Being able to easily increase one’s retirement savings isn’t the only reason why folks are looking for ways to generate passive income streams. Finding multiple ways to generate income at any stage of life is a key strategy for obtaining financial independence and safeguarding one’s ability to earn a living despite what the current job market or long-term economic outlook might happen to be at the moment.
When exploring passive income investmentsto gain information to help determine which passive income stream might be a good fit, it’s important to not forget to look for and calculate the total real costs associated with making any particular investment. Calculating the cost of making an investment incorrectly makes it impossible to determine the true potential for profit and return on investment.
The following is a short list of some popular passive income investments, and the costs typically associated with them that are easy to overlook.
Mining Alternative Currencies
Bitcoin is one of the most popular alternative currencies on the market today. In fact, it’s so popular that its name is often used to refer to the entire alternative currency market as a whole. While they are not considered legal tender, Bitcoin and other alternative currencies are gaining acceptance as a form of payment with a growing number of service providers.
Bitcoins can be purchased outright, and held until they gain value, but an increasing number of Bitcoin investors have turned to Bitcoin mining to earn Bitcoins. To mine the currency, investors race against one another to solve complex mathematical puzzles to earn Bitcoins.
Bitcoin mining cost can vary widely depending on which company one invests in and the terms of the mining contract. Another important factor is whether or not the investor will purchase their own hardware outright, or, will simply invest with a mining company that already has all of the necessary hardware and software to mine Bitcoins along with the skill to operate, manage and maintain the mining operation.
Investing in a Bitcoin mining operation in this way allows investors to enter cryptocurrency mining without having to invest large sums to purchase, run and cool expensive, energy hungry databanks.When choosing a cryptocurrency mining contract, be certain to look at how much your initial investment will be, as well as any additional charges that may occur periodically to cover maintenance and other costs.
Real Estate Ownership
For most of us, owning our own home will be our single, largest investment. An increasing number of folks, however, are buying real estate as a means to generate passive income streams. Most of these individuals will buy two or more additional properties in addition to their primary residence. Their goal is to generate income by becoming a landlord and renting out the properties to tenants.
Despite data from the National Association of Realtors that shows that demand for apartments is on the rise and there is a tight supply of existing homes for sale, is not without risks and some unexpected costs.
Before embarking on a second career as a real estate investor and landlord, it’s important to look at the true costs. For example, unless you purchase the home outright, with cash, there will be finance changes and other costs associated with borrowing the money to purchase the real estate investment.
Many times, you will need to repair, replace or otherwise refurbish aspects of the dwelling before you will be able to offer it for rent. Unless you plan to do all of the maintenancework yourself, there will be costs associated with paying for someone to maintain and keep up the home and complete any repairs when things break.
There may even be additional costs at tax time that can reduce the number and types of deductions that you can make when you file taxes, as well as a potential for additional tax liability should you later sell the investment property.
Finally, there will be costs to insure the property from the risk of loss due to fire, and even to protect yourself from financial loss should an accident occur on the property for which you may be found liable should you fail to keep the property in safe repair.
While investing in real estate can generate a reliable stream of income on a regular basis, providing you are able to keep the property rented out continuously, it is not without risks and the potential for rising costs over time.
Blogging and Affiliate Income
If you have a genuine talent for writing, and, have a great deal of knowledge in a specific niche area, you might be tempted to begin a blogging and use your blog to try to earn income by writing posts with affiliate links, or, from promotional ads from sponsors. While blogging use to be an easy way for some to pick up a bit of extra income each month, increased competition, and changes in search engine algorithms has made this a difficult market to enter and make a profit.
Even if you use a free platform on which to post your blog, it’s becoming increasingly difficult to find an effective way to monetize online writing. To stand out from the crowd of hundreds, if not thousands, of similar blogs, you have to rank high in the search engine results, which can be difficult if the content that you write is too similar to what’s already on the net.
To gain a following that will return to your site regularly, and, that will trust you enough to click on your links and make purchases regularly, you have to write engaging and useful content on a regular basis. Over time, it becomes increasingly harder to come up with original and relevant content on a consistent basis, no matter how great your writing skills might happen to be.
This means that you will need to enlist the help of a skilled copywriter to create at least some of your posts for you. That, or, you will be so busy writing blog posts and sharing to social media each day to generate enough traffic to your blog that it’s very likely you won’t have much, if any, free time left over at the end of each day. While the initial cost to invest in a blog seems very little, the cost in man hours is extremely high, and most find that there are easier ways to generate a passive income stream.