Jan 24 2009
Passive Income
One big thing to come out of the recession is the importance of alternative sources of income, just in case your hours at work are cut, or you end up having to work part-time or in a lower paying job.
The best alternative income is passive, which means that the money comes in even when you arn’t actively working. So how do you find these sources of passive income?
One form of passive income is investing in shares that pay a high yield or dividend. Given the state of the stock market, these shares are particularly cheap now, which means the yield on the shares is good. But before you rush off and buy them, make sure that the company concerned has a) very little debt (as it is companies with debt who are most vulnerable in this recession) and b) in a safe industry such as utilities (everyone needs electricity and gas) or supermarkets (everyone needs food). Some shares with high yields will be in vulnerable sectors such as retail or banking - avoid these, as the high yield is temporary (it is likely that their dividends will be cut due to losses).
Another form of passive income is working online and relying on advertising income to pull in the money. The theory is that you set up your blog and the traffic will come and everything else follows. However note that for blogging, you will have to work extremely hard to establish your blog in the first place. Only when you’ve written great material, and have got your site a decent pagerank and traffic, can you afford to relax and let the money roll in.
Therefore, with both these forms of passive income you will have to do a lot of work initially (due diligence when buying shares and a lot of promotion when setting up your blog). It’s not quite the money-for-no-work gig people think it is. It’s still worth doing though - the recession is of such uncertain depth and duration, people need to take all the steps they can to ensure they have multiple streams of income coming in.
