In the United States, paychecks are the main source of income for the average household. However, many American workers live below the average $905 per week reported by the Bureau of Labor Statistics (BLS). In addition, if we factor in the rising rates of student debt, increasing housing costs, childcare, and healthcare, it is perfectly understandable that one single paycheck is not enough to live comfortably. For many years, getting a second job was the go-to solution for most Americans, but, as financial education is becoming more widely available, people are beginning to understand that the time and stress of a second job is not worth the extra money. Instead, they are starting to understand that investing wisely and generating passive income is the better long-term choice.
Here are the top five sources of income that can you use to diversify your portfolio and generate more income without having to get a second job.
Thinking Outside The Box In Real Estate
The status of real estate in the investment world is quite controversial. For many decades, people assumed that buying a second property leads to guaranteed profits, but that’s not always the case. Markets go down in value and there are many market trends that can cause a property to lose its curb appeal.
Investing in real estate can be an excellent way to diversify your portfolio, but only if you take a few cautionary measures and plan out your strategy carefully. According to Trulia’s Consumer Home Buying Survey, location is the #1 factor that buyers keep in mind when deciding on a property which means that, in order for your investment to be successful, you need to analyze the evolution of the neighborhood in the following years. Buyers are willing to give up amenities such as pools, garages, and guest bathrooms, as long as the property is conveniently located.
When investing in real estate, it’s equally important to think outside the box. Residential properties can be profitable, but experts forecast that in the following years commercial real estate (industrial, retail, offices) will become a prime real estate opportunity.
Financial Education and Portfolio Diversification
There was a time when bonds, stocks, Forex, and hedge funds were terms reserved to professional investors and financial workers. Now, thanks to technology, these investments are becoming accessible to the average American and everyone can use their phones and tablets to generate income.
In addition to numerous platforms where you can start trading and investing, the Internet offers a huge online library of informative resources. From lists of certified Forex brokers accepting US clients to detailed guides that explain trading from A to Z, you can now benefit from the same resources as a professional. More and more Americans are seeing the potential of Forex, stocks, and other investments to generate profit, which is why the overall investor profile has changed. In the past, traders and investors were people in their 50s and 60s, with a background in finance and economics. Now, we can see Millennial investors who ride bikes to work, listen to indie music and are interested in technology.
The Rise of the Home-based Business
In 2017, there were more than 38 million home-based businesses in the U.S., and even if the idea might not sound as glamorous as working in a glass building, finance experts say that, in the long run, a well-run small home-business can generate more income than a regular job.
The most lucrative ones seem to be contracting jobs such as electrician or plumber because there is always a high demand for them, but a successful home-based business can also be centered around selling something through a third-party company. Meanwhile, younger Americans are more interested in online jobs that they can do from their homes, such as virtual assistant, copywriter, translator, and web designer.
In the U.S., a new home business is started every 12 seconds and nearly half of all home businesses are started for less than $5,000. Both financially and logistically, this is a solution that can consolidate your future finances.
Digital Products and the Modern “Inventor”
Creating a new product is generally regarded as a great way of generating passive income, but many people don’t see how you can simply invent something new.
Now, thanks to the Internet, everyone can be a modern inventor. You don’t necessarily have to build a prototype for a physical product, because digital products are just as profitable, perhaps even more so. According to entrepreneur Joseph Michael, you can make $100,000 from online courses, which are one of the most popular digital products available. You can also write and self-publish your own e-book because e-book sales doubled in the U.S. in 2018.
Business and self-help are the most popular categories because Americans are some of the biggest consumers of online information. If you are good at something, others can benefit from reading an e-book about it. Whether they’re about how to use editing software, how to cook, or how to use a sewing machine, e-books have a huge earning potential.
Passion Projects Can Be A Source of Income
After the 2008 recession, many Americans succumbed to the idea that they needed to be practical when choosing a career. Jobs with higher security, such as doctor, teacher, and contractor gained more popularity, while people steered away from “passion projects” because they couldn’t do well in an unstable economy. However, 10 years have passed from the economic crisis and Americans are rediscovering the huge earning potential of their hobbies. Arts, crafts, board games, beauty, and gaming are just five of the most popular hobbies that can make you rich and, with the advent of crowdfunding platforms like Kickstarter, bringing them to life has never been easier. Starting a passion project on the side can be great alternative source of income, but, in many cases, these projects become so successful that people decide to turn them into rewarding full-time jobs.
