Passive income ideas in India are not a rage unlike the western countries. In the West, you have individuals doing more chores to accumulate that extra buck each month. Passive income is income that gets generated when you don’t have to work for it regularly.
Imagine for a moment, how nice it would be to wake up on a Monday morning and skip that day job of yours because it sucks and because you have passive income streaming in form somewhere. I personally would love that ! To get to that state, one needs to have consistent passive income coming in each month to meet daily living expenses. Does the concept make sense in India and what are the alternatives ? Let us explore.
Simple passive Income Ideas for Indian People:
Well, all the tips I’m giving here are based on my experience and reading knowledge. One tip, which I would like to give you before, you real all these income generating ideas, stick to one of them seriously. Don’t just look for various options, rather become pro in one field and add lots of money via these passive source of income.
Rental Income
I think this is one of the most common and favorites ones. Not because it generates the most income but because buying a property is the most common goal for a middle class investor.
Intelligently done, this can reap huge benefits. If you buy a house at rock bottom prices and put it out on rent and your rental income is substantially more than the EMI you pay each month, then you have made a killing. But seldom does that happen in today’s scenario when the real estate prices have sky rocketed. If you have no loan on the house then all the rental income can be used for either living expenses or saving for long term goals.
I hear in Mumbai and other metros, home owners even rent out their parking units at Rs 5,000 per month !
Interest/Dividend Income
The money that you park in your savings account or fixed deposits or other fixed income instruments generate a small amount of money called interest for you. One can take this either monthly , quarterly or annually.
This is one of the passive income oppurtunities but you need a real large sum of money to generate anything substantial.
On the fixed deposits that you can make today, you can easily get 9% rate of return – so on 1 lakh of a FD, you get Rs 9,000 per annum – that is a small sum of money to make an effect to your daily living.
Then you have the dividend income from equity – stocks and mutual funds. However, unlike interests on FDs and savings account, these are not guaranteed at all. But if you hold substantial number of stocks of large chip companies, then you can make a killing just from the dividend income. I personally know a few people in Infosys Technologies who were with the giant since the first year of inception and today they laugh their way to the bank when dividends are declared.
The cumulative income from both interest and dividends might be substantial to be considered as a good passive income idea in India.
Income from the Internet
Many in India have now proved that they can beat their counter parts from the West when it comes to making money online via the Internet. However, having done blogging for 2 years now, I am led to believe that making money online is a full time job and if you look at it as a side job, it will not get the kind of money you are looking to make.
The Economic Times has some beautiful articles on how to make money online of which I can suggest two here and here.
But if you can crack the discipline and rigor of doing this part time, then the extra income per month might help. I still classify this as passive income because though you need to work on this always and a lot at the beginning, it starts generating consistent income for you after a few years.
Income from royalty
Being paid from royalty can be a great source of passive income. Royalty income is all future income that gets paid to someone who has created an asset that someone else wants to use. That someone else pays a royalty fee. So if you make an effort just once, this can be a consistent source of income for your future.
Writing books is one of the avenues for royalty income. Who better can comment on this than Manish from JagoInvestor ?
The music industry also uses royalty income to share revenues from an asset created today. If you possess a skill that can fetch you royalty money, then go for it.
Last Word
I cannot think of any other killing passive income ideas that can be used in our country. Of course there are other miscellaneous things one can do like sales of products by creating a multi level marketing where in you create a chain in such a way that all the future people who sign up by paying fees actually help you, the beginner in the chain, earn more and more. This was used and eventually misused in the Speak Asia episode.
One could also become a life advisor and keep selling insurance policies that will build up a source of income but again that is primarily used in India as the first source of income by agents and so does not qualify as a passive strategy – and believe me it is not worth the effort if you earn decent.
These are just few of working passive income ideas I can think of right now, but if you have more ideas for generating residual income, do let me know via comments.
Do you know of any that I am missing ?
Anytime I find someone extra polite/friendly and wanting to discuss passive income idea, invraiably turns out to be Amway or some such variety. I have never taken any interest in those stuff still would like to know are they real??
Yeah it does. These products exist but then the down side is that they work on multi level marketing. I will do a separate article on that in the future. Many people have made money with it and have grown rich but the issue is that the people who come in the last are the people who lose the most.
