What if there was a way for you to effectively make money while you sleep? Sounds like a dream come true, right? Even for the biggest workaholics, there are only so many hours in a day. If only you could get paid multiple times for something you did once—that’s exactly how passive income works! Thanks to technology, the potential to create multiple income streams is even easier than ever before. We’re no longer held back by the limitations of a traditional 9-to-5 job, and financial freedom is at our fingertips. Even if you already work a full-time job you can still improve your financial health with passive income.
If someone stole my hard work and passed it off as their own, I’d be livid and would pursue them to the ends of the Earth for full restitution. A man I hired to work with me registered my preferred domain name of my business and has re-registered it in subsequent years. That’s bad enough; I’m mad as hell. The worst aspect of his behaviour is that I don’t know WHY he has done that; I paid him the fee we had agreed on and thanked him for his input. We also got along perfectly well during the project so far as I know, so I don’t see what his problem is.
As interest rates have been going down over the past 30 years, bond prices have continued to go up. With the 10-year yield (risk free rate) at roughly 2.55%, and the Fed Funds rate at 1.5% (two more 0.25% hikes are expected in 2018), it’s hard to see interest rates declining much further. That said, long term interest rates can stay low for a long time. Just look at Japanese interest rates, which are negative (inflation is higher than nominal interest rate).
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For those willing to take on the task of managing a property, real estate can be a powerful semi-passive income stream due to the combination of rental and principal value appreciation. But to generate passive income from real estate, you either have to rent out a room in your house, rent out your entire house and rent elsewhere (seems counterproductive), or buy a rental property. It’s important to realize that owning your primary residence means you are neutral the real estate market. Renting means you are short the real estate market, and only after buying two or more properties are you actually long real estate.
Thank you for sharing your article! You did a great job saving and putting your money to work for you. Like you, I share the same financial dream of having 150-200k in passive income and traveling the world stress-free! :) Right now I’m saving about 80-90% of my active income and put it toward ETF funds and value growth stocks because I’m seeking capital appreciation. And I can tolerate a lot of risks because I’m still in my early 20’s. By the time I reach 30 something I’ll start looking into blue chips stocks that pay dividends and REIT. So I want to be where you are by that time lol. Anyways, that the plan and I’m sticking to it. Good luck on achieving your financial dream! https://thecollegeinvestor.com/wp-content/uploads/2018/08/TWFB_PASSIVE-1.jpg
Here’s the truth: a successful business is something that successfully solves a problem. And that business can make more money in two ways: solving more people’s problems, or solving bigger problems. The cool thing about the EP Model is that sometimes these products don’t even have to be yours. You can generate income by recommending other people’s or companies’ services or products. This is called affiliate marketing. It’s actually how I’ve made most of my money since I started in 2008.
Or you could do joint ventures/strategic alliances for your business or for other businesses and make residual cash flow for $0 investment.. that’s what I do lol. No money, no risk, little time, 20+ years working from home. Just connect companies and take a %, use the Internet to do it locally or globally, be the intermediary & connect companies…. ;-)
If you’ve got a book you’re itching to write, you can still go with the traditional publishing route. (We published our first book using a traditional publisher.) Whether your book is fiction or non-fiction, a publisher can help get your book into print and onto shelves in both online and traditional book stores. This is still a good route, although it may take more work and be more expensive than some other options.
eBay is, of course, the biggest and most popular auction and shopping site out there. You pay a small insertion fee to list your product (starting from 10 cents) and a small portion of the selling price (10%) if your item sells. Currently, insertion fees for your first 50 listings per calendar month are free. Also, if you are planning to sell on regular basis, you may want to consider setting up an Ebay store. Among other things, this will allow you to list your products at reduced rates.
Many people choose not to take this route because they get intimidated by complex applications and technology. The truth, however, is that you don’t need a fancy platform or special software to create a powerful online course. Your lessons can be sent out as emails, followed by action plans and/or video tutorials. This approach can be even more effective as most people check their email on daily basis. In fact, that’s the exact approach I took with some of my freedom eCourses.
5) Determine What Income Level Will Make You Happy. Think back to when you made little to no income as a student. Now think back to the days when you just got started in your career. Were you happy then? Now go over every single year you got a raise or made more money doing something else. How did your happiness change at all, if any? Everybody has a different level of income that will bring maximum happiness due to different desires, needs, and living arrangements. It’s up to you to find out your optimum income level.
For me, this has worked out brilliantly. Because I had passive income streams set up, I didn’t have to worry about generating sales immediately, raising funds from investors so that I can eat, etc. I could take my time, try out 100 different opportunities, and ultimately settle on a business that suited my needs (the one that I’m running now), which allows me to live and work wherever I want and whenever I want, and is, for the most part, fully autonomous. But I didn’t always have passive income — in fact, it took a lot of trial and error and a lot of learning (do yourself a favor and read Rich Dad Poor Dad — iBooks Link Here) before I had anything worth mentioning.
Udemy is an online platform that lets its user take video courses on a wide array of subjects. Instead of being a consumer on Udemy you can instead be a producer, create your own video course, and allow users to purchase it. This is a fantastic option if you are highly knowledgeable in a specific subject matter. This can also be a great way to turn traditional tutoring into a passive income stream!
Even if you don’t have the skills right now, it’s possible to develop them. Envato Tuts+ has a load of great courses that teach you how to make WordPress themes, Photoshop actions and so on. If you invest a few months into learning the necessary skills, you might well be able to carve out a spot for yourself in the Envato Market or in our new curated website Envato Elements.
When money is lent to a partnership or S-corporation acting as a pass-through entity (essentially a business that is designed to reduce the effects of double taxation) by that entity’s owner, the interest income on that loan to the portfolio income can qualify as passive income. As the IRS language reads: "Certain self-charged interest income or deductions may be treated as passive activity gross income or passive activity deductions if the loan proceeds are used in a passive activity."
