Money might not buy you happiness, but it sure makes life easier. Even more so if you can earn a little extra with passive income.
Let’s be real — our country’s current economy requires one to think outside the box when it comes to earning extra money. With the high rate of unemployment plus the rising cost of living, finding other streams of income can seem to be a bit of a stretch. But it’s doable, with a little help from a passive income. This might not make you an overnight millionaire, but every little bit counts, right?
Shopify defines ‘passive income’ as money you earn without the need for ongoing work. This could be through investments, royalties, rentals or revenue, for example.
According to My Debt Hero: “Passive income is not your job, it’s not freelancing, and it’s not an online job. You earn passive income by doing something once and then reaping the rewards years later. Having a passive income in South Africa can help you elevate your finances, help you get out of debt, and fill in the gaps that your 9-to-5 job can’t. It won’t take long for the rewards to become apparent if you keep the right mindset and are consistent.”
Passive income doesn’t require your constant attention, which means more freedom and flexibility — and cash —for you.
While your 9-to-5 might be the most stable income, it’s always a good idea to diversify your portfolio, as the experts say.
But you’re a busy guy, right? There’s so much to do and so little time. You’ve got your everyday job, which keeps you in steaks and pays for that car you’ve always wanted.
Then you might have a side hustle, something that requires more of your time on the weekend or at night.
That creative bent for pottery or painting, making dog kennels or furniture? It’s bringing in a fair amount. Or your photography hobby has turned serious and you’re out there shooting weddings and graduations, weekend in and out — and coining it.
Maybe your DJ skills are in demand at parties? Or you’re an educator who enjoys his job so much that he gets into creating online courses and ebooks.
You might have a trailer that you don’t use every day — time to put that out for rental. Or you could use your car to be an Uber driver over the weekends.
You could even venture into farming. If you live in a rural area and have access to a bit of extra land, growing vegetables or herbs will bring in money.
With all that money coming in, you need to start thinking about how to really make it work for you. Enter a passive income — that’s basically extra free money from your money.
Who wouldn’t want to earn money while doing absolutely nothing? And that’s the idea behind earning a ‘soft income’ — money that works for itself.
Your questions answered by Everest wealth
What is the safest way to earn passive income in South Africa?
Government retail bonds and fixed deposits are the safest, though they offer lower returns.
Which passive income options pay monthly in SA?
Monthly dividend stocks, unit trusts, REITs (real estate investment trusts) and property rentals are popular options. They are also the best investment options, depending on your risk profile.
Can I earn passive income with little capital?
Yes. Start with dividend ETFs (exchange traded funds), peer-to-peer (P2P) lending or blogging — many options require less than R5 000 to start.
Are passive income earnings taxed in SA?
Yes, income from dividends, rentals and interest is subject to personal income tax.
Passive income ideas for the busy man
Vehicle ads
This is as easy as it sounds, especially if you’re not fussy about vehicle aesthetics. Car-advertising companies pay you to display ads on your car, so they’re visible to passers-by as you drive around town. Once the wrap is installed, you simply drive as you normally would, earning money while living your life.
Vending machines
Ever looked at vending machines around town and wondered who takes care of them? It might not be glamorous, but the owner of those machines is earning passive income from everyone’s cravings. You have to spend money to make money with vending machines, but once they’re up and running, the possibilities are endless. In the right locations, such as hospitals and schools, you can make a lot of passive income. This one does require just a bit of work on your part, as the machines require stock when they run out, but it’s not a full-time job.
Roommates or short-term rentals
Maybe you don’t have the money to invest in a rental property. But do you have an extra room in your home that sits empty for 90% of the year? Receiving rent from a roommate is one way to offset your living costs. It does come with risks — you will need to set clear expectations around shared expenses and spaces like the kitchen and bathroom.
Another option is to make the room available to someone who is looking for a remote office or workspace.
Alternately, if are you going away for a few weeks and don’t want to leave your home empty, you can rent it out short-term. This is best done through an agency or established platform to avoid the risk of people robbing you blind.
Investment funds
Investing in funds can be a smart way to build lasting wealth while minimising risk.
Source: Shopify.com
Passive property
The side hustles we’ve outlined are ones that require work and a fair investment of your time and energy. They are not the same as ‘passive’ income but are a pathway to it.
One of the most popular forms of passive income is property. Ask any investor and that’s one of the first options they throw on the table.
According to Everest Wealth: “Owning rental property remains one of the best investments for passive income in South Africa. From apartments in urban hubs like Cape Town or Johannesburg to investing in student housing, property provides reliable monthly returns.”
In other words, if you can use your side-hustle income to invest in property, you’re golden.
You can choose to buy to let long-term, or something for short-term rentals aimed at tourists and digital nomads on Airbnb or Booking.com, which might have higher returns depending on the area.
Another option in university towns is student accommodation, which is in high demand, and when connected with the right institution, is almost always guaranteed to be the gift that keeps on giving.
How it works
According to Everest Wealth, generating passive income is no longer a luxury — it’s a necessity. “The ability to diversify your income sources provides financial freedom, reduces stress and offers a buffer against economic volatility.”
Unlike active income, where you must work and put in the hours for every rand earned, “passive income works for you, even while you sleep”.
You can go with options that pay out monthly or ones that require a little bit of patience —a few years — to earn that rand.
“The best way to get started with passive income strategies for investing is to assess your current risk appetite, available capital and desired level of involvement. Whether you choose investing, rental properties or digital assets, the key is consistency and diversification,” says Everest Wealth.
In simple words, the right-side hustle with the right passive income can help you retire early, buy those golf clubs and live a life of luxury. But you have to start somewhere.
By: Thulani Gqirana
Photography by: Gallo/Getty Images
Text courtesy of Man magazine
Also read: Why income differences shouldn’t stand in the way of good friends
