I wanted to specifically call out one particular strategy within equity investing that bears mentioning – dividend growth investing is when you focus on stocks that not only pay a dividend but have a history of strong dividend growth. When I was first building my portfolio of individual stocks, I focused on buying companies with a history of dividends, a history of strong growth, and financials that supported a continuation of both.
I actually spent a year and a half working as an affiliate marketer (mostly selling drumming related products – lessons, kits ect). 5 years on and one of my one page sites (which I’ve not touched) still nets me about $150 a month. I won’t be retiring off that but only really now appreciate the reverse pyramid approach to entrepreneurship (working for nothing initially but later being paid without effort!)
The great part about creating truly passive income is the money comes in every month without you having to sell your investment or worry about running out of money when you retire. The returns are also better for me with rental properties, because my cash flow is producing about a 20 percent cash on cash return and that does not even include equity pay down on my loans or appreciation. The appreciation on my rental properties is a bonus for me, while stock market investors are depending on it.
You can upload a T-shirt design with Amazon Merch and earn a percentage of each sale. If you choose to outsource the design, there are sites like Fiverr and Upwork with freelancers that can provide designs as low as $5 and up. Or you can buy pre-packaged designs from companies such as Design4Dollars and Merch Ready Designs, Lindsey says. Amazon.com also allows you to stream your own video game, talk shows, and other creations for income.
While having multiple streams of income is ideal, you need to choose the right one for you. For example, if you want to earn money from a blog, you need to pay for web hosting, choose the right niche, design your website (or have someone design it for you), create a blogging schedule, share your posts, develop a community, guest blog, and choose the best affiliates for your blog niche. Blogging is work, but it is fun!
One of the most important assets you have is your credit score. By taking care of it and pursuing the steps to improve your credit score, a world of opportunity can open up for you. If you need a loan to buy that rental property or some quick funding through a business credit card, a good credit score will help you get approved so you can build passive income.
When you buy a turn-key rental property you are saving a lot of time and work, by letting the turn-key company complete the repairs, find the property and manage the property. You are giving up equity in the property over buying one yourself, because you aren’t doing any of the work. You have to decide if the time you save is worth the equity you give up. Typical returns I have seen on turn-key properties have been in the 10 percent range.
Greg Johnson is a personal finance and frugal travel expert who leveraged his online business to quit his 9-5 job, spend more time with his family, and travel the world. With his wife Holly, Greg co-owns two websites – Club Thrifty and Travel Blue Book. The couple has also co-authored a book, Zero Down Your Debt: Reclaim Your Income and Build a Life You'll Love. Find him on Instagram, Facebook, and Twitter @ClubThrifty.

I’m looking at accepting a professor job. It’ll be more than a 50% pay cut. But I’ll have the same life you describe – endless summers and an entire month every winter to ski. I’m thinking in the end, eventually, I might even end up wealthier in more ways than one. Happy people tend to be the most successful. I have no desire to diversify. Dividend stocks allude me. CDs seem like a good choice for older people, but I have time on my hands and real estate knowledge, so I’m sticking with what I know, despite the fact that most people will tell me it is foolish and I should diversify.


The great part about creating truly passive income is the money comes in every month without you having to sell your investment or worry about running out of money when you retire. The returns are also better for me with rental properties, because my cash flow is producing about a 20 percent cash on cash return and that does not even include equity pay down on my loans or appreciation. The appreciation on my rental properties is a bonus for me, while stock market investors are depending on it.
Reinvest your passive income. Once you've started earning a good amount of passive income, you can reinvest that income to earn ever more. This income will then produce further income that you can also reinvest. This cycle produces ever-increasing income streams without any direct cost to you. For example, you could reinvest revenue from website advertising into more advertising that brings readers to your site. This increase in traffic would then further increase your ad revenue.[12]
Everything passive first takes active energy. The time to put in the effort is when we are young and not ravaged by disease or burdened by family obligations. I remember being able to snowboard from 9am until 4pm every day for a year. Now, I’m lucky to last from 11am until 2pm without wanting to go to the hot tub and drink a bucket full of beer! If we can appreciate how lucky we are when we are young, we’ll be able to maximize our vitality and live financially freer when we are older.
Hello from the UK! Fundrise and Wealthfront are only available to US residents it seems :(. Any other readers from the UK here? The only thing I have managed to do from Sam’s list is getting a fixed rate bond (CBS is having a 5-year fixed rate at 2.01% – not great but the best I could find ). Don’t know if the FIRE movement will ever take off here but would love to trade tips/ideas on how to reach FI and have the freedom to consider alternative rythms to living.

