While most of us trade our time for money, and this can be fairly effective, and does scale as you become more skilled at something, the easiest way to make money is to have an income producing asset that makes money for you. When it comes to income producing assets however, there is usually a great deal of capital required to make things work. It takes money to make money passively, but if you're willing to add some of your own effort to the mix, such as owning a business or a rental property, your return on capital can be greatly increased. Whether your can take those routes depends on your available time and willingness to put effort in. The way I look at it, there are really 3 major ways to make an income, and each has their own pros and cons
1) Working for someone else
The pros of this is that the barrier to entry is the lowest. It doesn't require any capital inputs, but typically requires you to possess some form of useful skill or demonstrate a capability in something. For this category, degrees and diplomas are useful, as they signal value to an employer, even if the direct skills required are lacking. The range of pay is variable, but is typically a multiple of the amount of hours worked, and grows moderately slowly with age and experience. Top performers who are able to distinguish themselves sometimes command much higher salaries because their skills are in high demand, though this typical requires branching out and carving your own career path has a freelancer or consultant.
I would also lump participating in the sharing economy here, as typically an individual still ends up working in some way for the business coming up with the concept, ie Uber.
2) Running a business
This requires a variable amount of capital input and a variable amount of work. The amount of income that can be generated varies widely and can grow exponentially, especially since one can hire others to scale. However, making money initially is much more difficult, and requires a great deal of work to get going. It's much easier to buy a business that's already operational. While it requires work, there will already be revenue coming in, and the business will have its clients and employees(depending on the business) already. Typically purchasing established businesses is very capital intensive though. When buying something traditional like real estate however, much of the money can easily be borrowed from the bank in the form of a mortgage. This is really what gives you a great return if you can find an ideal building: Leverage. The return on your own money can be quite high if you can get positive cash flow after your costs are paid for.
For the purchase of non-traditional businesses, like a website, the returns could be higher, as are the risks, and it might be difficult to find a traditional lender. Thus you may have to out up a lot of your own capital. However, depending on the site, it could scale much better than real estate, potentially acquiring more users without much more work on your behalf. However, you may require additional capital for more advertising, and profit is not guaranteed. If you're interested, check out https://www.empireflippers.com or https://flippa.com . You can also check out https://www.nichepursuits.com/what-i-learned-by-spending-37100-buying-sites/ to get helpful tips from someone who's done it.
3) Investing money you already have for a return
This will give you the least return for your money, but is the most passive option. You can avoid paying taxes on your returns if you use designated retirement or saving accounts, such as TFSA's and RRSP's in Canada, or Roth IRA and traditional IRA in the US. Beyond that you'll have to pay taxes on any gains you make. It is the safe, slow and most secure way to be wealthy. It requires that you make frequent contributions over a long period of time, typically for many years, until you're financially independent, and have enough to no longer rely on employment.
Most of us will participate on some combination of the above, with various success.
|Method of Income||Capital Required||Personal time Required||Difficulty|
|Working for someone else||None||moderate to high||easy|
|Running a business||Varies greatly on the business||varies, typically higher that being an employee, at least initially||difficult|
|Investing||High amount of capital required to live off of||Almost none||easiest|