One of the easiest ways to increase your passive income is to shift your savings to a bank that pays a higher yield on your savings — for example, Discover Bank and EverBank pay almost 1% for your money. Although it doesn’t sound like much (especially in this low interest environment), little things do add up and eventually interest rates will rise.
I will share what we did, because it’s an incredible success story. We used an existing tax loophole where if you sell your primary residence (after having lived there at least two years) you get to keep your profit tax-free. So, we stair-stepped. We bought house after house, at least two years apart, used the profit money to pay down on the next house (so on and so forth, yadda yadda) building up equity as we went along… and now, we own a $600,000 house debt-free. And now we are using our paid-off home as leverage to borrow money to buy commercial buildings to rent out. I like commercial because it’s a BUSINESS transaction… kids, pets, other wear and tear that you see with residential rentals is nonexistent. People take care of their business space much better than residential. You have to be in a good area for renting out commercial – a thriving business community – to make this work. But that’s how we “made it”, and though it took 15 years, we will have residual income to take care of us when we’re old enough to retire. People made fun of us for moving so much, but who’s laughing now? 😉 Oh, and our child only had to change schools once (and we wanted to anyway) because we stayed in the same general area as we moved around. We were careful not to disrupt his life too much.
Domain names cannot be replicated. If one is taken, the only recourse would be to approach the owner to discuss a sale. While there are other variations you could choose, sometimes owning a certain domain (especially if it is attached to your business) can be worth the premium. Often, people will scout out domain names that are still available, buy them, and then sit on them in order to sell them down the road. Depending on who may want the domain down the road, you could sell it for a large markup.
You can try and start another travel blog, but every twenty-something who’s visited South East Asia has one; the market is so saturated that it will be very difficult for you to stand out and start making money. Instead, if you find something you’re interested in that is underserved, you’re far more likely to be able to carve out a space. You’ve a far greater chance of making money with a blog for vintage BMW owners than another generic Thailand travel guide.
Before you buy any property, an inspection by a professional and independent home inspector is essential. Even if your potential purchase has just undergone a beautiful renovation, you must find out if the wiring and plumbing are all up to code. In most areas, it’s illegal to operate a rental property with any code violations. A top-quality inspector will be able to estimate the remaining life of the roof, HVAC system, and hot water supply, as well as find any defects in the structure, such as dry-rot in the attic.
I wish I had more time to put into real estate. Given the run up since 2012, I may even be interested in selling my condo that I currently rent out. I need to get it appraised to really see what it’s worth, but I think conservatively it’s gone up ~50%, although rent is probably only up ~10% or so. I am bullish on rents going up in the future… mostly in line with inflation, or perhaps even slightly faster due to constricted credit and personal income growth which should provide a solid supply of renters. At this point, I just don’t want to manage the property. I’ll probably look into a property manager as my time is likely worth turning it into a nearly passive investment.
In which socio-economic neighborhoods do you want to buy? I know real estate investors that have done very well buying and renting in lower-income neighborhoods. For me, it was a huge mistake. I fell into the trap of thinking, “I can buy a house for about half the cost as what I would pay in a better neighborhood.Even if I get slightly lower rent, say 70% as much, I’m still making a higher return.”Wrong!The money you lose on tenant turnover, unpaid rent and repairs far outweighs any benefit to buying property at a discount. Now, I always recommend to investors to never buy a house somewhere they wouldn’t want to live. If the business does poorly, you may end up living in one of your homes.
Absolutely Federico. I still invest in real estate but no longer carry the misconceptions that it’s passive income. Fortunately, I’ve held my real estate properties long enough that they cash flow even after paying for management but it was a lot of work in the beginning. Real estate is a great investment but passive income investors should look to REITs and other investments rather than direct investment.
If your research really does determine that there is some amazing market niche that until now has miraculously gone unnoticed and unserved---dog owners who wish to help their dogs lose weight naturally, for example---sooner or later, word is going to get out that there's money to be made there, and someone is going to create a better ebook or info course or product that serves that market's needs better than yours does, and who markets it better to them than you do. You can't manage this competition while sipping margaritas all day from your paradise restaurant on Fiji. You'll soon see your market share go down the drain---just like all those Açai cleanses. . .
Speaking from our own experience, you can’t be a passive McDonald’s franchisee. Every McDonald’s potential franchisee will need to complete at least thousands of hours of training before he/she would be approved to acquire a franchise and only if he/she has the financial resources to acquire a franchise. It could take years before one would get a single store franchise. Until the franchisee eventually has acquired multiple stores and established his/her own management team, the franchisee would have to put his/her nose to the grindstone and work his/her ass off every day. I won’t call it a passive investment by any stretch of imagination.
Now, how do you do it? Building a passive income will require some work up front, but choosing a method that plays to your strengths will yield the most success, and it can even become a fun hobby! Have an aptitude for photography? License your photos to stock photography websites. Or maybe you’ve always wanted to invest? Learn how with a robo-advisor. No matter what your strengths are, we’ve gathered 35 ideas for different ways you can generate passive income and build your wealth.
Bullshit. If you have a job, you have marketable value. Maybe it’s low value, if you’re flipping burgers, but you can create value somehow. I don’t care if you have to start out by re-renting the parking spot in front of your apartment, you can find, create, or buy something valuable worth repeatedly selling or renting, or you’re not thinking hard enough. Here’s a free idea: A lot of people want to play with 3D printers. Get 5 of your friends together and buy one. Put up a website and a listing in the local paper. Charge $50/h for printing. Set up a system that verifies if payment has been submitted and then automatically prints out the files that have been emailed to you. Split the earnings with your friends. Boom. You have passive income.