Maybe such a business is owning a McDonald’s franchise or something. If one has the capital (Feasibility Score 2), then the returns might be good (Return Score 6). But the Risk Score is probably under a 5, b/c how many times have we seen franchise chains come and go? Like, what happened to Quiznos and Jamba Juice? A McDonald’s franchise was $500,000… probably much more now?
As we’ll discuss, passive income opportunities are usually limited-time only, and honestly, over half of what you try won’t work. Diversification is your friend. Having many sources of income — at least 7 including your “day job” — is an important hedging strategy. Personally, I have been working at it for a long time, and I’ve had many failures in trying to build my portfolio. I’ve done a few apps for BlackBerry (come on, it was 2009), contemplated writing a book, started a bunch of blogs and forums, and joined countless affiliate programs. Here are the ones that are currently working right now.
As an struggling young Engineer (back in the Carter era) I bought anything I could renovate then rent to justify paying the 18% interest. I never took vacations but worked on my properties all in the pursuit of passive income. I drove junk for many years & many months I just got by on credit cards. My friends & colleagues were amused by my ‘stupidity’ but most are still working to make enough for retirement.
In that regard, I highly recommend you build your own email list. By building an email subscriber list using a service like AWeber, you’re essentially creating a list of people that trust you and want to hear about your affiliate products' recommendations. Check out my free course on how to build your subscriber email list if you want to learn more about it.
If an investor puts $500,000 into a candy store with the agreement that the owners would pay the investor a percentage of earnings, that would be considered passive income as long as the investor does not participate in the operation of the business in any meaningful way other than placing the investment. The IRS states, however, that if the investor did help manage the company with the owners, the investor's income could be seen as active since the investor provided "material participation." 
Like I mentioned earlier, coming in late in the game can be an advantage if you listen, learn and provide solutions for what seems to be missing. Even coming into a market with a minimal viable product, you’ll have the advantage of being able to get deep into the customer experience to shape your product or service to what it should be, again, all based on what you’re able to measure and learn.
2. You clearly have plenty of money already. Just more padding in your already cushy nest. This is not the story for a lot of people. Your title should be “How to become richer than you already are without working.” But, actually the investment one is the only one that would make money without actual WORK. Running rental properties is a lot of work, and so is running a business, or even a blog. Sooooo…..while there might be some truth to this, I think it’s mostly grass that looks greener because it’s on the other side of the fence.
In June, he put ads on his site with Google Adsense, and within the first hour, earned $1.08 with three clicks. He earned $5 the first day, $7 the second, and then eventually began pulling in $15-$30 a day. In October, he created an ebook exam study guide priced at $19.99. By month’s end, he earned $7,906.55 — more than he had ever previously earned in a month.
With Google AdSense, you can earn passive online income from your website by showing ads that are relevant to your visitors. The great thing about Adsense is that Google does most of the hard work i.e., they find the advertisers, pick the ads, track the clicks, and even deposit the earnings straight to your bank account each and every month. No wonder that 65% of the top 200 websites that show ads use AdSense.

Well, my first book project didn’t generate the interest I would have liked to, but another set of products suredid. In 2013, I launched a course on Udemy, which grew so fast, it became my biggest income earner of all time. That course resulted in a series of books (audio, digital, and print), a not-so-passive podcast, and even lead to my now full-time gig: SuperLearner Academy. Though I run the company full time, it is, for all intents and purposes, an automated business.
1 Would you choose WordPress as an easy-start blogging/website content management system? The only thing I know about it is that it exists, I’ve been told by friends who have WP it’s easy to set-up and maintain and I’ve since read lots of info on the Net which reiterates this claim. I believe I read in a reply you wrote to another community member who commented on another post of yours you recommend WP. Is this correct, Chris? Or did I just make that up?
"It's about long-term travel, but not travel in terms of just like going and seeing some sights, and checking them off your list and doing everything really fast. But more like in a really slow, enriching way. You might not make it past one city or another country. You just go to one place, and you're really going to soak it in and travel slowly," Carson said, adding that the family of four will hopefully leave Ecuador fluent in Spanish.

