Little sweat & toil: Here’s how you can earn some honest passive income

Ever wondered how a colleague, on the same pay scale as yours, appears to have a much better standard of living? While it is possible that they inherited a tidy sum from their parents or hit a jackpot, it could also be passive income at play.

In the traditional world of finance, passive income was what came from your rental property, stocks and other holdings. However, in this day of digital disruption and gig economy, people are finding a plethora of ways to earn steady incomes outside of their regular jobs.

Time, resources on ration

By its very definition this income is passive — in the sense that you shouldn’t have to worry about it 9 to 5, six days a week. It is something you give a thought to, develop, and enjoy income from. The maintenance of your passive income stream shouldn’t take you more than an hour or two a week. Once you put in the initial effort, you should be able to sit back and just keep it going.

Stocks, bonds, deposits and such are what first come to mind, but these are the routine. You can look at smaller, newer things that not only spruce up your bank balance but also bring you joy, for you’d be engaging in something that interests you. A lot of things are already being done by a lot of people, so look where you can differentiate.

Pyramid schemes are illegal, and therefore a strict no-no. Direct selling was always a popular option, but the regulatory bodies are increasingly toughening their stance on this. It’s not as easy to sell a high-priced moisturiser or plastic canister to your neighbour as it was a few years ago. There is the customer wariness factor, too.

Doing more with property

Property is a viable source of passive income. Renting it straight out as a residential or commercial property is alright, but you can perhaps look at repurposing it to some extent. For instance, your 3-bedroom flat can be made a serviced apartment. The ‘office space’ you own can be made a co-working space. These options widen your choice of tenants when the rental market is down, apart from possibly fetching you a higher rent.

Swetha (name changed), a Mumbai resident, was left with a three-bedroom house when her parents moved back to the South after retirement. She initially let out two bedrooms to colleagues in her office who hailed from other cities.

Soon, Swetha found that she was a natural at hosting people. She leased a large luxury apartment in the city and listed it on Airbnb. It was a reasonably long process but once done, operating it was rather easy, she found. Until the pandemic began, her calendar was full. The Mumbai apartment enjoyed good rating on Airbnb from foreign travellers, who were all praise for Swetha’s helpfulness as a host.

All Swetha had to do was spot an innate strength in her and tap it in a systematic manner.

The digital economy potential

The internet, and the ability of your mobile phone, tablet or laptop to connect to it, open up a million ways for you to build a parallel avenue of income.

For starters, you can take classes. Thanks in part to the pandemic, people are fully accepting of online classes now, so put your skills — be it music, dance, yoga, self-defence, Zumba or creative writing, to name just a few — to use. Word of mouth works best, so leverage the WhatsApp groups you belong to.

Affiliate marketing is another option. This is what social media influencers do — they convince their followers, via short videos, podcasts or blogs, that a product or service is good, and get paid for it.

While we tend to associate ‘influencers’ with actors, singers and other famous people, there are scores of ‘ordinary’ people with massive online following. It could be a person with a unique cooking style, or someone with good tips for housekeeping, or a film enthusiast who can recommend titles that the professional critics miss. Your pet dog that wags its tail with a goofy expression could become a huge hit on Instagram. Try out the possibilities.

You can also make and sell online. Masala powders, handicrafts, customised clothing, ‘natural’ cosmetics, the list is endless. A good product can quickly pull in customers, and you may look at hiring some help subsequently.

Rooftop gardening, developing a small farm outside the city, etc are also found to be rewarding income streams. If your terrace garden produces enough vegetables for your consumption, that’s an income in itself.

What to watch out for

So long as you hold a regular job or profession, remember not to invest too much time or energy in the passive income project. Else, it could lead to burnout. Allot some time for it, and a fixed capital if required, and never exceed it. If you find the income avenue growing, get help. Ask your family to pitch in or hire someone.

Check out the legal aspects. Does your employer/work partners know what you are doing and approve of it? Keep it all above board. Watch out for potential legal issues such as copyright violations and non-residential use of rental premises.

Keep an eye on the taxes. Some of your activity may require you to pay GST or other levies. See how best you can make your income-tax for the parallel income more efficient.