Hi Dip,
I’m running Amway professionally and can help you if your interested to take a look at how to create passive income. This business can be built with the knowledge one has. Reach me out if interested to know more on this opportunity.
-Thirumale
7829741600
Amway, Herbalife, Nutralife etc two sides of the same coin
I don;t agree with Amway, Herbalife, Nutralife etc two sides of the same coin… because of the followings…
1. in Amway, we can buy United Benetton colors fashions cloths, can we in others.
2. in Amway, we can buy Maxlife insurance, in other can we…?
3. Amway is a distribution company, and doesn’t has its own products… it ties up with companies to distribute products….
Say… Can I get ICICI credit card from Amway..?…yes.
But how abt others then…?
there is a difference in building business by knowing and just knowing some inputs…and not doing the business…
How much does an Amway toothpaste cost? Who is going to pay in excess of Rs. 100 to buy a toothpaste from Amway when we can get other leading brands at half the price.
Another MLM.
I think for most people rental and interest income would come first.
For those heavily invested in equity, dividend would add as a bonus (that’s what i am hoping for).
Then people could do some part-time consultancy work, taking tutions, conducting seminars, sales/marketing and so on.
Income from internet would be another option for net savvy people but there are many people who have lost money too.
For women cooking would be a very good option, i know a couple of them who do tiffin services and some sell cakes & pastries.
Thanks Rakesh. I think some of the things you have mentioned here are not passive incomes – tiffin services, selling cakes and part time consultancy are jobs that require you to work to make money.
I was referring to passive income – that is income that comes to you having worked just once at the start.
I don’t think one can survive on passive income and it is like starting any other business; too much of investment is required in terms of either money or time.
One of the easiest one [not in terms of competency] to start is giving tutions to school kids. I did it when I was in college for pocket money and that’s what passive income can do, help you earn some pocket money.
– Rental income require huge initial investment.
– Income on internet cannot be trusted. There are more frauds sitting out there asking for money first.
– Investing in equity to earn dividend is not everyone’s cup of tea.
– Writing book again seldom people can write the quality to earn royalty.
I don’t mean to be pessimist here but I haven’t come across a single person earning handsome passive income. In my opinion it is just a pocket money business and nothing more, probably for college kids or retired people.
Yeah agreed but as I said there are those lucky ones who get dividends from shares they got as ESOPs. Through not guaranteed, the year they get the dividend, it is mind a blowing figure.
I know some people who get handsome amount of rental income but as you rightly say, it is not sufficient.
People could make a lot of money with rental income too. I know in Bangalore where people build individual houses of two floors and the owner stays in ground floor and rents the 1st and 2nd floor with each having 2 houses. So on an average if the rent for 1 house is 7000 he or she can easily make 28000 per month. This should be enough to sustain the monthly expenses for a family of four. And every year there is a hike of 8-10% in rentals. A relative of mine is doing it for the last 5 years.
You are right but it requires huge amount of investment and not everyone can afford it.
Yes I agree Rakesh that it is indeed the case – even I know someone.
Yea, a few lucky ones are found in every field, aint they? 😉
I know few of my neighbors (Gujju community) surviving on Rental and Dividend incomes only. They have invested heavily in stock markets in 60-70’s. I hear from them that sometimes the dividend income earned is in five figures. I used to dream of this when i was young but over the years realized that you need a lot of $$$$$.
Interest income from fixed deposits/fixed income products surely comes first,as both the amount and regular payment is guaranteed,unlike dividend from stock and equity schemes which is attractive only during a rising market. Historically ,during a downtrend most of these schemes including the popular monthly income plans have not been able to pay a dividend for a long period.
Yeah agreed. You have a nice blog madam.
That’s a very valid point for those who look to survive on stock market.
In search of a perfect passive income idea (5 Crs from Kaun Banega Crorpati, invest part of it in real estate, FD for fixed passive income 😉 just joking……). Rental and FDs are good for passive income in India though one can’t survive on it.
hahaha, yea KBC is good source of passive income if some mafia doesn’t rob you 😉
I never thought of KBC, that is a good idea !
One of the ways to earn passive income in create a niche website. It will take some time to earn first $100 but if you keep writing/posting on the niche website, it could end up being very profitable.
Hi Samved,
Its true that you can make nice passive income by starting a niche site. But what about people who dont have Adsense? Won’t it be difficult for them to monetize their websites?
