Build and Diversify Your Income with Alternative Income
If you’re looking for some extra cash in your pocket and do not want to undergo a dramatic career change, it’s likely that you have come across a plethora of passive income ideas from blog articles.
There is a lot of clickbait online on the topic of earning passive income. Whilst some of these ideas are certainly worth exploring, almost none of them are genuinely passive. Shopify’s top 5 passive income ideas can highlight how absurd this has gotten:
- Start a drop shipping store
- Create a print-on-demand store
- Sell digital products
- Teach online courses
- Become a blogger
The top three suggestions are essentially creating a retail business - and you certainly wouldn't suggest to someone that creating a Highstreet shop is passive - whilst the last two revolve around creating gruelling amounts of content. Even if you don’t need stock for a print-on-demand store, you need a full-blown marketing strategy that takes a lot of time and skill.
But, this isn’t to say you can’t make extra side money, it’s just important to clear up that we can’t expect to generate revenue without some extra work unless we have a lot of capital already. If we’re not putting forward our capital to earn money, we usually have to put forward our time.
Here are some idea alternative income ideas to consider in 2022, split into the categories of monetising our capital and monetising our time:
Monetising your assets and capital
A lot of us will be living in spaces that are surplus to our requirements, although that would be hard to believe in London. Whether it’s spare space in our driveway that could be parking a car or a spare bedroom, these can be rented out. Car parking spaces in city centres are at a premium and while at work your driveway could be utilised, also the passenger seat in your Toyota Prius can be used to pick up car-poolers on the way to work..
AirBnB has become a behemoth in the property industry, rivalling Booking.com for short-term stays. Although they take a hefty fee, AirBnB makes it easy to advertise and facilitate the safe payment for your spare room or annex. Occupancy rates are very low, with an average of 15.2% in London and 32.1% in Bristol, but given this is a spare room and not an active investment, it may not matter. Otherwise, a private lodger or international students can likely secure a larger paycheck across 12 months.
Renting out a car parking space is genuinely passive, whilst running an AirBnB can range anywhere from an hour’s work per week to a full-time business. But, if we don’t have assets in the first place to rent out, then our options for easy alternative income decreases.
Still, if we have cash, we can let this work for us too in a similar way. If we do not have a house to rent out ourselves, we could invest cash into a property syndicate or property fund that operates in a similar way, but pay us a portion of the profits without the stress of management. One thing we should rule out in our high-inflation environment regarding income is savings accounts and premium bonds. The reason for this is high inflation far exceeds the fixed low interest rate you receive on savings accounts and premium bonds currently.
One of the most commonly discussed income-generating investments is dividend stocks. However, it is a fallacy that this income is somehow “extra” than what a non-dividend-paying stock offers. The truth is that when dividends are paid, the stock price generally drops because cash has left the business. So, you’re essentially trading equity gains for cash (though not perfectly true), which has its pros and cons. The advantage is that cash is king during hard times, and a good dividend stock should pay out even during a recession, but the downside is that you get less control over when you’re liquidating, as opposed to someone selling equity as and when they decide.
Monetising your time with low barriers to entry income
Retraining to a skill or trade is outside of the scope of this post, so let’s stick to skills and jobs which are relatively quick to obtain. The foremost advice here is to use what you already have. So, a full-time teacher can do some private tuition on the weekends. This is often the best use of time and highest hourly pay, as opposed to diving into something anyone can do that’s lowly skilled.
It’s also important to note that you may be overlooking opportunities just because you’re in a manual trade. For example, a health and safety inspector may feel like they’re restricted to the physical spaces of a warehouse, but nothing is stopping them from doing international consulting work over Zoom.
The above advice misses one key thing: diversification. If a music teacher gets laid off during a recession, it’s also possible that their weekend private tuition work may dry up too, as the industry as a whole may not be recession proof.
So, when looking to dive into something new, consider your general strengths: are you a numbers person or do you prefer writing? Are you good at communicating or are you good with your hands?
If you’re good with words, then you may be able to weaponise your existing industry experience in this area - there will undoubtedly be some health and safety inspection agencies out there looking for content for their website. Otherwise, bookkeeping, virtual assistant, customer service, proofreading, and social media management are some gigs with low barriers to entry.
It’s also worth further self reflecting on if you’re a fast worker, or a thorough-but-slower worker. For example, fast readers should organise fixed-price proofreading gigs in order to maximise their own pay per hour, whilst slower readers may want to negotiate hourly pay for their work.
Monetising a hobby
Life shouldn’t always be looked at in grayscale as a set of optimal financial decisions, because having some fun with your alternative income shouldn't be out of the question. Plus, there’s nothing to say that you can’t earn more by monetising a hobby as you’re very experienced at it.
For the artsy crowd who are good with fabrics, fashion or design, it’s worth exploring Etsy to see if there’s something you feel confident at selling - from handmade soaps to cork-laden maps, the artisan nature of Etsy means that you can operate with a high gross profit margin.
Those great at a musical instrument or a sport also have a great opportunity for teaching, particularly given that students looking for a teacher also want evening or weekend classes. Thanks to the many marketplace websites appearing, it’s never been easier to be paired with a teenager across the planet looking to learn English over the phone.
If you’re looking for ways to grow your income through investing and money management, it may be worth getting in touch with a Moneytree Wealth Management advisor. Moneytree Wealth Management provides expert advice and guidance on growing wealth and income through efficient financial planning.
The value of investments and the income they produce can fall as well as rise. You may get back less than you invested.
The value of investments can fall as well as rise. You might get back less than you invested. You should only consider these products if you are willing to take some risk with your capital. We will consider whether such products are suitable for you before recommending an investment.