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Passive Income 101: A Beginner’s Guide to Building Wealth on Autopilot

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Passive Income 101: A Beginner's Guide to Building Wealth on Autopilot

Opinions expressed by Entrepreneur contributors are their own.

In the realm of financial stability and freedom, passive income reigns supreme as a powerful tool for beginners seeking to build wealth effortlessly.

By understanding the nuances of passive income and its vast potential, budding entrepreneurs can pave their way toward financial independence. This comprehensive guide aims to decode the world of passive income and equip you with the knowledge and strategies necessary to embark on a wealth creation journey on autopilot.

Understanding passive income

Passive income refers to earnings generated with minimal effort and ongoing involvement once the initial setup is complete. It is a powerful wealth-building tool that allows individuals to earn money on autopilot, providing financial stability and freedom.

Understanding the key characteristics of passive income is crucial for aspiring entrepreneurs looking to establish sustainable income streams.

The following key attributes characterize passive income:

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  • Limited active participation: Passive income streams require less active involvement than traditional income forms. While some initial effort is necessary to set up the income stream, the ongoing maintenance is minimal, freeing up time for other pursuits.
  • Continuous cash flow: Passive income generates regular and consistent cash flow, allowing individuals to earn money even when they are not actively working. This steady income stream helps build financial resilience and provides security.
  • Scalability and leverage: Passive income has the potential for scalability, meaning that the income stream can grow over time. Moreover, it allows individuals to leverage their resources, skills or assets to multiply their earnings without significant additional effort.

Now let’s discuss the various ways that you can attain passive income.

Related: 10 Proven Passive Income Ideas for 2023

Real estate investing

Real estate investment, particularly rental properties, has long been recognized as a viable avenue for generating passive income. Understanding the benefits, risks and considerations associated with rental properties is crucial for beginners looking to embark on their real estate investment journey.

REIT investment

Invest in a real estate investment trust (REIT) traded on the stock exchange, such as VNQ for U.S. properties or VNQI for international properties.

With this approach, you can earn an average of 8% annually, with 4% coming from dividends and 4% from annual growth. These returns are comparable to those of the S&P 500.

Pros

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  • Worry-free investments.
  • Diversification.
  • No additional capital calls.
  • Market downturn resilience.
  • Liquidity.
  • High dividends.
  • Simplified taxes.

Cons

  • Lower returns.
  • Tax implications.

Fund or syndication investment

Invest in a fund or syndication that pools money from multiple investors to invest in one property or a portfolio of properties.

The expected annual returns can range from 8% to 25%, but a thorough evaluation of such investments is crucial.

Pros

  • Higher returns.
  • Trustworthy partnerships.
  • Tax savings.

Cons

  • The illusion of exclusivity.
  • Market volatility.
  • Trusting the investment.
  • Managing K-1 forms.

Related: 17 Passive Income Ideas to Increase Your Cash Flow in 2023

Online investment fund

Crowdfunding platforms such as FundRise (residential) or Cadre (commercial) allow investors to own a small portion of a diversified portfolio, typically yielding 10-12% annual returns.

Pros

  • Professionalism and experience.
  • Transparency and reporting.
  • Ease of liquidity.

Cons

  • Low liquidity.
  • No tax benefits.
  • Medium-level returns.

Peer-to-Peer lending and crowdfunding

Peer-to-peer (P2P) lending and crowdfunding platforms have emerged as alternative passive income sources.

P2P lending involves lending money to individuals or businesses through online platforms, bypassing traditional financial institutions.

Crowdfunding platforms, on the other hand, allow individuals to invest in various projects or businesses by pooling their resources with others. These platforms provide opportunities for investors to earn returns on their investments while borrowers or project owners gain access to funding.

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Pros

  • Accessibility.
  • Potentially high returns.
  • Diversification.
  • Direct connection.
  • Transparency.

Cons

  • Risk of default.
  • Lack of regulation.
  • Illiquidity.
  • Platform risk.

