The goal of passive income is to generate residual income after the initial investment of time and money. I spent a lot of time researching different methods of generating smart passive income and decided to make a list of opportunities to make it easier for you.
Passive Income Ideas
1. Affiliate Marketing: This is a marketing program where a company sells its products or services through an affiliate (individual or another company) for a commission. You see this all the time without even knowing it. Many of the websites dedicated to promoting or reviewing products are actually affiliate websites. In the content of the website they will have links to a vendor. When someone clicks through their website and makes a purchase, the affiliate gets a commission. I am an affiliate marketer and have had some good experiences with it. Prior to this source of income, I needlessly wasted time and money on a few subpar programs trying to discover how to make money online. I eventually came across Wealthy Affiliates, which got me on the right track with affiliate marketing. I will eventually dedicate an entire post to discussing Wealthy Affiliates so those interested will know if it is for them or not.
2. Blogging: Many have turned their hobbies and writing skills into passive income. The two most common ways to make money off a blog are affiliate marketing and direct advertising (if someone clicks on an ad on your blog you get a small commission). If this is something you want to try I suggest you pick a niche that you are passionate and knowledgeable about. Making money from a blog takes time so if you are not writing about something you really enjoy, it will be tough to stick with it. Though blogging is a continuous process, I consider it passive because once you post the blog post there is little upkeep required.
3. Peer-to-Peer Lending: This is when people lend money to other individuals instead of going through a bank or other financial institution. The most common P2P websites are Prosper and Lending Tree. I have been with Prosper for many years and have seen decent returns. Back in the Financial Crisis of 2007 most of my investments lost a lot of money. However, Prosper was one of my investments that continued to be profitable during that crisis.
4. Rental Income: Many have either supplemented or based their entire income off making money from rental properties. Being a landlord is definitely not for everyone. A lot of success or failure in regards to making money off rental income is in ensuring you get quality tenants. The wrong tenants can make your life a headache if you decide to use this type of passive income.
5. eBooks: These will be a lot of work upfront but once created they can be a source of passive income. You can either create your own website and sell the eBook yourself or sell it through another website like Amazon, Payhip, or Lulu.
6. Dividend Paying Investments: Possible options are dividend yielding investments like stocks, exchange traded funds (EFT), and Real Estate Investment Trusts (REIT). Be sure to do your proper research before picking which investment to go with to maximize your earning potential.
7. Treasury Inflation-Protected securities (TIPS): These are issued by the US Treasury and sometimes referred to as inflation-indexed bonds. When the Consumer Price Index (CPI) increases the principal of a TIPS also increases. For example, if you invest $1,000 and there is a 4% inflation the first year, your new principal amount is $1,040. You earn on the adjustment to the principal as well as the fixed coupon interest rate. The risk with TIPS is if the CPI decreases, your principal also decreases. Chances of the CPI decreasing, however, are extremely low seeing deflation in the US dollar rarely occurs.
8. Annuities: These are typically used to ensure a steady cash flow for a specified period of time or for the rest of your life. The two basic types of annuities are deferred and immediate. In a deferred annuity, the principal is held by the financial institution (usually an insurance company) for a period of time. The investor then begins to receive payments. In an immediate annuity, the investor begins receiving payments soon after making the investment.
Passive Vs Nonpassive Income
Passive Income Definition: Once the initial investment is made, little or no maintenance is required to sustain the income. An example is writing a book, once you write the book and have it published it will continue to generate revenue for years.
Non-Passive Income Definition: Continuous upkeep is required to sustain the income stream. The best example is wages from a traditional job. If you stop working, the income stream ceases.
Multiple Income Streams: Income coming in from multiple (both passive and non-passive) sources.
Many blog sites dedicated to identifying passive income list selling real estate or starting an eBay store as passive income when it is in fact non-passive. Those types of income sources should be listed as possible multiple income streams but definitely require continuous work.
Each of these passive income opportunities has its own risk and reward associated with it. Before undertaking any investment I encourage you to conduct your due diligence to see if that venture is right for you, even if that means asking for professional advice.
Those of you are looking to make money online or through affiliate marketing will come across a lot of scams, rip-offs, and get-rich-quick schemes. It is very easy to get sucked into these products because many of them have entire websites dedicated to giving the program a positive review. Many of these reviews are from affiliate marketers who will praise the product or service, even if they know it is a scam, because if they can get you to purchase it then they will still get a commission. I got sucked into a few of these myself so the technique that I use is to ignore the positive reviews and seek out the bad ones. Each program (even the good ones) will have bad reviews but look at what the people are saying about it.
Some people give legitimate programs bad reviews but they will admit that they didn’t take the time or effort to make it work. You can eventually find the truth about every program before spending any money if you look hard enough. I also look for programs that are willing to sell themselves without having to rely on the promise of a refund; meaning they will give you a taste before they expect you to pay.
Other programs will charge you then promise a refund if you are not satisfied. If you read reviews from actual paying customers you will see that some of these programs make getting a refund a hassle or don’t give it at all. I chose Wealthy Affiliates because they offer a free (but limited membership). If after one week you like the service you can upgrade to the paid membership ($19 for the first month and $47 for each month after that) or you can keep the free membership but you can’t get the reduced price for the first month.
Thank you for reading this article. Please post a comment if you have any questions or you can also elaborate on any of the examples that I have provided.