Master These 8 Passive Income Earning Habits for Building Wealth in India

A famous adage says, ‘Rome was not built in a day. This holds in building and growing your wealth. Wealth creation is a continuous process of following a set of financial habits and making profound choices to earn passive income.

Share on facebook
Share on twitter
Share on linkedin
shutterstock 1748251898 min 1

Passive income is a great financial tool that multiplies your earnings without consuming much time and effort. Thus, to achieve financial freedom, one needs to build sustainable sources of passive income that can contribute to growing your wealth over the years. For this, it is of utmost importance to imbibe financial discipline through a set of habits that can ultimately reach your goal of ‘Financial Freedom’. In this article, we have put together 7 tried and tested habits that can up your passive income game. All you need to do is to start implementing them slowly and steadily until they become a part of your being.

Building wealth has been one of the topmost priorities of many millennials. The deadly virus just helped strengthen the priority of passive wealth in lockdowns. The restrictions imposed by the Covid pandemic forced a majority of people to stop their occupations or work remotely. With few sources of income, people were left to ponder on their financial stability in such trying times. The toughest lesson taught by nature is ‘DON’T SOLELY RELY ON YOUR OCCUPATION’. The creation of a passive income portfolio is the need of the times. And for that, investors must employ their knowledge and time to build a sustainable portfolio to cover their financial needs in uncertain times.

Top 8 Habits to Master Your Passive Income Game

  • Plan ahead of your expenses

Most people have an impulsive nature. Well, this type of nature is helpful in some aspects of our life but not in handling our finances. It is certainly not advisable to expend on valuable purchases without putting much thought into it. Thus, ‘PLAN AHEAD OF YOUR EXPENSES’. Devise a plan prioritizing which expenditures are worthful and through what sources of income the expenditure can be taken care of. With this habit, you would be in full control of your expenses and thus eliminate any unwanted purchases.

  • Start Saving

The worst financial condition a person can be in is living paycheck to paycheck. The urge to spend all your income on buying expensive things is natural. But saving a portion of your income is a must to plan for future expenses as well as to cater for emergencies like the Covid-19 pandemic. So, before making any big purchase, start separating some amount of your monthly income. This will not only make you aware of your expenses but also channel money towards important things. An ideal savings ratio for an Indian could be 40%. It means you need to put aside 40% of your salary towards investments and contingency savings. This will take care of your requirements of emergency funds and important expenses and investments.

  • Create Passive streams of Income

Passive income is a golden basket that keeps multiplying money once you put the initial effort in the form of an investment of time or money. To build long-term wealth, the creation of passive income streams is essential. The most common ways of earning passive income can be from Mutual Funds, Bonds, Real Estate Rental Yields, Real Estate Crowdfunding, Fractional Ownership, REITs, and so on. These additional sources of income can be reinvested to attract the power of compounding. The power of compounding helps to gain additional interest on the income when the earnings are reinvested. Using this formula, long-term wealth can be successfully created.

  • Conduct thoughtful Asset Allocation

The most important aspect of portfolio planning is Asset Allocation. There are tons of passive investment options available. However, making the right choices at the start will prove to be impactful in the long run. To choose the best options, one must take complete knowledge about the passive investment options.

The key things to check before buying an investment are:

  1. Liquidity
  2. Investment Type
  3. Expected Returns
  4. Risks
  5. Lock-in Period
  6. Investment Tenure
  7. Taxability.

With a due understanding of these concepts, the investors must align their investment objectives to choose the best suitable option.

  • Monitor your investments

This habit is as important as building streams of passive income. The costly mistake most investors make is to forget about their investments once the money is put in. Investments require constant due diligence in the form of checking the market sentiments, economic conditions, valuations, and so on. Along with that, make sure that your investments are put in the right companies or properties with a high potential of return. If the capacity of generating returns lowers then be quick enough to exit at a right time and invest in something better. This will ensure no blockage of funds in dead investments.

