That’s confusing, so let’s take a simple example. I create a free newspaper, and give away the value (information, entertainment) to people at no charge. By doing so, I’ve created a powerful form of secondary value: the attention of my readers. I then rent this value out to advertisers, who consume it regularly. If an advertiser leaves and I find a new one, the fact that the other advertiser consumed value before is of little or no concern to the new consumer.
Nobody gets early FI investing in bonds, CD’s, or even stocks unless they make a huge income or are extremely frugal or a combination of both. Paper assets just don’t provide enough returns. Business income can be great but it is typically not as semi-passive as I would like and there is a relatively high failure rate. That is if you can monetize an ideal to begin with. RE investing needs to be higher ranked IMO as a way that the “average guy” can become FI.
I have not. While I am intrigued with the possibility of making online income, it seems to be less passive then how I want to spend my time. Regarding your blog / site, you have done quite well for yourself. However, you have to keep pumping out content or your site would eventually go out of business. That sounds like more of a commitment then I would want. Regarding your book sales, it is probably relatively passive now, but certainly was not when you were writing the book. Now if you love it, great. Just not for me.
Amazing that you saved between 50% to 75% living in NYC…I think that is one thing holding me back…the cost of living here. I’d like to invest in real estate, but I can barely afford to buy a place to live. I don’t need a large income to be happy, but I probably do need an income to support living in NYC as we don’t plan on leaving. The only thing I’m doing at the moment is saving in my 401K, IRA and a I dabble in stocks and P2P lending.
Hey Mike! Love this article. Recently, I paid off my student loans and am crazy focused on creating multiple passive income streams. Currently, all my passive income comes from real estate and because of your great articles on the subject I called to check out refinance options! I had no clue about CD laddering, dividend investing or P2P lending until two weeks ago when I started doing my research on where to put my hard earned money. I had been just saving it but when I looked at the terrible 0.01% return I said forget it! 2 % for me is a great way to start. It is better than what I have been getting outside of my real estate. Also, creating products is a must! I’m working on this type of royalty too. I find it so exciting to learn how to use your money to make money. Thanks and I will be sure to link to you when I start my blog!
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.
If you need cash flow, and the dividend doesn’t meet your needs, sell a little appreciated stock. (or keep a CD ladder rolling and leave your stock alone). At the risk of repeating myself, whether you take cash out of your portfolio in the form of “rent”, dividend, interest, cap gain, laddered CD…., etc. The arithmetic doesn’t change. You are still taking cash out of your portfolio. I’m just pointing out that we shouldn’t let the tail wag the dog. IOW, the primary goal is to grow the long term value of your portfolio, after tax. Period. All other goals are secondary.
- HubPages.com is a content community for writers. Members (referred to as "Hubbers") are given their own sub-domain, where they can post content rich articles (known as Hubs). As a Hubber, you earn revenue primarily from Google AdSense (you need your own Adsense account) and other advertising vehicles such as, Kontera, and the eBay and Amazon Affiliate programs. There is a 60:40 revenue split and it’s achieved by alternating the code used in advertisements: Your code will be displayed 60% of the time, and HubPages' code 40%. Same as Squidoo, traffic dropped heavily due to Google's changes but the site is still wildly popular. Currently it’s one of the 500 most visited US sites on the Internet.
Dividend stocks tend to be more mature companies that are past their high growth stage. Utilities, telecoms, and financial sectors tend to make up the majority of dividend paying companies. Tech, Internet, and biotech, on the other hand, tend not to pay any dividends because they are reinvesting most of their retained earnings back into their company for growth.
