The Top 11 Ideas for Passive Income in 2023

We’ll discuss some of the top passive income options for Indians in this article. What’s intriguing is that there are several ways you may be able to earn passive money.

Let’s take a closer look at what passive income actually means in layman’s words before discussing all the many methods it may be generated. You have two options: use the Cube Wealth App or speak with a Cube Wealth Coach.

Passive income: What is it?

The definition of passive income is revenue that requires little to no work on your part. The idea of passive income is gaining popularity, and many individuals are looking for ways to make passive money.

In essence, passive income means that you may earn money on a regular basis by working hard and concentratedly for a little amount of time. For the majority of Indians, however, passive income refers to income from enterprises, partnerships, and rent that does not need them to put in a lot of effort at work.

How can I earn money passively?

The term “passive income” initially described revenue derived from sources that are not produced. It may be achieved by profitable real estate investments, financial ventures, joint ventures, etc.

‍This is a short list of items to think about before beginning to generate passive income.

What kind of initial financial commitments may I make in order to get passive income?
Do I have any skills or knowledge that others may benefit from adding to me?
How can I make sharing my expertise with those who share my interests easier?

‍‍Depending on the passive income source you choose to explore, there may be actions you may do to increase your short-term profitability. To increase sales faster, some digital goods vendors, for example, use a range of marketing strategies to increase customer accessibility to their items. Still others may try to win back customers by adding products that enhance the initial offers in an attempt to grow the scope of their passive income company.

‍A compilation of ideas for passive income

Passive income comes in a variety of forms. Some of the greatest suggestions for passive income are listed below:

Idea 1: Rental Income

Owning real estate, land, or even just storage space may be excellent sources of passive income. A lot of individuals end up as landlords.

This implies that you put a lot of effort into earning the necessary funds to cover the cost of your first rental property.

With the state of the economy today, this is a challenging decision. More significantly, real estate has relatively little liquidity. It’s not the simplest or most secure way to generate passive income.

Moderate risk. You could take the chance of picking a poor area, the house being vacant for extended periods of time, and other hazards.
Award: Mild. Since 2016, the average annual growth rate for real estate in India has been estimated to be 5.4%.
Duration: Extended period. It takes years, if not decades, to purchase a home.

Idea 2: Mutual Funds

Purchasing mutual funds is among the most effective methods of earning passive income. Mutual fund selection is dependent on your time horizon and risk tolerance.

This implies you have the ability to decide how much risk you are prepared to take on in addition to having the passive ability to build money. You can create the ideal portfolio for your financial objectives if you have a qualified expert guiding you through this process. You have two options: use the Cube Wealth App or speak with a Cube Wealth Coach.

Risk ranges from low to high. You can select funds that are classified as high-risk, like foreign funds, or low-risk, like liquid funds.
Bonus: From low to high. In India, mutual funds have traditionally produced returns ranging from 4 to 16%.
Duration: Extended to indefinitely. It usually takes three years or more to get a sizable amount of passive income from mutual funds.

Idea 3: Stock Investments

Purchasing stocks is yet another excellent method of generating passive income. Of course, a certain degree of experience and understanding is needed for this. Even while investing in stocks has the potential to yield significant passive income, it is advisable to do so under the supervision of a knowledgeable advisor.
Hazard: Elevated. Stock selection, unless you have a professional financial adviser on your team, might need hours of study and reevaluations on a regular basis depending on your financial objectives and the state of the market.

Payoff: From moderate to high. Certain companies are recognized to be among the greatest passive income generators since they pay dividends.
Duration: Extended period. In the past, profitable stocks with strong fundamentals have been around for more than five years.

Idea 4: Peer to Peer Lending

In essence, peer-to-peer lending offers an alternate route for investing. In essence, you will be lending borrowers money and getting paid interest on it. Investing in P2P lending through a reputable intermediary is the best option. By doing this, you may invest money while significantly lowering the risk involved with peer-to-peer lending.Moderate risk. Faircent and LiquiLoans, two of Cube’s P2P partners, are governed by the RBI, and LiquiLoans holds the distinction of being the first P2P platform globally to have a credit rating from a credit rating agency (CRISIL).

