money itself? Here’s what you need to know about passive income

Sounds tempting: you get money at regular intervals without having to work for it. Is that really not possible? Theoretically, it is possible with passive income. However, it often requires an upfront accumulation of money for an investment. For example, I have an investment that pays monthly interest. Granted, I can’t live off it, but it’s a small bonus. Here you can read what passive income is, the advantages and disadvantages and tips on how you can use passive income for yourself and your finances.

Passive income, as the name suggests, is Income for which you have little or no work to do. In theory, it generates itself, but in practice it is not so easy, because you need one to generate such an income. payment in advance: Money, an existing investment such as real estate, or the necessary funds and knowledge to establish a business model or product that generates a reliable stream of income over an extended period of time.

Examples of passive income are very diverse and range from income from investments and rental of real estate to digital business models.

Very few of us have the capital to start or buy a property that just falls into our lap. In practice, earning a passive income often involves hard work and, depending on the job, a lot of courage to take risks.

In addition to financial independence, passive income has a number of benefits, but it also comes with associated risks. Here are some examples.

Advantages

disadvantages and risks

There are several ways you can generate passive income: the most common are through investments, which then generate income, or by building a business model. Without any recommendation, here are a few ideas as examples and food for thought.

The FIRE movement, which originated in the US, stands for «Financial Independence, Early Retirement » a lifestyle and financial philosophy that aims to achieve financial independence so that you can effectively retire or retire at a very young age, such as when you are thirty or forty.

FIRE followers achieve this goal, by first living very modestly and then investing as much as possible, for example 50-70% of their income, in order to live on the income.

Rules of thumb are often used and adapted to calculate the personal number, such as the 4% rule: your desired annual income X 25 = your FIRE amount. For example, if you want to have 60,000 francs available per year, you need a capital of 1.5 million francs.

Possible market fluctuations, fluctuations in inflation and, for example, a longer life expectancy are not taken into account here at all. As with many of these generic formula concepts, they should by no means replace a well-founded financial plan and strategy adapted to your own living circumstances and goals!

In addition to the extreme approach, there are a number of other ways you can generate passive income with investments or business models.

Dividend stocks are Shares (shares) in companies that regularly distribute a portion of the company’s profits to their shareholders. For example, according to various sources, 80% of the companies traded on the SIX Swiss Exchange pay a dividend. For anyone interested, such stocks can be found in various lists, for example in the SIX dividend calendar or in various lists of the best.

Instead of betting on individual titles, you can also participate Invest in funds that pay out profits regularly, say every three months. Keep in mind that you generate passive income that is immediately available to you, but your investment grows less quickly because the profit is not reinvested. Building funds is therefore more suitable for anyone who wants to achieve long-term capital growth through investing.

When you invest in government or corporate bonds, you earn regular interest payments. Here too, there are several bond funds that you can use.

A similar effect can be achieved with investments in the savings account, which earn interest, but at the moment returns for private investors are still very low, despite rising interest rates.

As a private individual, you can also provide loans to companies or individuals and receive interest on them. You are then a lender and receive a return if the loan is repaid on time. Examples of such lending platforms are: Cashhare, Credit Gate 24, Creditfolio, Crowd 4 Cash, Lend, Lendora, Swisspeers. You can find a comparison here.

One of the most traditional methods of earning passive income is investing in real estate to profit from rentals. The rental income can help pay the mortgage and other costs, while also allowing the property to increase in value over time. However, real estate in Switzerland is very expensive and you need some equity for the mortgage.

Alternatively you can crowdfunding in real estate to invest. You take your money together with others Get involved in real estate projects and enjoy shares in rental income and other financial benefits. Platforms are for example Crowdhouse, Crowdli, Foxstone.

In addition to investments, you can earn passive income through the Realize the development of a business idea. Products or services that are suitable for this are random scale to leave. There are many options here, especially online. However, you do need the necessary knowledge, ideas, perseverance and time. Running an online blog, working as an influencer or doing affiliate marketing is certainly also a matter of taste.

Some examples of business models are: Online shops, sales of e-books and online courses, software development, commercial apps, but also licensing of products or works or dropshipping (online shop where you do not have the stock with you, but have the supplier send it directly to the customer).

From my own experience I can tell you that writing a blog does not bring wealth 😉. How do you see it, is passive income useful or do you prefer long-term investments to increase your money? What experiences and ideas do you have?