There are many comments about it being impossible to break into real estate with little money, or needing help from the bank of mommy and daddy. It is possible. I bought my first property, a multifamily, 6 months after graduating college, with a garbage job I got 3 months before and barely 7k in the bank. It’s now two years later and I’ve purchased a second this summer. Regarding management, I self-manage like most ‘small time’ landlords. Unless you own a massive apartment buidling, there’s no need to professional managment. Like another comment mentioned, I’ve only ever gotten heating issues or other minor things, for which I have a handyman to take care of. Aside from that, it’s fairly passive IMO. Dividend investing doesn’t require 100k either. It’s just an example the author used. I invest un securities with dividends ranging from 2-12%, and hedge/balance according to risk. Higher dividend % isn’t always better, but there are some good deals you can find. I think the key is to realize that you don’t need to stick to just one form of passive investment. Sure, 10 properties sounds daunting, and a $1M portfolio seems impossible, but you can combine both, as well as other passive income strategies. And ofc, the more risk you are willing to take on, the higher the potential reward (and loss). I day/swing trade, but wouldn’t advise this. It’s also not passive, I spend a massive amount of time researching and analyzing the technicals, but it’s worth it for now, as I’m fairly consistnet with profits. I have not tried blogging, and am not sure I’d be any good at it. I dabbled in ecommerce but found it was too time consuimg, but I know people who were able to quit their 9-5s from ecommerce. I’m sure no matter how much debt you have (i have 30k unsecured debt) or how little you think you make, there is a way to start investing today, even if it’s starting small.
Amazon affiliate program is a great way to promote physical products through a reliable, trustworthy, and well-known online store. The fact that everyone knows Amazon is probably their biggest advantage. On the downside, commissions are fairly small - they start at 4% for most products and can go as high as 8% depending upon how many sales you make. However, when you send someone to Amazon, you earn a commission on whatever they buy within 24 hours of clicking your link, whether they end up buying the product you promoted or not. So, for example, if you promoted a book but the person you sent to Amazon ended up buying an expensive camera as well, you’ll get the commission for both the book and the camera. This can add up. https://insidesmallbusiness.com.au/wp-content/uploads/2017/06/bigstock-181398349.jpg
The most liquid of the private investments are investing in equity or credit hedge funds, real estate funds, and private company funds. There will usually be 6 month – 3 year lockup periods. The least liquid of the private investments are when you invest directly into private companies yourself. You might not be able to get your money out for 5-10 years, depending on the success of the company and upcoming liquidity events.
Blogging is still going to take work starting out. That path to $5,000 a month didn’t happen overnight but just like real estate development, it build up an asset that now creates constant cash flow whether I work or not. I get over 30,000 visitors a month from Google search rankings, rankings that will continue to send traffic even if I take a little time off.
I invest about 5% of my pre tax income in 401k that my employer matches. Have close to 70k in cash in checking. Also,I liquidated around 40k in my 401k and not sure where to invest that in (bonds vs stocks) because of stocks trading at record high. Have a rental property that is paying itself now and I will pay off the mortgage completely in 5 years. My immediate concern is the cash in checking acct that’s not doing much. Thanks for your reply and appreciate your work. I am learning a lot

​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!
Software is one of the most lucrative passive income streams but most online entrepreneurs shy away from it, mainly because of the technical aspect that is involved. The truth is that you don't need programming skills to build a software; the whole process can be outsourced fairly easily. You do need to know how to pick a good developer and, of course, have a winning idea that customers are willing to pay for.
This is a venture that is growing rapidly. You can create videos in just about any area that you like — music, tutorials, opinions, comedy, movie reviews — anything you want . . . then put them on YouTube. You can then attach Google AdSense to the videos, which will overlay your videos with automatic ads. When viewers click on those ads, you will earn money from AdSense.
What I did: I first identified my favorite places in the world to live: San Francisco, Honolulu, Paris, Amsterdam, New York City, and Lake Tahoe. I then looked up the median rent and housing prices for each city. Then I factored in private education costs for two kids to be conservative given I may not have two kids and public schools are often good enough. After calculating all vital costs, I then did a self-assessment of how happy I was making $50,000, $100,000, $150,000, $200,000, $250,000, $350,000, $500,000, and $750,000. I decided working 20 hours a week making $200,000 a year is the best income balance for maximum happiness. 
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.
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!