Award: Mild. P2P lending on Cube Wealth has the potential to provide returns of up to 12% and provide a passive income stream in the form of periodic payouts.

Temporal: Brief. P2P loan agreements often last three months to three years.

Idea 5: Asset Leasing

Leasing assets enables you to generate passive revenue. You can work as an investor and lease intangible assets such as copyrights or tangible assets like vehicles, furniture, and equipment.

For the term of the lease, the lessee will pay you the principle amount plus interest, which is passive income.

Danger: Quite high. All lessees are verified and deemed creditworthy by Cube’s partner, Grip.
Reward: Quite substantial. Grip’s asset leasing program may provide Cube with passive income in the form of monthly dividends, yielding up to 12% post-tax profits.
Temporal: Brief. Plans for leasing assets often last between 11 months and 2 years.

Idea 6: Bank Fixed Deposit

This is among the most traditional methods of earning passive income. You receive little interest on a bank savings account. Nonetheless, because bank FDs are low-risk investments, those who are very risk averse often choose them.

Minimal Risk. Because bank fixed deposits guarantee returns, they are typically seen as low risk.
Payoff: Minimal. At best, bank FDs presently provide returns of 4–6%.
Duration: Brief to somewhat extended. FD plans have durations ranging from one year to three years or more.

Investing in a liquid fund, a kind of mutual fund with high liquidity that allows you to withdraw money as needed, is an option if you’re eager to take on new challenges. Liquid funds don’t have lengthy lock-in periods as fixed deposits do. You have two options: use the Cube Wealth App or speak with a Cube Wealth Coach.

Here are some money-saving suggestions to help you maximize the money you receive from your regular employment as well.

Idea 7: Launch a company

This is a long-term plan for creating passive income. When you first start a business, you have to put in a lot of labor until it runs itself. You have two options: use the Cube Wealth App or speak with a Cube Wealth Coach.

The business can become a profitable source of income for you through royalties, stocks, bonds, and other means once you are no longer need to actively engage in it.

Relevant statistic: Twenty-five percent of businesses make it to the age of fifteen or more. Launching your own company might be your ticket to financial freedom. However, there is also a very large danger.

Hazard: Elevated. Establishing and growing a lucrative business is no small feat.
Bonus: From low to high. Even while not every business can make you a million dollars, they can nevertheless position you for success financially.
Duration: Extended period. Companies often want you to work hard for at least five years.

Idea 8: Make A Business Investment

There are benefits to becoming a serial investor. You may get passive income from your company investment in the form of dividends, royalties, debentures, and other payments. ‍
You must, however, rely on the business to operate and provide consistent growth and profits. Most angel investors would be aware that this has hazards of its own.

Hazard: Elevated. Some people argue that investing in businesses is more difficult than identifying a good stock.
Bonus: From low to high. Although it is common for venture investors to have some wins and losses, their rewards are often large.
Duration: Extended period. Typically, venture capital investments yield long-term profits over an extended period of time.

Idea9: Take on an Influential Role

Getting into the influencer game is perhaps one of the simplest ideas for passive income. Influencer marketing is based on three primary pillars: social media influence, relationship-building, and content development. You have two options: use the Cube Wealth App or speak with a Cube Wealth Coach.

But not everyone has the opportunity to influence others. Among other requirements, you must have a sizable number of social media followers and a high interaction rate with them. ‍

Risk ranges from Low to High.

It could take a lot of work and sacrifice for some people to become influencers, such as giving up a full-time career.

Bonus: From low to high. Influencer marketing is challenging, and not everyone is able to land significant partnerships and sponsorships.
Duration: Extended to indefinitely. It takes a long time to become an influencer, unless you’re an instant hit.

