You are interested in Passive Income and generating income without exerting effort

Dreaming of having money flow in every month without studying or going to work is not an impossible dream. What we need to do is understand Passive Income—what it is, how it works, and choose the method that suits us best.

The Meaning of Passive Income You Need to Know

Passive Income is money that flows into our pocket without us having to go to work. It can come from various sources, such as rental income from leasing out a property or dividends from holding stocks paid by the company every year.

The key characteristic of Passive Income is that cash flow comes steadily even when we are not there to oversee it. Creating Passive Income often involves owning income-generating assets such as copyrighted (e-books, music, images) or tangible assets (stocks, land, buildings).

The Difference Between Three Types of Income

In the financial world, there are three types of income that investors should distinguish:

Active Income - Income from work
This is income earned by exchanging your effort for money, such as salary, wages, or freelance work. When you stop working, the income stops flowing.

Passive Income - Income that requires no effort
Income that comes without doing anything extra. You can sleep while money still flows in. It can coexist with Active Income without conflict.

Portfolio Income - Income from investments
Generated from buying and selling assets, such as profits from selling stocks or redeeming mutual funds. Some of this Portfolio Income can turn into Passive Income, like dividends from stock holdings.

A clear example is taking paid photos for clients vs. selling images on online platforms; the original author sending manuscripts to publishers vs. writing and selling e-books independently; a programmer working at a company vs. selling code templates independently.

8 Ways to Create Passive Income That Anyone Can Do

1. Create Digital Copyrighted Works

Books, music, templates, paintings can generate recurring income through licensing platforms daily, such as Shutterstock for images, Amazon/MEB for e-books, or even uploading videos on YouTube/Facebook to earn from views.

Advantages: No initial capital needed, create once, earn forever, freedom to create according to your expertise.

Caution: Platforms take service and brokerage fees, so you only get a part of the revenue.

2. Classic Fixed Deposit

An old but reliable method. Choose a term and deposit money with a bank. When the term ends, you receive interest at the announced rate.

Advantages: No effort, safe, predictable returns.

Caution: Requires a large amount of money, interest is relatively low, and 15% tax is deducted. Interest policies may change.

3. Bonds and Debentures for Steady Returns

Investments that pay regular coupon rate interest. The rate depends on the creditworthiness of the issuer (government vs. private).

Advantages: Safer than ordinary stocks, higher returns than fixed deposits, no significant risk.

Caution: Requires substantial capital, 15% tax deducted, and risk of issuer default.

4. Whole Life Insurance Savings Plans

Buy life insurance with a savings component. After a certain period, it returns the principal plus about 2-3% annual interest, including insurance benefits.

Advantages: No tax deduction, combines insurance benefits, can reduce taxable income.

Caution: Requires large investments, and returns are paid as a lump sum at maturity, not monthly.

5. Sustainable Real Estate Rental

Rent out houses, condos, or urban spaces to generate monthly income. Additionally, property value appreciates over time.

Advantages: Income from the first month, real estate appreciates, no need to sell assets.

Caution: Must own property first; no tenants means no income; requires maintenance effort.

6. REITs - Real Estate Investment Trusts

Buy REIT units instead of land. Receive dividends from rental income of the trust. Low investment threshold, diversified across the country.

Advantages: Low initial investment, easy to buy and sell like stocks, various types available (office, hotel, infrastructure).

Caution: Dividends are taxed at 10%, and dividends may fluctuate with unit prices in the market.

7. Dividend Stocks for Long-Term Income

Invest in stocks with a history of regular dividends. Besides capital gains, some stocks offer 6-8% annual dividend yields.

Advantages: Income from two sources (price + dividends), higher returns than savings, easy to trade on exchanges.

Caution: Stock prices may fall; 10% dividend tax; choose stocks with good credit.

8. New Crypto Staking

Deposit cryptocurrencies into pools to earn 3-5% or more returns.

Advantages: Highest returns among these options, easy to trade on exchanges, generates Portfolio Income.

Caution: Very high risk; potential loss of principal; tax policies are unclear; suitable only for those knowledgeable about crypto.

Summary: Passive Income as a Ladder to Prosperity

Passive Income is not just a dream. It is a real tool that can help you achieve your financial goals faster, rather than relying solely on Active Income.

Currently, there are many ways to generate Passive Income, from no-cost options (such as copyrights) to highly specialized ones (like Staking). Each person has different limitations, choices, and no one needs to be the same. Start with the first method and then move forward.