Related: 7 Ways to Earn Passive Income From Work You Have Already Done

Affiliate marketing and niche websites

Affiliate marketing involves promoting products or services on behalf of a merchant and earning a commission for each successful referral or sale.

Niche websites, on the other hand, focus on a specific topic or target audience and provide valuable content or resources related to that niche. Affiliate marketing and niche websites can work hand in hand, offering a pathway to passive income.

Pros

  • Low startup costs.
  • Flexibility.
  • Passive income potential.
  • Scalability.

Cons

Creating and selling digital products

Creating and selling digital products has gained significant popularity in generating passive income.

Digital products include e-books, online courses, software, templates, graphic designs and music.

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These products can be created once and sold repeatedly, allowing entrepreneurs to earn passive income from their expertise or creative endeavors.

Benefits

  • Low production costs.
  • Scalability.
  • Automation.
  • Global reach.

Once you begin your journey, you will undoubtedly face some challenges, and learning how to overcome them is very important. Let’s discuss this in the next section.

Overcoming challenges and pitfalls

When pursuing passive income, beginners often encounter common obstacles that can hinder their progress. Some of these challenges include:

  • Lack of knowledge: Insufficient understanding of the chosen passive income stream or investment vehicle can lead to poor decision-making and suboptimal results.
  • Financial constraints: Limited initial capital or resources may restrict the ability to invest in certain passive income opportunities or delay progress in wealth-building endeavors.
  • Fear of failure: Fear and uncertainty can discourage beginners from taking necessary risks or exploring new ventures, limiting their potential for success.
  • Time management: Balancing passive income pursuits with existing commitments or responsibilities can be a challenge, requiring effective time management and prioritization.

Related: There’s No Better Time to Start a Passive Income Business Than Now

To mitigate these risks and minimize failures in the pursuit of passive income, consider the following strategies:

  • Education and research: Invest time in learning and understanding the chosen passive income streams or investment options. Stay informed about industry trends, best practices and regulatory requirements.
  • Risk management: Conduct thorough due diligence and risk assessments before investing. Diversify your portfolio to spread risk and avoid overreliance on a single income stream.
  • Financial planning and budgeting: Develop a comprehensive financial plan and budget to manage resources effectively and allocate funds towards passive income endeavors.
  • Start small and scale: Begin with smaller investments or ventures to gain experience and confidence. As you become more comfortable and knowledgeable, gradually increase your involvement and scale your passive income activities.
  • Seek professional advice: Consult with financial advisors, mentors or experts in the specific passive income field for guidance and support. Their insights can help you make informed decisions and navigate potential pitfalls.

Passive income holds immense potential for beginners seeking to build wealth on autopilot.

By understanding the various passive income streams and implementing the strategies discussed in this guide, you can take steps toward financial independence and stability.

Remember that building wealth on autopilot is a marathon, not a sprint, and every step you take brings you closer to achieving your financial goals.

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Samsung: 6-Day Workweek For Execs, Company in Emergency Mode

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Samsung: 6-Day Workweek For Execs, Company in Emergency Mode

Four-day workweeks might have all the buzz, but one major tech company is going in the opposite direction.

Samsung is implementing a six-day workweek for all executives after some of the firm’s core businesses delivered lower-than-expected financial results last year.

A Samsung Group executive told a Korean news outlet that “considering that performance of our major units, including Samsung Electronics Co., fell short of expectations in 2023, we are introducing the six-day work week for executives to inject a sense of crisis and make all-out efforts to overcome this crisis.”

Lower performance combined with other economic uncertainties like high borrowing costs have pushed the South Korean company to enter “emergency mode,” per The Korea Economic Daily.

Related: Apple Is No Longer the Top Phonemaker in the World as AI Pressure and Competition Intensifies

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Executives at all Samsung Group divisions will be affected, including those in sales and manufacturing, according to the report.

