Learn how to earn Passive Income in India: The Correct Asset Selection

For Indians, it is very important to learn about what qualifies as Passive Income before learning about how to earn Passive Income in India. You can not be making YouTube videos full time and be calling this your passive income source because it clearly is not. If your passive income source is asking you to devote that much time of yours to earn out of it then it might just be your Active income or ‘another job’ of yours. Passive Income is something which does not ask for a lot of time or efforts of yours.

With smart planning, you can create multiple streams of income besides your primary source, that may require initial capital and initial set-up but once it starts working for you, you do not have to work for that extra income. These are passive sources of income that will help you attain financial freedom sooner than what is expected to be an average amount of time to achieve financial independence. 

It is very important to understand that these sources of income will only be valuable if you are prepared to take the necessary actions and not have a laid back attitude towards switching your money from a less profitable asset class to a high-yielding one. Risk taking is not everyone’s cup of tea and we understand that but not taking any kind of risk has a larger risk associated with it when it comes to our money. We need to level up our financial game in order to learn how to earn Passive Income in India. 

The best and the easiest way to earn Passive income is to maintain a portfolio with a diverse set of assets which keeps you ready for all financial weather. Here are 2 Assets which can perform in 2021, 2 likely won’t: 

  1. Real Estate : Likely WON’T Unless..

Now, this may sound a little controversial in the beginning due to the Real estate market not doing very good recently. Real Estate has several problems like Poor liquidity and over supply and also is not a suitable asset class for people with low investment capital. To make matters worse even Rental income has also been affected this year. However, this is not the end of the tunnel. Investment avenues like Strata, Propshare, REITs and INVITs are still a good option to invest in to make passive income in India even in current economic times. These instruments has also removed the barrier of small Investment in real estate. 

  1. Equity: Likely WON’T Unless..

Equity is one asset which has the potential of giving maximum profit but it also comes with a lot of work as there requires good research before investing in any stock. Equity market in India is currently extremely overvalued and sustaining solely on FII Money while most investors are just waiting for markets to behave in parity with the economic conditions of india. While the current rally can continue but a deeper correction awaits in 2021 trapping all investors with the mindset of quick money making. The safe way to Invest is in index funds using monthly investments only and that for a horizon of over 5 years, without speculating in stocks. 

  1. Debt funds: Likely WILL Unless..

Debt market is a one good option for investing in 2021 because of its feature of being safe and fixed. Debt funds are of all kinds i.e. treasury bills, commercial papers, corporate and government bonds, PSU and Municipality funds, which are safer as compared to equity because low volatility and being secured i.e. backed up by assets in case a company fails. 

The most common amongst all the debt funds are Bonds. Bonds have a fixed interest rate (sometimes floating) and are disbursed on a month, semi-annual basis or annual basis. This option is very good for those who do not want to get themselves in the complexity of fundamental and technical analysis of companies in order to buy their stocks, yet want higher returns than fixed deposits in their banks. Only thing to ensure is investment is in AAA rated, secured and strong pedigree companies with good financials. 

  1. Gold: Likely WILL Unless..

This Asset Class is a ‘must have’ one because of its qualities of surviving in adverse market conditions. This asset will likely not disappoint you in the times of crisis. Gold can be bought both physically and digitally and that too in low investment amounts however it is important to note that the objective of investment in this asset class should only be a reserve creation and an economic hedge rather than a speculative investment. 

How to earn Passive Income in India using these assets can be an easy task if only prompt and corrective action is taken on the same. One should always consult an expert before making investment decisions just like visiting a doctor before surgery. It has been seem that often people try to cut corners ending up making financial mistakes owing to personal biases. 

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