Passive Income: The Ultimate Guide to Financial Freedom & Master Investment Techniques
Active income vs. Passive income from real estate assetsIncome requiring a lot of effort from the investors is referred to as Active income. An investor should take the necessary steps to ensure that they have all the necessary amenities and also a perfect location for investment. It is also important that the interior and exterior are up to date to match the taste of the tenants. Managing the tenants and the property requires some effort from the investor. On the other hand, passive income refers to the investment which requires little effort from the investors. The traditional method to earn passive income in real estate is to lease out your property. However, even leasing requires some effort on the behalf of investors in terms of maintenance, tenant search, and so on. Passive income can be earned from real estate assets without actually owning them. Investing in crowdfunding options of Assetmonk is an example of how passive income is generated from real estate.
Passive income habits to build your wealth in IndiaWealth is not created in a day and continuous efforts are required. You are required to develop certain financial habits and also make some profound choices to earn passive income. Passive income is a great tool to maximize your profit without spending much time and effort. Thus here are some of the financial habits for you to build your wealth.
- Plan ahead of your expenses
- Start Saving
- Create Passive streams of Income
- Monitor your investments
- Invest for Long term
- Leverage Carefully
- Manage your taxes wisely
How To Make Passive Income Through Rental Income?
- Research your market very well
- Do the math and calculate the income and expenses, including tax
- Invest through Leverage
- Advertise your space
- Be a good landlord
How much passive income do I need to retire? Passive income to retire in the 40s – How to strategize?
Tax implications of passive incomePassive income as an investment option is gaining immense popularity in recent times. However, apart from knowing the benefits of passive income, it is also important that you understand the tax implications of this type of income. Here are some of the lawful tax implications on different passive income options under the Income Tax Act, 1961.
- Rental yield- Taxable under the head ‘Income from House Property
- REITs- Taxable under the head ‘Income from Other Sources
- Real Estate Crowdfunding- Taxable under the head ‘Income from Other Sources
- Dividend Income- Taxable under the head ‘Income from Other Sources
- Interest Income- Taxable under the head ‘Income from Other Sources
- PPF Interest and Maturity- Not taxable
- NPS- Partially Taxable on maturity
How to save tax on your passive incomeEverybody is looking for methods to avoid tax. So is passive income taxable? The answer to this is yes, passive income is taxable just like Active income. However, here are some tips for you to lawfully avoid or reduce your tax burden while investing in passive income options.
- Maintenance Charges
- Deduction on Municipal Tax
- Standard deduction
- Deductions on Home Loan interest under sections 24 and 80 EEA
- Deduction on Principal Repayment
- Deduction on TDS
- Deduction for joint owners & fractional owners, etc.
Passive income ideas with smaller investments?As already stated, passive income is the income generated without much effort from the landlord. The concept of passive income is quite attractive as it provides the investors with the ability to earn profit with minimal or no effort. One of the most searched questions on passive income is the different methods to earn passive income. Passive income can be earned from different sources based on your income and the capital present at hand at the time of investment. Here are some of the passive income ideas for you.
- Rental Income
- Bank Fixed Deposit
- Mutual funds and bonds
- Affiliate Marketing
- Starting your course
Techniques to build a passive income portfolioThe building of wealth has been a top priority for many. The pandemic has further strengthened the desires of the investors to diversify portfolios and to invest in different passive income options to build their wealth and to be financially independent. With the advent of the pandemic, many started investing and looking for different techniques to invest as they faced uncertainty in their regular jobs. Here are eight efficient passive income building techniques for you:
- Know your finances
- Set your Objectives
- Determine your Risk Capacity
- Conduct thoughtful Asset Allocation
- Direct your Earnings to Investments
- Check your taxes
- Create an emergency fund
- Monitor and Evaluate your Portfolio
Residual income vs. passive income – Difference, How to earn bothThe concept of passive income and residual income are interrelated and both options are attractive for the investors. Passive income is the income that is earned on investment options wherein much effort of the investor is not required and on the other hand, residual income is the income that is generated on the completion of an income-producing project. The key point of their difference arises from the objective of the investors. In residual income, active participation of the investor is required while in the case of passive income only little effort is required from the investor. Rental income is considered to be passive as well as residual income as it fits both definitions. You can earn residual income from options such as royalties, interest, and dividend income, and income from the ongoing sale of consumer goods (such as music, digital art, or books), etc. while you can earn passive income from options such as Crowdfunding, Rental Income, Cryptocurrency, Bank Fixed Deposit, Dropshipping, Affiliate Marketing, etc. Your risk appetite, financial position, and objective as an investor are the key determining factors while choosing to invest in either of the options.
Portfolio income vs. passive income – Difference, Importance, TypesPortfolio income is the income that is generated from interests, dividends, and capital gains. Mostly the portfolio income options are merged with the passive income options with a slight difference between them. Investing in stocks, ETFs, Mutual Funds of dividend-paying companies can be a great stream of portfolio income. The main feature of portfolio investment is that it is easily accessible to all the investors and it provides them with equal opportunities. The major difference between the two are:
- Capital investment is required to invest in qualified portfolio income while capital investment along with time and skills are required to set up a passive source of income.
- The returns or income from portfolio sources are in the form of interests, dividends, capital gains, etc. while returns on passive income are in the form of Rent / Lease, Passive business profits, Ad income, Royalties, Interests, etc.
How to earn passive income through Assetmonk?Assetmonk is a smart real estate investment platform offering investment opportunities in top Indian cities like Hyderabad, Chennai, and Bangalore. The properties offered by us are usually in the fractional ownership model and hence eliminating the high-risk barrier. Our properties are categorized as Growth, Growth Plus, and Yield. We offer properties with an IRR of 14-21%. Thus Assetmonk is your ideal investment partner to earn passive income.
Passive Income: The Ultimate Guide to Financial Freedom FAQ's:
Passive income is any income that is earned with little effort. Some of the most common investment options to earn passive income include rental property, mutual funds, crowdfunding options, equity dividend, fixed deposit, etc.
Some strategies to generate passive income include the evaluation of your current financial situation, creating goals, focusing on assets that create income, understanding the main assets that generate passive income and starting your investments with a sound plan to maximize your profit.
Passive income can be generated from sources such as crowdfunding, rental income, cryptocurrency, bank fixed deposit, stocks, mutual funds, and bonds, dropshipping, affiliate marketing, blogging, fixed deposits, etc.
Rental investments are traditionally considered the best way to generate passive income due to the stability it provides and also due to their lower volatile nature. However, the high capital requirement was a huge entry barrier for the investors. With the growth in technology and improved communication mediums, real estate is now accessible at much lower rates through crowdfunding platforms such as Assetmonk.
Rental investment can be a good source of income to generate passive income on a monthly basis.