To lead a successful life along with a desired and fulfilling lifestyle, one needs to have multiple sources of income rather than just a single job or business. Everyone is into some side hustle that will get you a passive income. If you focus more and work smarter, your passive income might even replace your regular income.
There are two most popular ways for passive income, i.e., Trading and Freelancing. Based on your interests, skills, and strategies – you can generate passive income through either or both. Let’s discuss further and learn more about the key differences, pros, and cons of Trading vs. Freelancing.
Let’s begin with the most obvious question – What is trading? It is where investors/ traders buy and sell assets, including stocks, commodities, currencies, cryptocurrencies, etc. While making trades, they make predictions about certain companies and earn profits. With higher risks associated with Trading, it also has greater potential to earn significant amounts of passive income.
Why should you go for Trading for Passive Income?
- Higher Returns: The potential for higher returns earned in a short period of time makes trading one of the widely preferred methods of passive income.
- Flexibility to Work: You do not need specific hours of the day to do the trading. As per your availability, you can work anytime from anywhere for just a couple of hours and make successful trades.
- No Time Commitment: No time commitment is needed for trading regularly, as you can buy stocks/ cryptos and keep them. In the remaining time, you can pursue other interests of yours.
Cons of Trading:
- Higher Risk: When you buy a specific company stock or, say, a cryptocurrency, a higher risk is associated depending on how the company performs. If they go down, you will likely face losses on your end too.
- Expertise Takes Time: To know market trends better and have a deeper understanding of how it works, you will need some time. Over a period of time, with experience, you will gain such helpful insights.
- Influencing Factors: Various global economic events, company performance, and more incidents might greatly affect the potential of stock prices, which is something to be more careful about.
How to be a Successful Trader:
By better understanding current markets, you can get better and make successful predictions for trading. Staying updated with the latest trends and performing various analyses for different companies will get you deeper insights, which will help you make better at buying stocks and other assets.
This is something that you will achieve over a period of time when you work with consistency and dedication.
It is when you provide various services to clients over distinctive works. One major advantage of freelancing is that you can do it from anywhere in the world. Even when you enjoy your beach holidays, you can still be working and generate passive income. However, due to increased competitiveness, finding work might be somewhat difficult. With the right skills and research experience, you can find consistent work with regular clients.
Benefits of Choosing Freelancing for Passive Income:
- Turn Existing Skills into Money: Any existing skill sets gained from your education or hobby can be turned into a freelancing source of income.
- Flexibility for Work: As a freelancer, you can choose only the projects you feel you can do better and complete them for your clients, depending on your expertise and interests.
- Recurring Income: After delivering satisfactory work results, there is potential to have long-term relations with clients, and that will get you regular work. That will provide you with a steady income over time.
- No Investment Needed: To start working as a freelancer, you do not need investment capital – all you need is what you already have, i.e., a smartphone/ a laptop and an internet connection.
- Remote Working: You can complete your work from anywhere you are. You just need your laptop, and you’re all set to go.
Drawbacks of Freelancing:
- Competitive Nature: Due to higher competition in the market for almost any field of work, it might take some for you to get your first freelancing project.
- Consistency: There is no consistency in the amount of work you will get because it is not regular work. Hence, depending on your projects, you will be paid accordingly, but it is more of a ‘feast-or-famine’ scenario.
- Time Management: Even though it can be done from anywhere, one needs to keep a work-life balance, rather than working almost all the time and not getting any time for oneself or family and friends.
- Lesser Income: You will get paid accordingly, depending on your skill set. Sometimes even when you have expertise skills, you might get lower rates from clients due to higher competition.
How to be a Successful Freelancer:
You can become a successful freelancer through your current skill sets and take on new skills as you move forward. Keeping up with the latest technologies and trends is much in today’s fast paced world. Hence, as time permits in your routine life, you should keep learning new skills, which will eventually help you become a freelancer with many skills.
Also, being better at client communication through effective techniques is something freelancers should keep in mind. By maintaining client relationships, you will reap benefits that you sawed for yourself long ago.
Trading and Freelancing have unique opportunities and greater potential to generate passive income. You can start your passive income over time depending on your investment goals, risk tolerance, and time management skills.
We discussed various aspects related to Trading and Freelancing and how they work. You can carve your path toward successful passive income generation based on your skills that might be turned into freelancing or your interest in finances and crypto.
No matter which of these you choose, with consistency, patience, and a well-thought strategy – you will achieve your financial goals and lead a successful life.