Though it requires a huge up-front investment (well, at least 20%), real estate is awesome, because it’s (usually) pretty stable, and it’s a triple-whammy: you make money by leveraging a bank’s money, you can rent it out with almost no work at all day-to-day, and the value of the underlying asset INCREASES. This is why so many people flock to AirBNB to rent out their apartments when they’re going on vacation, too. It’s pretty passive, you don’t have to own the asset, and you just hand over keys and hire a cleaner before/after. The value of your apartment is untouched. By contrast, imagine buying a plane and renting it out to people for tours — you pay tons of money to maintain it, and after 20 years, it’s value is almost nothing. The exception is if you can manage depreciation and somewhat automate the value-delivery. If you have an expensive tool (like a 3D printer) and charge people to come over to your house and print things on your 3D printer, it’s pretty passive for you to answer emails and open the door, so I give it a “Semi to yes” for passivity.
One great way to generate a passive income is through affiliate marketing. Now, this does depend on the size of your list. Yes, size matters when it comes to your list. Especially if you're looking to make some serious money and do it on autopilot. But, list-building takes time. It doesn't happen overnight. And you need to add value to your list or you become obsolete.
However, investing in passive income streams isn't as easy as it looks. Most online passive income strategies, such as e-commerce, are effective and profitable only after you have built up a substantial following. And they take a lot of time, and sometimes, money, to make them work, unlike passive investing in low-cost index and other funds in the stock market.
Another way to generate passive income is to invest and be a silent partner in a business. This is very risky, but with risk comes the potential for high returns. For example, several years ago both Lyft and Uber were looking for private investors to invest in their companies. Today, they are worth billions - but you as an investor would only reap that benefit if they go public via an IPO, or get acquired. So, it's risky.
Alliance Wealth Management, LLC (“Alliance”) is a registered investment adviser offering advisory services in the State(s) of Illinois and in other jurisdictions where exempted. Registration does not imply a certain level of skill or training. The presence of this website on the Internet shall not be directly or indirectly interpreted as a solicitation of investment advisory services to persons of another jurisdiction unless otherwise permitted by statute. Follow-up or individualized responses to consumers in a particular state by Alliance in the rendering of personalized investment advice for compensation shall not be made without our first complying with jurisdiction requirements or pursuant an applicable state exemption.
Dividend Income: Dividend income is wonderful because it is completely passive and is taxed at only 15% if you are in the 25%, 28%, 33%, and 35% income tax bracket. If you are in the 39.6% income tax bracket you will pay a 20% tax on your dividends. My dividend income portfolio mainly consist of dividend equity and bond ETFs such as DVY, VYM, MUB, TLT, and IEF. Total stock and bond income is a little over $100,000 a year due to a heavy accumulation of stocks and municipal bonds after selling my house.
The term “selling” probably doesn’t need much explanation, but it’s where value is transfered one time in exchange for money. Heart surgery, baguettes, and designer jeans are all ways to sell value. This one would probably the least optimal of all, at least for passive income, if it weren’t for an exception. This is because once you sell a normal commodity or service, you can’t re-sell it. Here’s the exception to this: software or digital goods can be duplicated with a very low marginal cost(now that we don’t use CDs, you can duplicate it with a cost of $0.00), and therefore, technically can be “sold” advantageously over and over and over again. This is why Microsoft grew to such a profitable company, and why I love selling digital goods.
Great job, note the home upsizing works only in appreciating housing markets (I’ve done a similar this in CA but it was 7 years same home to gain almost 500k profit which is around the govt cap for tax-free home profits. What a gift! Thanks booming economy and generous govt taxation on home profits). Those proceeds bought our next house cash and invested the remainder in domestic stock (which has been equally profitable).
We’ve discussed how to get started building passive income for financial freedom in a previous post. Now I’d like to rank the various passive income streams based on risk, return, and feasibility. The rankings are somewhat subjective, but they are born from my own real life experiences attempting to generate multiple types of passive income sources over the past 16 years.
Investing in real estate: Investing in real estate offers more passive income cash potential - but more risk - than investing in stocks or bonds. You'll need substantial amounts of cash to invest in buying a home -- it usually takes 20% down to land a good home mortgage loan. But history shows that home prices usually rise over time, so buying home a for $200,000 and selling it for $250,000 over a five-year time period, for example, is a reasonable expectation when investing in real estate.
You can find dividend stocks using Google Finance Stock Screener which is free to use. Set the search criteria for the P/E Ratio, and Dividend yield (shown as a percentage) criteria. You can set minimum and maximum values; in the dividend yield box, set it between 2 and 100. This will search for stocks that pay dividends worth between 2-100% of the current stock price.
I’m feeling inspired! I’ve been a PT for 19 years and I feel I have so much experience to offer but have been so intimated by starting a blog. I also subscribed to Michelle’s website but wasn’t sure it was for real. Is it for real? After reading this I feel like it’s time to take the plunge, I need to start a blog, I have so many ideas and even course ideas. I want to get away from the paperwork that plagues our healthcare system but not leave the field so the blog just might be the answer. I’ve been a landlord for 15 years now, great investment for sure, renters paid for the down payment of our house and should hopefully help pay for our kids college. I’d love to have one more! Thank you for the inspiration, wish me luck with my blogging!

