Earning a passive income in India is very important nowadays. The main reason for this is rising inflation, which makes it almost impossible to live on a single salary or one main source of income.
Furthermore, even if your salary or income from the business is sufficient enough to buffer the fallouts of inflation, making some extra money doesn’t hurt.
Instead, you could use it for investments and make it work and grow to your advantage.
So, I am sharing the 10 best passive income ideas in India for 2021 and beyond. But, You might wonder what is passive income and how to make passive income. Therefore, I will explain the differences between an active income and a passive income first.
Active Income v/s Passive Income
To help you understand better, here’s my comparison between an active income and passive income.
- An active income is your source of money from a fixed job or business. Instead, a passive income is a source of money from assets.
- To earn an active income, you need to exert a lot of effort daily, such as at the workplace or in your business. In stark contrast, earning a passive income requires minimal or even no effort.
- Generally, active income can stop if you lose the job or make losses at business. Instead, a passive income doesn’t depend on your job or business and can provide you with enough money even while you’re not working.
- You can make money as active income daytime, by going to work or managing your business. On the other hand, passive income enables you to make money even while you’re asleep.
Now that you’re aware of the difference between an active income and passive income, surely, you would want to find ways and means to earn one.
10 Best Passive Income Ideas in India
These best passive income ideas don’t require much educational qualifications or experience. Almost anyone can earn from these passive income ideas.
You can select one or two or even more and start earning a passive income. Some of these ideas will start paying you immediately while you might have to wait a bit for others to begin making money.
Blogging is the best passive income idea that I can offer to everyone. That’s because there are no upper limits to how much money that you could make as a blogger.
In fact, a lot of bloggers in India are now millionaires in their own right. That’s because their blogs have a very wide audience.
As a beginner, you can start a blog easily. There are two ways to open a blog. One of them is through a free blogging platform such as WordPress.com, Wix.com and Blogger.com among others.
The other way is to buy a superb domain name and hosting to launch your own blogsite. In India, a good domain name and hosting is available for as low as Rs.2,999 only per year.
You can start writing articles about anything that you know very well. It could be something to do with your profession or even about the place or region you live in.
Or you could write about your hobbies and passions. In many cases, you’ll require some superb writing skills and excellent research on the field about which you’ll blog.
There are many ways to make money by blogging. One of them is Google AdSense. You can subscribe free to Google AdSense, when you have a certain number of unique visitors daily to your blog site.
Google will then display ads on your blog site. And whenever anyone clicks on these ads, you can make some money.
The other ways to make money with blogging are by affiliate marketing, accepting sponsored posts and selling advertising space on your blog site.
India is one of the popular tourist destinations. Therefore, we have a lot of domestic and foreign travellers visiting this country on long holidays.
Indian visit visa rules stipulate that any foreigner can stay in India for up to a maximum of 90 days. And Airbnb provides you with an excellent opportunity to create a second source of income.
If you have a superb bungalow or apartment at some tourist destination or even a main city such as Mumbai among others, you can rent out a room to such travellers and earn a passive income.
The amount of money you make on Airbnb also depends on the number of facilities that you’ll provide.
All you need to do is register as a host on Airbnb. Once your application is successful, upload pictures of the room you intend to rent out to tourists and write an excellent description of the area.
Also add if you’re going to offer free facilities such as breakfast, parking space, air conditioning and others. That way you can make more money.
At popular tourist destinations, foreign travellers sometimes book a room for the entire three months of their stay in India.
Also, a lot of domestic tourists prefer to stay in private accommodations because they wish to avoid the hustle-bustle of hotels.
3. Paying Guest Accommodations
Also, if you have a spare room, you can accept paying guests or what’s commonly known in India as PG.
There are lots of single women and men that look for PG accommodations because they wish to live in safety with a family.
Generally, an agreement for a PG accommodation is for 11 months and renewable upon mutual agreement.
You can earn anything from Rs.7,500 to Rs.15,000 per paying guest. More if you host more than one such PG.
This is an ideal way to earn passive income for persons that own more than one house. You can lease out the other to PGs and make a lot of money as passive income.
All that you need to do is ensure that the premises are maintained properly. You’ll have to provide fully furnished accommodations and make sure there are no complaints from any of the PGs as well as neighbours.
In fact, countless people living in Indian metros are making a lot of money by converting their houses and apartments into PG accommodations.
4. Rent Your House
Another thing you can do with a spare house, if you have one, gives it out on rent. Generally, a leave-license agreement as it’s known in India for renting a property, has an 11-month validity.
In such cases, the person or family that takes your house on rent is responsible for its upkeep, though you might have to pay for any major repairs that might crop up without warning and due to nobody’s fault.
You can also rent out your flat to a company that wants to provide accommodation to its senior executives that’s on short term visits.
That way, you are assured of a fixed income every month from this company in the form of rentals. However, renting an apartment or house in India isn’t without its own hazards.
