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When Sahil lost his job a couple of years back, he was devastated as he had a family of 6 to look after, which was impossible without his constant salary coming in. However, relief came in the form of a property he had invested in and the regular rent from that space. For over 3 months, Sahil stayed without a job; this constant passive income helped him manage the finances and pay the bills for his family. Sahil realized the importance of having a passive source of income.
Do you know what Passive Income is and how to earn passive income to enhance your income sources? Passive income increases the potential for financial independence and is associated with many other benefits. Let’s look at the passive income meaning and other details in this post.
Passive Income is an income type that can create financial returns within a particular time with limited effort. People looking to build wealth and realize financial independence can use the various passive income sources to earn better.
Passive income sources are options for wealth creation via diversifying streams of income to achieve financial independence.
Here are some Passive Income ideas available in India:
When it comes to passive income, real estate work is a popular option. Investments in commercial or rental properties are an excellent source of income in India. These properties let you earn monthly income for financial stability.
The stocks of companies or dividend stocks are another passive income option in India. The companies distribute a portion of their profits regularly to shareholders as dividends. Dividend stock investments serve as a source of regular income for investors.
REITs are financial tools that let investors earn by investing in profitable real estate properties like malls, hotels, etc. Here, the income earned as rent or lease proceeds is regularly distributed among the investors as dividends.
For talented people like writers, music composers, artists, etc., can earn income through royalties. These are payments offered to the person who has created the creative work instead of the sale or use of the asset.
These are not counted as a total passive income. However, they are low-risk investments that can be used for regular income or a predictable income source.
SIPs let the investor invest a fixed sum of money at regular intervals like quarterly, monthly, etc. Under SIPs, money is pooled from varied sources and invested in bonds, stocks, securities, etc.
This concept is new in India. It is a process of lending money to people or businesses to earn interest in return.
Here are some benefits of earning passive income or why passive income is important:
With a constant source of passive income, you don’t have to rely solely on your active income, like your salary. Thus, when your active income source falters, you can rely on passive sources for regular income.
With passive income, you can have a stable income stream that helps you meet your needs, like bills, vacations, emergency expenses, etc.
If you are planning for retirement, having passive sources of income is essential. With passive income, you can have a regular stream of income every month or regularly, even if your salary has stopped.
With passive income, you can have enough time to pursue your other interests or spend more time with your family. Thus, it gives the flexibility to enjoy life and not get stuck with a regular morning-to-evening job.
Passive income created through entrepreneurship provides financial independence and leaves a legacy for future generations.
Passive income acts as a second source of income for many people. If you are looking at how to earn passive income, here are some key points to know:
Passive income needs an initial capital to invest at the source generating step. Sometimes, it includes both money as well as time. For instance, buying rental properties.
Thorough research is another important aspect of passive income. Before diving into anything, it is imperative to have good research work done.
Since passive income has tax implications, it is necessary to understand the tax laws thoroughly.
Passive income takes time and patience. It is not a source that will give you returns from day one. It may take months or even years to get the appropriate results.
To Conclude
From the above discussion, we can conclude that the best passive income ideas are worthwhile options for investment plans for people looking to create an added source of income in India to accumulate wealth. Passive sources of income have gained noteworthy popularity, looking at the focus on income diversification sources at the current times. So, plan for a passive income source to add value to your savings and investments.
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Yes, most passive income sources are usually taxable in India.
Yes, except for a few specific passive income types, most other sources of income are subject to taxation under the Income Tax Acts.
Yes, there are some limitations associated with creating passive income, such as:
~ The huge initial capital requirement
~ Market risks like stock price fluctuations
~ Changing values of real estate
~ Regulatory risks, maintenance expenses, etc.
PayBima Team
PayBima is an Indian insurance aggregator on a mission to make insurance simple for people. PayBima is the Digital arm of the already established and trusted Mahindra Insurance Brokers Ltd., a reputed name in the insurance broking industry with 17 years of experience. PayBima promises you the easy-to-access online platform to buy insurance policies, and also extend their unrelented assistance with all your policy related queries and services.
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