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Understanding the Benefits of Passive Investments

Passive income such as investing in real estate is one of the many things you can invest on in order to build your wealth. Passive investment is an investing strategy which aims to maximize returns on the long run, through keeping the amount of selling and buying to a minimum level. The basic concept of passive investing is avoiding fees and dragging on the performance that can potentially happen from frequent traditional trading. Passive investment is not a source of immediate or fast wealth build-up, rather it takes a slow process but steady wealth over time. Passive investment is also referred to as buy-and-hold strategy, wherein it involves the process of buying a security with the intention of owning it for a specific number of years. Investors in passive investments are not after the profit gained through short-term price fluctuations or “time the market”, but rather they gain positive returns through a given period of time.

What are the strategies in passive investing? The types of passive income-generating sources are rental income, real estate, interest income, royalty income, dividend income, membership fees, advertising income, affiliate income, business income, pension income and donation income. Real estate properties can be leased such as building and office spaces, so you can earn without too much effort. The younger you invest on real estate income, the sooner and the longer you will taste the sweet of this kind of passive income. You can also obtain passive income through movable rental properties such as machinery, equipment and vehicles.

Interest income are your earnings obtained from lending or your cash deposit in banks. Royalty income can be obtained though royalty fees by publishing a book, being a songwriter or being a great singer, from licenses for using software, your photos for being a professional photographer and trademark for franchising . Dividend income if managed properly can minimize the risks involved in dividend income earned though stocks and shares of an ownership of a corporation. In dividend income, an investor must be guided by the right knowledge, skills and attitude to the proper discipline about investing in stocks and other securities. Membership revenues can be earned through golf club, fitness gym, and membership websites that contain useful and unique contents where users or members pay a regular membership fee to be able to access those contents. The contents of your website can be in a form of software, applications, podcast, videos, articles and scripts. Advertising and affiliate sources of passive income can be earned by generating blogs and websites through direct advertising, third-party advertising and affiliate marketing.

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