Jason Describes What to Consider When Contemplating Earning A Passive Income - With Esther Shaw at The Daily Telegraph
The original article was published in Telegraph Money on 21st November 2024, but is only available to Daily Telegraph subscribers. As part of our mission to empower as many people as possible to make better financial decisions, we have published below all the information Jason shared with them, so you get the maximum benefit from it (not just from what was published).
WHAT IS IT?
You could think of passive income as income that you don’t have to actively work for. That’s not to say that you won’t need to put in some time and effort, but it’s income that’s not generated by your job. The number of ways you can generate a passive income is infinite and so it’s impossible to say which is “best”.
BUT BE CAREFUL
As it can be presented as trying to generate money for nothing, it’s no surprise that the internet is full of advice on passive income “side-hustles” or “get-rich-quick” schemes. Just be careful who you believe, otherwise you could find yourself being someone else’s passive income.
SOURCES OF PASSIVE INCOME
You could argue that having a job that you absolutely love is a form of passive income. So, a question to ask yourself is why you want to generate a passive income in the first place. If it is to escape a job that you dislike, then looking into a career change might be a more viable solution.
Even if we’re happy with our careers, generating a passive income is what we all need to do if we ever want to retire. Pension income, investment income and rental property income are tried and tested ways of generating a passive income.
All of these involve building up an asset base, over time, from a surplus of income over expenditure and then investing this sensibly, into a balanced portfolio of assets, so that it works harder for us that just leaving it in the bank. The right approach for you will depend on your timescales, personal circumstances and views on risk appetite.
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