  • Invest in Long term

Long-term passive investments are proven to be more profitable compared to short-term returns. For earning consistent passive income and building wealth, investing for a long-term horizon of say ten, twenty, or even thirty years can prove to be a great wealth multiplier. Even the stalwarts like Warren Buffet and Charlie Munger have advocated long-term investing as their greatest asset in building such huge wealth. Thus, the longer the period of your investment, the lesser you pay and the more you earn. Real estate properties, Mutual Funds, and Stocks are some of the best assets for long-term investment.

  • Leverage Carefully

In today’s times, debt-financing options are available for almost any purchase whether big or small. But, indulging in more and more debt is a sign of intoxication which can lead to debt traps and collapsing the tower of your wealth. Thus, it is important to learn the right way of using the leverage tool to grow your wealth. The best way to use leverage is where you can avail tax deductions on your income. The best option for that is purchasing real estate through a home loan. Interest on Home Loan can be claimed as a tax deduction under Sec 24b of the Income Tax Act. Along with that, principal repayment of up to 1.5 Lakhs can be claimed as a deduction under 80C of the Income Tax Act. Thus, this provides a two-fold benefit.

  • Manage your taxes wisely

Paying taxes is surely a painful act for many people. Sure, every earning citizen must pay their taxes duly, but what if you can lawfully save your taxes? Yes, managing your income in the right manner can help you to save taxes as per the provisions of the Income Tax Act. Under section 80C, several investment options are listed which can be claimed as deductions from your total income. Along with that, payments to Life Insurance and Health Insurance can also be claimed under deductions. Thus, with careful financial planning, one can save taxes and in turn invest more to build wealth

The above-listed habits are the gateway to building passive income and wealth. Every person needs to be financially disciplined to become successful in life. Mastering passive income is a sure-shot way to build wealth. These habits may be hard to adopt at first. But by setting a system for yourself, you can slowly and steadily inculcate these habits into your daily routine. One thing to remember, small steps in the right direction are always better than losing your path. Start putting efforts into creating multiple streams of Passive Income. Several opportunities in the market can help you create passive income. For knowing more about passive income options, give a quick read on the 10 Best Sources of Passive Income in India.

For starting your passive investment journey, Assetmonk is the right place to be.

Assetmonk is a smart real estate investment platform that offers multiple investing options through Growth, Growth Plus, and Yield Models with an expected IRR of 21% per annum.

Passive Income Portfolio FAQ's:

Creating and maintaining a passive income portfolio is a continuous process. By following the 8 techniques mentioned in the article, one can easily build a sustainable passive income portfolio.

To start building a passive income portfolio, analyse your investment goals along with other factors like Liquidity, Investment Type, Expected Returns, Risks, Lock-in Period, Investment Tenure and Taxability.

The popular streams of passive income investment are Real estate rentals, Mutual funds, Direct stocks, ETFs, Provident Fund and so on.

Related Articles

istockphoto 1313421433 612x612 1

Pradhan Mantri Kisan Samman Nidhi Yojana

What is the Pradhan Mantri Kisan Samman Nidhi Yojana? The Pradhan Mantri Kisan Samman Nidhi Yojana is a plan initiated by the Indian government. It gives income help of as much as Rs. 6000/- annually to all marginal and small farmers. Families of land-owning farmers receive an Rs. 6000/-  cash advantage a year under the Pradhan Mantri Kisan Samman Nidhi Yojana plan. This amount will get paid Rs. 2000/- in 3 equal payments per 4 months. Also, read Saving Schemes in India. The Motive of the Pradhan Mantri Kisan Samman Nidhi Yojana? As we all know, agriculture is the backbone in the Indian economy. So, farmers are an important part of society. But, the economy has socioeconomic gaps between the urban areas with rural areas. So, farmers battle with long-term profitability. This problem has afflicted the majority of India’s people since its freedom. The state and federal governments have worked to solve this challenge. They have also introduced a variety…