There are countless cases where tenants have laid illegal claims to the house and refused to vacate it despite serving legal notices. Therefore, be very cautious when renting out your house to anyone.
5. Invest in Stocks
Investments in stocks are one of the best passive income ideas that I can provide. As you would know, the stock market is one of the best ways to build wealth in India.
Actually, there are two ways to make money from stocks, as a passive income.
One of the best ways to earn a passive income from stocks is by buying them during an Initial Public Offering (IPO).
And you can also buy Exchange Traded Funds (ETFs) during their New Fund Offer. An ETF is basically a collection of stocks or debt instruments that are traded like stocks on the stock exchanges.
The prices of stocks always rise, despite occasionally hitting lows. As a result, your money also grows a lot. You can withdraw the money by selling off your stocks or ETFs.
The other way is to place orders with your stockbroker. The stockbroker will then trade on your favourite stocks and earn you a profit.
In return, they get a lucrative commission while you can make a lot of profits by such stock trading.
6. Buy Mutual Funds
And sometimes, these returns can also go as high as 100 percent. All that you need to do is visit the websites of Asset Management Companies that provide Mutual Funds and buy them.
The best type of Mutual Funds is the ones that come under the category ‘Direct-Growth.’ This means, you’ll be cutting off any brokers in between.
There are two ways to invest in Mutual Funds for a passive income. One of them is by buying units of a Mutual Fund with a lumpsum amount.
The other is a monthly Systematic Investment Plan or SIP. Both are equally good.
In a SIP, you’ll have to provide standing instructions to your bank to credit a specific amount of money towards your investment, to the Mutual Fund house.
This is done by adding the Unique Registration Number (URN) that the Mutual Fund house provides when you register a SIP, in the biller section of your net banking portal or app.
According to financial advisers and investment experts, Mutual Funds can give you superb returns as passive income over a period of 10 or more years.
In India, we have different kinds of Mutual Funds. These include Equity, Debt, Hybrid, Liquid, Thematic or Sectoral and Fund of Funds that invest in foreign stock markets too.
A superb portfolio of Mutual Funds will ensure your secure future too.
7. Buy Orchard or Farmland
Investing money in an orchard or farmland in rural India is the best way to earn a passive income.
You can also hire farmhands to do the work and till the soil to grow crops or fruits. The returns are very high, especially if you’ll grow cash crops and fruits.
Generally, contractors and wholesale buyers of fruits will contact you and pay in advance for the yield from your orchard or farmland.
The only work you have to do is pay the farmhands and provide them with the necessary equipment and seeds for sowing.
Agricultural and horticultural businesses in India and income from them is treated as tax-free.
Additionally, food grains and fruits are always in high demand in India and you can get money several times a year from an orchard and farmland.
Because, in other seasons, you can ask your farmhands to grow vegetables while contractors and wholesalers will buy them from you directly.
8. National Monthly Income Savings Account
You can invest a maximum of Rs.450,000 in the National Monthly Income Savings Account that India Post offers as part of its financial and banking services. You get interest at the rate of 6.6 percent per annum.
However, this interest doesn’t accumulate in your NMIS Account. Instead, you will get the money every month from your interest as an income.
Your investment stays intact with India Post. And if necessary, you can withdraw the entire amount after a period of one year.
It’s possible to start an NMIS Account at any post office that offers financial services with investment as low as Rs.1,000. The monthly income depends on the amount of money you invest.
A lot of people take the monthly income and reinvest it on Recurring Deposits since it fetches more money as passive income.
9. Bank Fixed Deposits
A Fixed Deposit account at any good bank can earn you a passive interest by means of interest. Nowadays, most banks pay between six percent and 9.5 percent interest on Fixed Deposits.
Your money grows over a period of years. Generally, banks offer women and senior citizens an additional 0.5 percent as interest on Fixed Deposit accounts.
You can study the rates of interest offered by various banks before opening an FD account.
All FD accounts in India are insured up to the sum of Rs.100,000 by the Reserve Bank of India and its agencies. This means, your investments worth Rs.100,000 are safe.
However, make sure that you select a good bank such as a reputed private or cooperative bank, nationalized bank or India Post Bank to keep your money.
In recent years, some banks have collapsed due to various reasons, causing their depositors to lose lots of hard-earned money.
10. Invest in a Business
And finally, another best passive income idea in India is to invest directly in a business by offering some part of the capital. You needn’t run the business yourself.
Instead, you’ll be investing in a reliable and promising business or a running one, that has a good track record. You’ll be what’s commonly known in India as the “dormant partner”.
As the dormant partner, you’ll get returns from the investment from other owners and business operators. This system works somewhat like venture capital for startups.
However, it’s different in the sense that you’ll be an actual partner in the business and not merely an investor.
As I mentioned earlier, ensure that the business you’ll invest in has a reliable track record and its owners are above board where financial matters are concerned.
All these 10 passive income ideas in India are legit and can be done easily. Some ideas require no skills or even educational qualifications. You can therefore start earning a passive income immediately.