to $5 gigs, you can earn big these days. Page 20 /

21. Few other ideas for income from online There are a few other things you can look at: Blogging Social Media Management Coaching and other services Tutions and Paper corrections Blogging Though it takes time to grow a blog that doesn’t mean it is gone. If you have a knack for writing, use your creativity and genuine information to write articles and eventually another revenue stream. Social media management Plenty of companies and startups are looking for someone to handle their Social media accounts like Facebook, Instagram, Youtube, LinkedIn, Twitter, etc., and regularly manage campaigns, posts, ads, likes, comments and boost up their audience by increasing followers and subscribers. Coaching and other services In this era of networking, if you can establish a good hold of the audience with your authenticity and valuable services, then you can create a revenue stream by providing coaching services in different sectors all around the world starting from ?tness, ?nance, education, etc. Page 21 /

22. Tuitions and paper corrections You can easily pick up a side job of teaching any of your favourite subjects starting from English to Finance to even any local language. My wife was once correcting English papers for non-English students online. All she had to do was read through and correct the grammar, sentence structure, etc. A few hours per week is all that is needed to generate this income source. 6. Non-traditional alternate income opportunities In this century, there is a tonne of alternate areas to invest and grow your wealth from. But, that also means there is a tonne of crooks, so be careful where you invest and always be cautious. Property Share This is a recent idea where a bunch of investors lend for the construction of a property or alternately buy a share in the property. You get your returns on the rental income from the property or if the property is sold a ?xed % as interest on your funds. There is also REITS (Embassy group has one on the stock exchange). In India there is PropertyShare and further away you have Crowdestate, Bulkestate, and Estateguru Out of the box Some quirky ones exist too, that end up helping people or the environment while generating incomes : Heard of Sun exchange ? This Africa based startup sets up solar plants in large buildings and schools in Africa and allows you to buy solar cells from them. You are paid back in terms of the energy generated by your cell. I have a couple of solar cells and feel good about it! I get about 11% returns on investment. Page 22 /

23. 7. Royalties and revenues You can put your skills and education to good use and generate multiple recurring incomes for your retirement. Monetizing your creative assets Stock Photography – Great photography skills? Monetize it by selling your photographs as stock images. High-resolution images are required in online and of?ine businesses. Sign-up with a stock-imagery website and you are good to You can try Getty Images, Shutterstock, and Scorpio Coursework – PMP expert, Six Sigma, ?uent in French, Machine Learning? Sign up to coach or creating course work. Edureka, Udemy, and many MOOCs are looking for you Writing, music, scriptwriting, advertising, photography, video editing, choreography, event management are all skills that can be monetized to supplement your active income. 8. Lending Peer-to-peer(P2P) lending This concept has picked up steam over the past few years. It is quite simple, you have money and are looking for a way to grow your money, someone has a need for your money and is willing to pay a premium (interest) done by a third-party intermediary. There are a number of platforms such as Faircent, LenDen, etc, and globally Mintos. Page 23 /

24. Crypto lending Cryptocurrency is one of the most stirring innovations of this era, more and more people are interested in putting their incomes in this ?eld. Cryptocurrency is the digital or virtual alternate of money that is powdered by blockchains. Crypto lending works by connecting borrowers to lenders via cryptocurrency platforms. This lending works for people who have cryptocurrency reserves and are not going to use them soon. Some of the crypto platforms are Block?, blockchain, etc. 9. Affiliate Marketing Af?liate marketing is simply promoting another company’s product via an af?liate link. You can do this on your blog, social media page or in groups on Telegram or whatsapp. When a customer purchases any product via the af?liate links, a commission gets added to your af?liate account. The advantage of being an af?liate marketer is that you can promote multiple businesses and products from different companies, unlike traditional salesperson where they only sell products on a single company. There is no limit to how much one can earn in af?liate marketing. It depends on the niche and efforts that one puts in. Successful marketers can earn up to six to seven ?gures per month. Different platforms can be used to promote such a blog or YouTube. Different af?liate programs include ShareASale, JVzoo, Solvid, or Amazon Af?liate programs. These passive income ideas are all tried and tested. Hence, by investing time, effort and money in the initial phase, a passive income source can be generated with a huge amount of return. Page 24 / --

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