Samsung had its worst financial year in over a decade in 2023, with the Wall Street Journal reporting that net profit fell 73% in Q4. It also lost its top spot on the global smartphone market to Apple in the same quarter, though it reclaimed it this year.

Though employees below the executive level aren’t yet mandated to clock in on weekends, some might follow the unwritten example of their bosses. After all, The Korea Economic Daily reports that executives across some Samsung divisions have been voluntarily working six days a week since January, before the company decided to implement the six-day workweek policy.

Entrepreneur has reached out to Samsung’s U.S. newsroom to ask if this news includes executives situated globally, including in the U.S., or if it only affects employees in Korea. Samsung did not immediately respond.

Research on the relationship between hours worked and output shows that working more does not necessarily increase productivity.

A Stanford project, for example, found that overwork leads to decreased total output. Average productivity decreases due to stress, sleep deprivation, and other factors “to the extent that the additional hours [worked] provide no benefit (and, in fact, are detrimental),” the study said.

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Related: Samsung’s Newest Galaxy Gadget Aims ‘To See How Productive You Can Be’

Longer hours can also mean long-term health effects. The World Health Organization found that working more than 55 hours a week decreases life expectancy and increases the risk of stroke by 35%.

The same 55-hour workweek leads to a 17% higher risk of heart disease, per the same study.

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John Deere Hiring CTO ‘Chief Tractor Officer,’ TikTok Creator

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John Deere Hiring CTO 'Chief Tractor Officer,' TikTok Creator

This article originally appeared on Business Insider.

Agriculture equipment company John Deere is on the hunt for a different kind of CTO.

The brand on Tuesday announced a two-week search to find a “Chief Tractor Officer” who would create social media content to reach younger consumers.

One winning applicant will receive up to $192,300 to traverse the country over the next several months showcasing the way John Deere products are used by workers, from Yellowstone National Park to Chicago’s Wrigley Field and beyond.

“No matter what you do — whether it’s your coffee, getting dressed in the morning, driving to work, the building you go into — it’s all been touched by a construction worker, a farmer, or a lawn care maintenance group,” Jen Hartmann, John Deere’s global director of strategic public relations, told AdAge.

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To kick off the search, John Deere tapped NFL quarterback Brock Purdy (who will presumably be a bit busy this Fall to take the job himself) to star in a clip in which he attempts to set out on a road trip in an industrial tractor.

Suited up in the obligatory vest, work boots, and John Deere hat, Purdy’s progress is interrupted by teammate Colton McKivitz hopping into the cab while a string of messages floods in from other athletes and influencers expressing interest in the job.

The clip also represents the first time that the 187-year-old company has used celebrities to promote itself, Hartmann told AdAge.

According to the contest rules, entrants have until April 29 at midnight to submit a single 60-second video making their pitch for why they should be the face and voice of the company.

In addition, entrants must live in the 48 contiguous states or DC — sorry Hawaii and Alaska residents. Interestingly, any AI-generated submissions are prohibited, too.

Videos will be judged against four categories — originally, creativity, quality, and brand knowledge — after which five finalists will be chosen and notified after May 17.

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How to Capitalize On This Thriving Talent Pool to Drive Your Company’s Growth

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How to Capitalize On This Thriving Talent Pool to Drive Your Company's Growth

Opinions expressed by Entrepreneur contributors are their own.

As business operations shift, executives and entrepreneurs are increasingly turning to an on-demand workforce that is simultaneously empowered by technology and drawn to purpose-driven projects.

Consider Upwork, whose 2020 Future of Workforce Pulse Report revealed that nearly 80% of hiring managers engaging freelancers feel confident about doing so. These hires provide coveted expertise — on a project-to-project basis — that entrepreneurs need to scale their operations without incurring long-term overhead costs.

This new market paradigm also promotes dynamism, with 79% of businesses agreeing that freelance talent enables greater innovativeness. Perhaps most telling, 84% of hiring managers utilizing it feel more assured about adapting to future disruption, compared to just 69% of those relying solely on full-time staff.