At age 55, I own high-end rental properties (near the beach) and commercial buildings servicing the medical industry. I was widely criticized during my career for not living up to my income; that is, buying big homes with many fancy cars. I married a great woman who understood that saving and investing today meant a better lifestyle and more freedom tomorrow. Our passive income is half of my active income from sales, but my net worth has increased substantially. We are both happier and healthier than we were in the high-stress pressure cooker of franchise sales. The naysayers have become converts to the concept of passive income, but they have locked themselves into a “big hat, no cattle” lifestyle. It has been a great ride!

“There is no such thing as 100% passive income,” says Flynn. “Even with real estate you still have to manage your properties, or even with the stock market, which is potentially passive income, you still have to manage your portfolio. With online business, there is no such thing as 100% passive income — and this is coming from a guy with a blog called SmartPassiveIncome.com. The definition of passive income is ‘building these businesses of automation,’ but in order to keep them automated and keep that trust going with your audience on top of that, you do have to keep it up every once in a while — so a lot of time upfront and a little time after. But there is alway time involved.”
Perhaps a coworker purposefully tries to make your life miserable because they resent your success. Maybe you get passed over for a promotion and a raise because you weren’t vocal enough about your abilities, and mistakenly thought you worked in a meritocracy. Or maybe you have a new boss who decides to clean house and hire her own people. Whatever the case may be, you will eventually tire.
Unfortunately, I can’t answer that conclusively one way or the other. It all depends on you, what you like to do, your work ethic, personality, etc. If you are a good writer perhaps you could write a book and make money that way. Or, you could start your own website and do affiliate marketing. Just because you are young it doesn’t mean you can’t make money doing at least a few of these ideas. I wish you luck in your money making efforts!
It’s funny, Peter Lynch says before putting any money in the stock market, make sure you own real estate. It’s a rare investment that allows you to own an asset while borrowing a large portion of the value at an extremely favorable interest rate. However you are right, real estate investing does not offer passive income in the truest sense of the word. Great guide!
We have decided to invest in 2 ETFs, a multi asset allocation ETF (Fixed Inc, alts and div paying equities) and a preferred stock ETF. This will cover almost 45 percent of our deficit. We will be extremely diversified, can access the markets at a very low cost and the investments are liquid. On this pool of $, we have no plans to invade principal unless the investment grows by 20 percent, which we think is unlikely given the characteristics of the investments.
Get paid to take surveys at home by signing up with one or more survey websites. All you do is answer questions and voilà, you get paid. Another way to earn extra income is to participate in focus groups. Companies hire focus groups as a way to test out a new product before it hits the market. Why? Because they need to make sure it will make money; they want a high return on their investment. Surveys and focus groups may not make you a millionaire overnight, but you can earn hundreds of dollars each month by giving your opinion on products and services.
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.
Who cares? I don’t care one bit about building a “successful company” with most of my passive projects. That’s for my active projects — and I’ve done that when I converted them into active projects. For passive income, I can build products and automated services that are useful enough that people want to buy and use them. My Magento modules and Udemy course had 5 star ratings despite being passive. I knew back then that I could probably sell 2x as many copies of each if I made it my full time job — but I chose note to. I realized that if I could have more fun, get more fulfillment, and make more money out of other passive activities, and that’s why I don’t care that my passive businesses are small and nichey. Again, though, converting one of them into an active business has made it much more successful — so I would just remind you that they aren’t mutually exclusive, and if anything, having a Passive Income side business or 2 let’s you try out a few different waters before you dive in to any one.

Creating passive income is the key to retiring, especially retiring early. If you want to retire early with the stock market you will have to save a huge amount of money, because that money has to last so long and retirement calculators depend on you using your investment to fund your life. With passive income you will have income coming in as long as you own the investment, without every eating away at the principle invested. Creating passive income may take more work than investing in the stock market, but I think it is well worth the extra effort! http://treasuryvault.com/articles/wp-content/uploads/2018/08/passiveincome-01.png
One of the most appealing options, particularly for millennials, would be #12 on your list (create a Blog/Youtube channel). The videos can be about anything that interests you, from your daily makeup routine (with affiliate links to the products you use), recipes (what you eat each day) or as you mention, instructional videos (again with affiliate links to the products you use). Once you gain a large following and viewership, you can earn via Adsense on YouTube.