Read more
istockphoto 951524746 612x612 1

Post Office Time Deposit

So, what is the Post Office Time Deposit Scheme? India Post provides the post office time deposit as a modest savings program for Indians. Post Office Time Deposit Scheme is a savings account investment provided by India Post. This program gets intended for depositors who desire to make a one-time deposit with an FD of 5-year which is a tax advantage. With a few exceptions, it is identical to a bank fixed deposit. People can create a post office time deposit account by approaching their closest post office or by utilizing India Post’s official app or website. India Post has been in existence since 1854. It is the most globally disseminated postal network, with over 1.55 lakh offices spread over India. Majorly known for mail delivery, India Post also offers these services: Small savings schemes. Postal Life Insurance and Rural Postal Life Insurance Instant money order E-money order. Mutual funds. Services for money transfer Also read Post Office Investments –…

Read more
istockphoto 1364622197 612x612 1


PPF Vs SSY: What is the difference between the two? Sukanya Samriddhi Yojana Account (SSY) and Public Provident Fund (PPF) are the safest investments. These are accessible to those desiring significant financial development with a low-risk component. So, if you wish to invest in any or both of these schemes, you would investigate and check. Financial objectives, risk tolerance, rate of interest, and versatility should all get addressed. Read SSY – Sukanya Samriddhi Yojana Benefits & Interest Rates. PPF Vs SSY PPF and SSY are solid investment options, although they differ in important ways. The Sukanya Samriddhi Yojana is a female child welfare plan. It helps to safeguard a girl child’s future. But, the PPF is a program that enables depositors to receive zero-tax interest. In India, the Public Provident Fund (PPF) plan provides a long-term investing choice. It provides high profits while also giving tax deductions to the investor. A PPF account may get created in any private or…

Read more
Small Savings Schemes

Small Savings Schemes

Small savings schemes are an excellent way to save money. They offer a good rate of interest and can be used as an alternative form of collateral for investments, bonds, and property. The following schemes are available throughout the country and are some of the most popular ones that you can consider: Post Office Time Deposit Scheme The Post Office Time Deposit Scheme (POSTD) is a small savings scheme launched by the Government of India to provide investment opportunities in the secondary market. The scheme was launched on 15th September, 2015. This scheme is popular in rural as well as remote corners of the country, where the people have limited access to other financial products or alternative investments. The Ministry of Finance sets the interest rates for this scheme based on the performance of government securities, which is generally spread across the yields of the government sector. For 2022, the rates of interest are 5.5%, 5.7%, 5.8%, and 6.7% for…

Read more
istockphoto 1033711098 612x612 1

UAN Helpdesk

What is the UAN helpdesk for PF account holders? UAN is a 12-digit Universal Account Number that is assigned to every PF account holder at the time of joining the first job. The PF number when allocated, is used for each organization through the use of UAN. The new PF identification number that the person is associated with is his UAN in each new company of which an employee is a part. UAN can be described as a code that is used to identify several PF account IDs for an individual participant. It serves as an umbrella for multiple PF IDs assigned to individuals by various organizations. Also read UAN Registration & Activation Process Online. What exactly is UAN Helpdesk? The Employee’s Provident Fund Organization, India has a separate helpdesk online for (Universal Account Number) UAN-related issues and complaints. Users can access the helpdesk online and resolve their issues on their own or contact the executive offline. Employees can also…

Read more
child saving scheme

Child Saving Schemes

A child is the most precious thing in your life, and it’s important that you take care of them. However, it can be hard to know how much money you should save for their future education, health, and insurance needs. There are many different types of child saving schemes available for parents who want to safeguard their children from financial difficulties later in life. Here are some examples: Sukanya Samriddhi Scheme The Sukanya Samriddhi Yojana is a child saving scheme specially made for girl children. It was launched by Prime Minister Narendra Modi on January 22, 2015. The objective of this scheme is to promote the financial inclusion of girls in India by incentivizing them to save money through the Sukanya Samriddhi account. The interest rate ordered by this scheme is 7.6% per annum, and the minimum and maximum investment amounts are ₹250 and ₹1.5 lakh per annum respectively. Also, the maturity period of the Sukanya Samriddhi Scheme depends on…

Read more