By capitalizing on freelance marketplaces, entrepreneurs can amplify employer branding, augment capabilities and future-proof organizations, even amid turbulence. As nearly 60% of hiring managers plan to increase engagement with freelancers over the next two years, the time is now for executives to realize their inherent potential.

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Related: Navigating the Great Reshuffle: Why Your Employer Brand is Key in Recruiting Talent

The job market continues to shift

After a season of massive hiring, we’re back to seeing layoffs and downsizing. Companies are feeling the bloat—from unused office spaces with rising rent to oversized employee structures — and are shifting focus to hiring only the most essential positions. This leaves a critical talent gap needed for complex projects and specialized tasks. Highly skilled and specialized independents can fill this void.

A few key benefits to engaging them:

Access to niche experts: Platforms like Toptal and Guru provide access to elite professionals from leading Fortune 500 companies and innovative startups. Whether the need is for a machine learning specialist, growth strategist or financial modeler, entrepreneurs can now curate on-demand teams that boast specialized skillsets, enabling them to focus investment on projects with the highest strategic value.

Enhanced agility: Leading corporations increasingly “rent” skills by tapping freelance experts for initiatives involving new technologies or while entering unfamiliar markets. With niche contributors available to plug knowledge gaps, owners can explore ideas that once seemed unrealistic due to internal constraints—unlocking inventiveness and first-mover advantage.

• Stronger employment brand: Blending full-time employees with project-based freelancers signals a commitment to modernization and work-life balance. Offering both engaging work and flexibility will help draw exceptional candidates and help you compete with corporate giants for top-tier talent.

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Related: Can Retirees Thrive in the Gig Economy? Navigating a Changed Workforce

Tips for capitalizing on gig talent

Having explored the forces reshaping work, executives may wonder how to effectively leverage freelance platforms. After all, how can you know you’re getting your money’s worth if a hire isn’t physically present full-time?

• Define projects clearly: Contract hires thrive when expectations and deadlines are established upfront. So, clearly, detail needs around deliverables, success metrics, required skills and projected time investments. Staying ahead when it comes to communication and expectations will help avoid headaches, including delays.

• Build loyalty with talent: The best independent professionals have options regarding the projects they accept. Study their profiles to discern passions and incentives. Offer interesting work, flexibility and strong communication to motivate interest and improve results.

• Manage collaboration: Provide steady context, feedback and guidance at each project stage, but also foster autonomy, even while directing efforts toward strategic goals. A dynamic balance of these qualities drives optimal outcomes.

• Continue expanding your talent pool: Add proven freelancers to an internal database for repeat engagements, and notify talent about new initiatives for which their expertise would provide an edge. Uncovering additional ways, freelancers can enhance the business deepens the relationship.

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Related: Fill Your Talent Gap by Sourcing Candidates From the Veteran Community

Top platforms for connecting with talent

Now comes the hard part: finding contractors who bring fractional expertise sets. There are a growing number of platforms, of course, but I’ve found that the following stand out as leaders:

Fiverr: Ideal for execs seeking design, digital marketing, writing, video and admin support. Known for affordability and ease of posting jobs. It taps a global talent pool, too.

Upwork: A flexible platform that spans more than 150 skills. Used by everyone from small businesses to global enterprises. Strong at IT, development, design, finance and consulting.

Toptal: Focuses exclusively on the top 3% of talent. Best for expert software developers, designers, project managers and finance experts. All contributors are extensively vetted.

Contra: A growing independent platform that vets and connects both job candidates and hiring companies. Best of all, it doesn’t take a commission from projects.

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Related: 3 Strategies to Optimize Your Hiring Process and Find the Best Employees

The numbers speak for themselves: businesses engaging freelance professionals report greater confidence and competitiveness, as well as the ability to withstand turbulence, yet legacy beliefs can still cause hesitancy among those keen to hire. Supported by such specialized collaborators, companies can explore new horizons unencumbered by a one-time narrow view of staffing models.

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