Idea 10: Take Up Hosting on Airbnb

The difficulties are the same as when trying to get passive income from a rental property. But there are benefits to becoming an Airbnb associate.

You may post your home for free on the Airbnb website and choose your own pricing. Additionally, Airbnb offers a host protection program that, in some countries, ensures a $1,000,000 damage guarantee.

Risk ranges from Low to High. The dangers begin when you identify the ideal visitors and then buy a suitable house.

Bonus: From low to high. Seasonal fluctuations may have an impact on your Airbnb earnings.
Duration: Extended period. It takes time to pay off debt and turn a profit on any real estate endeavor.

Dea 11: Purchase an asset that will provide you with an annuity

Following a one-time lump sum investment, an annuity plan can help you create lifetime income. There are several annuity plans available, such as deferred and immediate annuity programs. Nonetheless, selecting the appropriate annuity plan is crucial.

Minimal Risk. It is well known that both public and private entities offer an excessive number of alternatives, which can be perplexing and difficult.

Payoff: Low to moderate. The payout varies according on the kind of plan you select.
Duration: From short to lengthy. Annuity plans vary in that some have a vesting time and others begin on the first day of the plan.

How Many Passive Income Sources Are Adequate for You?

The ultimate objective of creating several passive income sources is financial freedom. Because of this, the prevailing opinion is that investors ought to strive to own up to seven assets that have the potential to produce passive income.

It will take time for this to materialize, though. Developing several sources of passive income will need time and careful preparation.

For inspiration, you might start by looking at the list of passive income options above. It is well known that the majority of investors begin with mutual funds or equities as their primary source of passive income. Some people are reputed to save savings and purchase real estate, such as a home that may bring in rent each month.

When it comes to investing in passive income streams, don’t forget to speak with a trustworthy financial advisor to determine what will be best for you.

FAQ Regarding Passive Income Q. Is there taxation on passive income?

Taxes on passive income are governed differently.

Regardless of whether self-employment taxes or FICA apply to passive income, ordinary income taxes still need to be paid. This is the basic amount that you are subject to the following tax slabs: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

If you sell your interest in a passive activity, like renting out a home, you will make money or lose money.

Should your income exceed a certain threshold, you may also be liable to the 3.8% net investment income tax (NIIT).

Q. How many different types of passive income are there?

Passive income can take many different forms. It can be in the neighborhood of 20–30+ different passive revenue streams.

Selling digital goods, making real estate investments, operating an affiliate marketing company, leveraging influencers, blogging, stock market trading, etc. might all be the starting point.

Q. Can one choose not to claim a passive loss deduction?

Only closely held C companies, trusts, estates, individuals, and personal service businesses are allowed to deduct losses from revenue from passive activities. The portion of partnership profits that belongs to a limited partner is known as passive income.

The loss from passive activities for a taxpayer’s tax year is disallowed and carried over until such time as they have passive revenue available. The difference between the gross revenue from all passive activities and the deductions for all passive activities for the tax year is referred to as “passive activity loss”.

What is the best way to earn money passively?

Making your money work for you is known as passive income. By making investments in assets that yield large returns, regular dividends, or both, you may create passive income. The most well-liked concepts for passive income include:

rental revenue
Mutual investment vehicles
Stocks
peer-to-peer lending
Leasing of assets
Bank FDs

Q. Which passive income stream is the best?

The most profitable passive income streams are those that yield sizable returns either right away or over time. While mutual funds are recognized to produce passive income through strong returns after five or more years, asset leasing by Grip generates monthly dividends from the following month of your investment.

In summary

The eleven passive income alternatives listed here include a variety of options, including real estate investment, internet company development, dividend investing, and more. You may put yourself on the path to financial independence and a more secure future by selecting the strategies that fit with your interests, financial objectives, and risk tolerance. Recall that careful preparation, continuous management, and a dedication to financial growth are necessary for the effective production of passive income.