The 7 Best Passive Income Ideas in India

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Pune, 13th October 2023: According to the 2022 Deloitte Global Survey of Gen Z and Millennials, 62% of Gen Z and 51% of Indian millennials engage inside jobs or pursue passive income avenues. Passive income can be described as earnings generated from alternative sources of income, often requiring minimal effort.

Chances are that you already know someone with a “side hustle” and are looking for something similar for yourself. Currently, a significant portion of the Indian population generates passive income through activities like YouTubing, blogging, vlogging, or being a social media influencer. It’s viewed as a supplementary endeavour, providing extra earnings on top of regular income. Other examples of passive income encompass rental earnings from property, dividends from stock or mutual fund/ULIP investments, interest income from savings accounts or bonds, and revenue from royalties for intellectual property. Passive income can help you achieve you financial goals, both short term, like buying a car or house, and long term, like having a robust retirement investment plan.

In this article, we will explore some of the most effective passive income ideas in India to supplement your income.

7 Best Passive Income Sources in India

Although there are plenty of sources which can provide passive income, some of the popular ones in India are:

Rental Income

Generating income from renting out a property is quite prevalent in India. It’s also one of the less labour-intensive methods of generating extra income. The primary task is to secure a tenant and ensure timely rent payments. You may also contemplate annual rent adjustments in accordance with the lease agreement. When it comes to how much you can earn through rental income in India, there is no one answer here. The rent that you receive will be based on the prevailing market prices, which are decided based on the size and location of your property. For example, if you have a property in a Mumbai suburb, say Goregaon, you can get around 35-45 thousand a month for a 2BHK. There are websites where you can list your property, and take the rent of similar properties from the same area listed there as a reference.

Affiliate Marketing

If you possess a substantial following on social media or run a well-received blog, you can utilize your audience base to earn additional income by endorsing products from various companies. For instance, if you manage a blog with a decent readership, companies might approach you to feature their products as advertisements. You’ll receive a commission from the respective company for every click or purchase originating from your blog.

Peer-to-Peer (P2P) Lending

This option is suitable for individuals with available capital and a willingness to assume some risk. Peer-to-peer lending entails investors lending money to creditworthy borrowers who, in turn, repay the loan along with interest through regular EMIs. You stand to profit from the interest payments, but there is a substantial risk of financial loss if the borrower defaults.

Blogging and YouTube

Blogging and, particularly, YouTube have emerged as prominent social media platforms for generating passive income. Anyone with a decent following can indirectly endorse specific products or brands through their channel and charge a substantial fee in return. In India, numerous YouTubers, often referred to as influencers, earn substantial amounts, often in lakhs and crores.

Social Media Influencing

Being a significant source of passive income, social media content creation has become a staple for many online content creators exploring alternative income streams. Given the ubiquity of social media, many content creators have transitioned to platforms like Facebook, and Instagram. You can do the same. Establish a YouTube or Instagram channel and regularly post content tailored to your target audience. If your content resonates with your audience, you’ll notice a gradual rise in subscriptions. As a social media influencer with a significant subscriber base, you can start accepting brand promotion requests and charge a fee for your services.

Invest in Real Estate Investment Trust (REIT)

Suppose you wish to sidestep the substantial initial investment and time commitment associated with owning real estate. In that case, you might consider investing in a Real Estate Investment Trust.

A Real Estate Investment Trust (REIT) makes it possible for you to invest in a business responsible for owning and managing real estate. Commercial real estate, such as office spaces or other commercial properties, usually necessitates an initial investment covering both the property cost and the time spent securing reliable tenants.

Investment Plans like Mutual Funds and ULIPs

Mutual fund and Unit Linked Insurance Plans are two of the best investment plans in India. Both provide you with the opportunity to invest in the financial markets and gain returns based on the performance of the funds. In case of mutual funds, it is very simple: you invest in on or more asset classes and over time start earning returns. In the case of ULIPs, this is one part of the product. The other part is life cover, which makes sure your family has financial security in your absence. ULIPs like the Wealth Secure+ by Edelweiss Tokio Life Insurance are highly sought after for their dual benefits and investor friendly features.

Selecting Your Passive Income Source

The ideal passive income source for you should align with your interests and skill set. The number of passive income sources you pursue should be guided by your financial objectives, personal circumstances, and risk tolerance. Generating passive income requires careful consideration of time, effort, and resources for each source.

Things You Should Know About Earning Passive Income

Here are some important points to remember if you’re new to passive income:

Passive Incomes Don’t Lead to Quick Riches

While it requires less active work, you still need to invest time or money upfront. Over time, passive income in the form of interests, dividends, etc., provides financial security.

May Demand Significant Time Investment

You might need to put in extra effort to earn that additional income. For example, if you’ve rented a property, it must be well-maintained.

Consider Tax Implications

Passive income is subject to taxation, though it’s taxed differently from your regular income. In India, passive income falls under Section 80C, Section 24, and Section 80CCD.

Final Thoughts

You likely already possess the resources or skills to generate passive income. However, remember that it’s not entirely hands-off. The initial analysis and effort in acquiring and managing assets are significant. With passive income investments, whether in a new business venture or income-generating securities, you can potentially earn more in the long run with minimal effort.

For passive investments, consider ULIPs by Edelweiss Tokio Life Insurance and save big on taxes! Start investing today!