I've now only got an SF rental condo and a Lake Tahoe vacation rental in my real-estate-rental portfolio. Although I miss my old house, I certainly don't miss paying $23,000 a year in property taxes and another mortgage, and dealing with leaks and managing terrible tenants. I drove by the other day and couldn't believe how much noisier and busier the street was than where I currently live. I wouldn't be comfortable raising my son there.
Finally, I imagine the biggest debate with my ranking is Creating Your Own Product as the #1 passive income source. If most people have never created their own product, then it’s easy to give it a thumbs down. There won’t be much complaint about Private Equity Investing being in last place because most people are not accredited investors. But given I believe that plenty of people can create their own product if they try, pushback is inevitable because a lot of people simply don’t try!
Notes are loans against properties that can also be used to create passive income. Most people assume the bank or mortgage company they get a loan with, keeps that loan. Most notes are sold to investors, usually as mortgage-backed securities on Wall Street. Some notes are sold to individual investors as either performing or non-performing. Performing notes mean the borrowers are making payments and non-performing meant the borrowers are behind or have stopped making payments. When you buy a note, you become the bank and start collecting payments every month. There is a lot of money to be made with performing and no performing notes and they are a great way to create passive income.
This company mainly focuses online business and internet marketing products, but there are also other products ranging from health and fitness to travel. One of the great things about DigiResults is that both vendors and affiliates get paid at the point of sale, and not a month or two later like most affiliate marketplaces. I’ve been using their system and so far it’s one of my favorites.

Brian had found a huge need for web design in the restaurant and food truck space. After getting tired of working with client after client, he decided to turn his service-based business into a product-based one. He made his services more standardized and productized. He eliminated all his client work and created templates and products to serve that market instead. And it’s been going great for him.


This may all seem like a lot of work but it’s how professional real estate investors do it. If you are buying rental properties on a hunch and just paying what you feel like the property is worth, you’re going to end up over-paying. Understanding exactly how much a property is worth will put you ahead in the negotiations and get you the best price possible.

One of the best ways to build wealth is to get a handle on your finances by signing up with Personal Capital. They are a free online platform which aggregates all your financial accounts on their Dashboard so you can see where you can optimize. Before Personal Capital, I had to log into eight different systems to track 28 different accounts (brokerage, multiple banks, 401K, etc) to track my finances. Now, I can just log into Personal Capital to see how my stock accounts are doing, how my net worth is progressing, and where my spending is going.
One of the most important assets you have is your credit score. By taking care of it and pursuing the steps to improve your credit score, a world of opportunity can open up for you. If you need a loan to buy that rental property or some quick funding through a business credit card, a good credit score will help you get approved so you can build passive income.

There’s a saying that the biggest opportunity for improvement is at the margin. Boiled down, this means that you can reap big rewards for minor adjustments in behavior. Instead of using a check, debit card or cash to pay for daily activities and big expenses, using a cashback credit card can earn you a sizeable return each year. One of my favorite cards, the Discover it will even double all of the cash back you earn the first year!
Rentals, just like stocks, throw off cash. With rentals we call that cash “rent”, and with stocks we call it dividends. A significant difference however is that the S&P 500 has appreciated at ~6% per year (above inflation) for the last 100 years…..Real Estate has had almost 0 growth above inflation. So are rents higher than dividends? Maybe, maybe not. But unless you got one heck of a deal, the delta in rent over dividends will have a very tough time making up for the 6% per year difference in appreciation.

Acorns: Acorns is a great way to start investing and building wealth. As it turns out, Acorns will pay you $5 to start investing with them for as little as $1. That’s a 500% return, plus it’s probably time you started investing for your future. They even have features like round-up and found money that allows you to get free money from places you already shop at.
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.

7) Never Withdraw From Your Financial Nut. The biggest downfall I see from people looking to build passive income is that they withdraw from their financial nut too soon. There’s somehow always an emergency which eats away at the positive effects of compounding returns. Make sure your money is invested and not just sitting in your savings account. The harder to access your money, the better. Make it your mission to always contribute X amount every month and consistently increase the savings amount by a percentage or several until it hurts. Pause for a month or two and then keep going. You’ll be amazed how much you can save. You just won’t know because you’ve likely never tested savings limits to the max.

So many great tips in this big post, thanks! I think it’s so true that people should focus on the things they do well at and are interested in. And yes save, save, save in the beginning and throughout. I have several interest and dividend earning investments and am looking to expand further. Diversification is a great goal for all of us so we can avoid having all our eggs in one basket.
×