Hello, I am Swapnil & I think you missed out a few types of Passive/Residual income methods possible in India.
a) Leasing: (a type of renting but still it’s a bit different) For e.g. vending machines. You keep the vending machines at your shop or other place where people come & then they put in the money in the machine for getting coffee, cola etc. This way you buy the vending-machines from someone & lease it to other people/customers. Then one can also keep (PCOs)or Public-phones where again, people come & put in the money for making calls. Then leasing movies to others like 70mm people (the movie renting Co.). I think they buy movie CDs/DVDs on a commercial basis (ONCE). The key word here is ONCE & then they lease/rent it to many other people, many times & thus – I think- earning a good income. Then there’s giving one’s car or other vehicle on lease to other travelling or tour institutions or orgs in exchange for a fee. If one can lease more vehicles then that means more income. Leasing happens in cyber-cafes too, where the owner acquires internet connections for a few computers & leases the internet-surfing facility/service to it’s members or new customers for charge (say) ₹40 per hour & making a small profit per usage.
b) Arbitrage: (I think this is something big in India but happens in such a subtle way that most people just can’t detect it on the surface). Arbitrage or middle-man income is something one gets by eating/feeding off on other people’s efforts. A big e.g. of this can be Employee-Staffing Offices or Recruitment/HR Agencies. These agencies help candidates get a job in some Co. & then as long as the candidate is working at that Co. the recruiter from the agency gets a small fee/commission for helping the Co. get a good employee (I think this small fee/commission that the recruiter gets is cut out from the employee’s salary/wage). This kind of thing happens in BPOs.You can also take the automated examples like Freelancer(dot)com or elance(dot)com; these businesses are based on the arbitrage model itself. Here freelance workers work for an Employer (project-assigner) for a fixed project-cost (bid) & generally with a project-deadline. But a small % from (I think) every project-cost is taken by the site owners as ‘processing-fee’ or any other fee/charge APART from the regular monthly/yearly membership-fee. The thing to note is that the site-owner do not contribute/help in the completion of any project in any way. They simply charge the freelancers for being a platform for them in getting projects & for processing their payments. I think in India there are people copying these models too.
I personally don’t like the Arbitrage model but it is a realistic 1 & it happens at other levels too like merchants trading food-grains & eating-off the heavy-efforts of farmers.
c) Distributor/Franchisee: If you become the owner of a Coffee-Shop Franchise (like Café Coffee Day) you can simply hire ‘college-kids’ to run the franchise & pay them small salary while you collect all the remaining cash that pours in from the customers. Btw, having a coffee-vending machine at such a place can be very useful 🙂 Then you can also become the owner of a pharmaceutical-distribution shop a.k.a. a chemist-shop, where people come & ask for medicine, you give them what they ask & take the cash @ the cash counter or simply hire someone to collect the cash at the cash counter. If 1 has a lot of money 1 can also become a franchisee of McDonalds, Dominos Pizza, Baskin Robbins (the ice-cream franchise), etc.
d) Starting a service-center: In this case you can be the owner of a service center like being the owner of a hair-salon where there are other barbers who work for you (for a salary) & you collect the cash at the cash-counter or (again) hire a cashier. Ladies can start beauty-parlours where other girls can work as beauticians (for a salary) for the customers & where the owning-lady can simply collect the cash or hire a cashier. One can even start a gym & have people working out there for a monthly/annual fee. Btw, you may not believe it, but a maid working @ my house, her husband used to be a driver (not sure whether it was a auto/taxi or bus) but he started his own gym (or at least that is what I heard). Hence, this is realistic. Ladies can also open Spas where masseurs/masseuses & other therapists can work for them on a salary to serve the customers & where the owning-lady can simply collect the cash or hire a cashier. If nothing else 1 can be the owner of a mobile-repair shop or car-repair shop having the workers work for you or pay you rent.
Key Factor in the last 2 methods is that 1 has to be the owner of the service-center or the Franchise/Distribution establishment. So these are some passive-income methods I could think of. Thank you for posting this interesting topic Mr. & may great fortune favour you.
Thanks for sharing these great information with us. I am aware of online passive income process but most of the points Swapnil and you have shared are great. I will try to implement these.
Can you provide some more information on Arbitrage?
Very Nice Swapnil