Passive Income 101

Ever dreamed of earning money while you sleep, travel, or spend quality time with your loved ones? You're not alone. Many people are looking for ways to break out of the traditional 9-to-5 routine or generate a little bit of extra spending money. That's where passive income could help.

In this guide, we'll explore different ideas that can help you generate relatively hands-free income, whether you're a seasoned investor or just starting out. So grab a cup of coffee, get comfortable, and explore the exciting possibilities of passive income with tips from Origin Bank.

What is passive income?

Passive income helps you generate steady income with very little effort. Unlike the standard active income earned from a traditional job, passive income generates hands-off revenue so you can focus on other aspects of your life. You just have to put in the work on the front end to set everything up.

Passive income can come from a number of different sources, such as investments, rental properties, online businesses, royalties, and more. It's all about building income streams that work for you, not the other way around. The key is to set up systems that generate income on autopilot, allowing you to pursue your passions without worrying about clocking in or checking up on your finances.

Why is passive income important?

Income is the cornerstone of wealth building. But increasing your income doesn’t have to mean taking on extra work or a part-time job. By generating income streams that work for you in the background, passive income opens the door to financial freedom and flexibility.

Passive income can help you:

● Earn (and save) more money

● Diversify your income streams

● Maintain stability, even if you lose your day job

● Retire early with a steady stream of income

How can I generate passive income?

1. Rental Properties: One way to build passive income is by investing in real estate and renting out properties to tenants. By owning and leasing residential or commercial spaces, you can earn regular rental payments from tenants, creating a consistent cash flow. However, make sure that you pay off your own mortgage before you go in on an investment property, and avoid going into debt to purchase new property. Also keep in mind that you will need to set aside time and money for property maintenance and repairs.

2. Dividend Investing: Dividend stocks are shares of companies that distribute a portion of their profits to shareholders. By investing in dividend-paying stocks, you can earn passive income through regular payouts, allowing your investments to work for you. And to really up your investment game, start re-investing your profits to scale up your passive income. However, be sure to seek advice from a wealth management professional and understand that investments aren't guarantees.

3. Digital Products: If you have strong writing skills and specialized content to share, creating and selling digital products can be a lucrative way to generate passive income. From e-books and online courses to digital guides, you can sell your product repeatedly without additional effort on sites like Shopify, Amazon, or Etsy and reap the royalties for years to come.

4. Rental Platforms: Have an old truck, trailer, boat, or kayak collecting dust in your garage? List them on peer-to-peer rental platforms like Splinster or Turo and rent out these items for short-term use. This helps you earn passive income from rarely-used possessions, knocking the dust off and generating extra cash flow. And if you’re not ready to take it to the internet quite yet, consider starting in your own neighborhood. From power tools to pressure washers, renting out your equipment to neighbors can help you earn a little extra money here and there.

5. High-Yield Savings or Checking Accounts: While not as high-earning or immediately gratifying as other methods, putting your money in a high-yield account can generate passive income through interest payments over time. With Origin Bank’s Performance Checking, for example, you can earn up to 6.00% APY on balances up to $40,000. Click here to learn more about the account, including the conditions and qualifications that apply.

6. Stock Market Investments: Investing in stocks can help generate passive income as your money appreciates and you earn dividends. By carefully selecting and managing your stock portfolio, you can benefit from long-term growth and regular dividend income.

7. Create an Online Business: Have a side hustle or passion project that you’re ready to monetize? Building an online business, such as an e-commerce store or a blog with monetized content, can generate passive income via advertising and product sales. By leveraging the power of the internet, you can reach a global audience and generate hands-free revenue.

Financial foundations that last

Whether you’re looking ahead to retirement or just looking for a little extra cash, generating a passive income stream is well worth the effort.

However, it’s important to remember that each passive income method requires initial effort, time, and in some cases, capital. Research and evaluate different options to find the strategies that align with your interests, goals, and risk tolerance. And remember that when it comes to personal finances, you don’t have to fly solo. At Origin Bank, we’re proud to offer tools that make it easy to manage your finances, like our budget-tracking Personal Financial Management tool and high-yield accounts. Take the next step towards financial freedom and schedule a meeting with a Trusted Advisor today.