Non-fiction e-books that educate your potential audience on specific topics like finance, online marketing, and business are going to make you more money than fiction books. Of course, there are always exceptions and you could write the next Harry Potter book, but if you want to create some residual income opportunities quickly, I would suggest you go for what sells first!

Peer-to-Peer Lending: Earn up to 10% in returns by lending individuals, organizations and small companies who don't qualify for traditional financing through peer-to-peer lending platforms like Lending Club. You can lend $100, $1,000, or more to borrowers who meet lending platform financial standards. Like a bank, you'll earn interest on the loan - often at higher returns than banks usually get.


Investing in rental properties is an effective way to earn passive income. But it often requires more work than people expect. If you don’t take the time to learn how to make it a profitable venture, you could lose your investment and then some, says John H. Graves, an Accredited Investment Fiduciary (AIF) in the Los Angeles area and author of “The 7% Solution: You Can Afford a Comfortable Retirement.”
When I purchase an existing online business, I look for cash flow over the past year and where the money comes from. I want the sources to be more passive so that it does not take a lot of my time. Also, typically I will make an offer that is 18 – 24 months of profit so that I know that I will get my money back within the next two years. I hope that helps! https://dtqnv8in03d1n.cloudfront.net/wp-content/uploads/2017/03/understanding-what-passive-income-is.jpg
“The biggest surprise is real estate being second to last on my Passive Income Ranking List because I’ve written that real estate is my favorite investment class to build wealth. Real estate doesn’t stack up well against the other passive income sources due to the lack of liquidity and constant maintenance of tenants and property. The returns can be huge due to rising rental income AND principal over time, much like dividend investing. If you are a “proactive passive income earner” like myself, then real estate is great.”
You would receive $9,500 and make 60 scheduled monthly payments of $204.64. Origination fees vary between 2.41%-5%. APRs through Prosper range from 6.95% (AA) to 35.99% (HR) for first-time borrowers, with the lowest rates for the most creditworthy borrowers. Eligibility for loans up to $40,000 depends on the information provided by the applicant in the application form.

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.
I have had a LC account for almost 2 years. Invested 5k. A lot of very small loans. Unfortunately I had to invest though Folio FN. The fees reduce your return. Now, they are not even allowing that. My interest and return of principal are not being reinvested. I talked with LC and they are working on it for my state. Even if I can obtain access to the prime portfolio, I would only place 10 percent of my cash here and would reinvest for at least 3 years. I am still concerned about what would happen when a recession hits.
Hey Mike! Love this article. Recently, I paid off my student loans and am crazy focused on creating multiple passive income streams. Currently, all my passive income comes from real estate and because of your great articles on the subject I called to check out refinance options! I had no clue about CD laddering, dividend investing or P2P lending until two weeks ago when I started doing my research on where to put my hard earned money. I had been just saving it but when I looked at the terrible 0.01% return I said forget it! 2 % for me is a great way to start. It is better than what I have been getting outside of my real estate. Also, creating products is a must! I’m working on this type of royalty too. I find it so exciting to learn how to use your money to make money. Thanks and I will be sure to link to you when I start my blog!
As for me, I started focusing on passive income last year, but have owned rentals for 5 years. $25k now outside retirement accounts in mostly real estate. Looking to invest another $500k cash into real estate to get about $65k, and then 1031 under performers next year to hopefully boost that a bit higher. Heavy in real estate, but feels lower risk than the stock market to me if you have cashflowing properties. Real estate is inflation adjusted, and built in cashflow raise when the loan pays off.
It was easier recouping the lost $60,000 in rental-property income than I expected. For so long, my primary mindset for passive income was rental income. Having $815,000 less mortgage debt but still generating roughly the same amount of passive income with a much larger cash balance feels great. Further, my passive-income portfolio got even more passive, which is good as a stay-at-home dad to a newborn.
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