Best Passive Income Ideas 2021

As a working professional in Australia, your ultimate dream in life is to build wealth that doesn’t eat up your time, and use it to do all the things you really love – retire early, spend quality time with your loved ones and travel the world. Today I’m gonna let you in on a little […]

passive income ideas

As a working professional in Australia, your ultimate dream in life is to build wealth that doesn’t eat up your time, and use it to do all the things you really love – retire early, spend quality time with your loved ones and travel the world.

Today I’m gonna let you in on a little secret – passive income is the solution to accomplish the work-life balance you crave for, and here are some ideas to help.

What Exactly Is Passive Income?

To better understand how passive income works, you need to first know what active income is.

Active income is what most of us make. You go to work every day and exchange your time for money. If for any reason, you stop going to work, your income stops.

When you trade time for money, you’re setting a cap on your income. If going to the office is the only way you have to earn an income, you will never be able to quit! You don’t want that, do you?

Now, onto passive income.

There are different definitions of passive income. For this article, we’ll define passive income as consistent income earned with little to no active involvement on the individual’s part.

The key here is little to no effort, which most of us forget about. Passive income lets you put effort into something today so that you can enjoy the spoils of your sweats later in life when you need them the most.

A good litmus test of passive income is being able to give your full-time job full attention and still run your passive income streams.

A great example is a real estate investor who renovates a home and rents it out for a profit every month.

For your passive income ideas to actualise, you need to know where to start and the kind of resources you need to expend. A financial adviser will help you do that and more.

Why Passive Income?

Building passive income streams in Australia has benefits both in the short term and long term.

In the short term, it can make you more resilient and better capable of weathering economic shocks.

Even if you love your job, it’s never a good idea to depend on a single income stream. If you’re fired or furloughed, generating money passively will give you more security.

In the long term, passive income will allow you to earn effortlessly for years to come while protecting your time.

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Time – Your Most Precious Resource

More than anything else, passive income is about your time. See, I’m all for getting a side hustle or starting a business. You could do many things to create additional income streams, but not all of them are passive.

For an income stream to be truly passive, it must require very little effort (time and money) to produce income, in due course requiring no (or very little) effort to maintain.

Say it takes you an hour to generate $200 a day, and it takes you the same one hour to generate $200 next week or a month from now. This simply means that the income is active as it takes the same effort for the same amount of financial output.

If, on the other hand, you invest $10,000 with the same initial effort, your returns would go up and your effort would decrease.

This venture is passive income.

Now that you get the picture let’s talk about what passive income isn’t.

What Doesn’t Count as Passive Income?

    • Your Job – The whole premise behind passive income ideas is to supplement your job so you can retire comfortably and spend more time doing all the things you’ve always wanted.
    • Consulting – You can make good money by offering consulting services. But consulting is just another active income that requires effort.
    • Side Hustles – While they’re great ways to monetise your passion and supplement your income, most side hustles need a lot of your attention.

How Can I Create Passive Income in Australia With Minimal Work?

So how can you get some of that sweet, sweet passive income from the surplus money you’ve saved?

If you haven’t guessed it yet, it’s through making good investments.

For most people, the end goal of investing is to reach financial independence – the point where income from their investment portfolio is sufficient to cover their expenses for the rest of their lives.

However, getting started to achieve such a significant milestone like financial independence can get overwhelming quickly for most of us.

The good news is that a financial adviser can guide you through your wealth building journey step by step, and help you achieve your goal sooner than you would have by yourself.

Best Passive Income Investment Ideas in Australia

Let me clear this right off the bat.

I don’t consider stock investment for only capital appreciation to be passive income. The reason is simple – stock appreciation isn’t an income.

When you invest in a stable company listed on Australian stock exchange that gives you dividends, you get passive income.

So, when considering what to put your money towards, asks yourself whether you’ll get cash on cash return, or you’ll only see the returns if you sell the investment.

Cryptocurrencies are all the rage right now. While you can allocate Bitcoin and other cryptos in your investment portfolio, they are mostly reserved for price speculation. What this means is that investing this way is unlikely a stable passive income strategy.

Better ways you can make use of the money you already have are to

    • Invest in dividend-paying stocks and bonds
    • Invest in crowdfunded real estate
    • Invest in Real Estate Investment Trusts (REITs)
    • Invest with Robo adviser
    • Switch to a high-yield savings account
    • Offer peer-to-peer (P2P) lending
    • Buy index funds and ETFs
    • Buy an existing online business

You can reach out to me personally here if you are sick of reading and filtering information online and wanting to speak to a licensed financial adviser.

How the ATO Views Passive Income

Unsurprisingly, the Australian Taxation Office (ATO) takes a keen interest in passive income, expressly in its most common form – on real estate and financial market investments.

There may be tax implications you need to consider when you own, obtain or dispose of investments irrespective of whether they are in Australia or overseas.

A financial adviser will help you understand how tax works in relation to your investment products and ensure you do not pay more tax than you absolutely have to.

This way, you can convert your investments into lifetime income.

Contact Us

Everyone can build passive income streams, but the ways of doing it can differ from person to person.

We will evaluate your risk tolerance and together devise an investment strategy that:

    • Fits in with your lifestyle
    • Is not in direct conflict with any aspect of your job
    • Takes a minimum amount of your time
    • You can comfortably monitor and manage remotely
    • Build passive income streams now to make use of the power of compounding over time. This way, you set the stage for retiring early and wealthy.

I hope this post on passive income Australia has helped you whet your appetite for some options to get started with.

Contact us for a free initial meeting to cover:

    1. Where you are currently at
    2. What your goals are (try How Much You Need to Retire Comfortably )
    3. What areas you need the most help with and how we could potentially work together on an ongoing basis

We’re waiting to hear from you!

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