Passive Income – Make money while sleeping
I won’t lie I am obsessed with the idea of passive income. The idea of making money while you sleep is crazy and has nice jazz to it.
Unless you were born rich (read your last name is Gates, Buffet or Bezos) which I am sure you aren’t. I am sure you are chasing your paycheck to be able to pay the bills.
Would you mind waking up to money flowing into your bank account while you were taking a nap? I wouldn’t and I am sure you wouldn’t either :).
If you dream of achieving financial freedom or retiring early or both you’ll need to set up passive income streams. Converting a dream to reality requires a plan and we’ll discuss various possibilities here.
Before we start diving into the details we need to get the elephant out of the room – Financial Independence and Early retirement warrants having multiple passive income streams. Having your money work for you is a must to early retirement and the only way to make it happen is passive income.
So, what is it – you might ask? Without further ado let’s get right to the point
WHAT IS PASSIVE INCOME?
Passive income, IRS defines it as – Earnings derived from a rental property, limited partnership or other enterprises in which a person is not actively involved.
Money made with little to no effort on your end. Although IRS treats every type of income differently, for better understanding I will lump together all your earned money except your paycheck from your day job as passive income.
Why Should You Make Money Work For You
Robert Kiyosaki’s book “Rich Dad, Poor Dad” preaches a great concept “Cashflow Quadrant” and as you can see in the picture below on the left side are the examples of Active income i.e. you work hard to make money either being an employee or self-employed. Whereas, on the right, you have passive income where your money is working for you i.e. you have a business that can keep making money for you or you have invested into money-making assets.
How to Make Money While Sleeping?
The idea of making money while sleeping has a nice tune to it. Having earning without spending little to no effort is a well-proven strategy for financial freedom.
Whether you are a college student who needs some money, or you are an adult who needs extra income to pay off your student debt, or you are preparing for early retirement – making money with no effort is good for everyone irrespective of your life stage.
You may be thinking if you need some extra money you can always find a part-time job but the point is what happens when you are not able to trade your time for money.
Do I need to mention there are only 24 hours in a day and you have a life too? Since this blog is about financial freedom and early retirement I will only focus on the strategies that you can use to generate income without having to trade time for it.
Now that makes sense we want to develop passive income strategies that can help you generate extra income that you need.
I want to reemphasize these strategies are not a way to get rich overnight. They require a lot of hard work and commitment.
So what are different ways to make passive income? Let’s look at some of them below:
EXAMPLES OF PASSIVE INCOME
- Dividend Stock Portfolio – a portfolio of stocks and bonds the gets you, dividends and/or interest payments. This is a time tested way of generating passive income and a lot of people have successfully achieved their money goals by investing in stocks of great companies.
- Rental properties – Buy and rent out a home or commercial property or invest in REITs. When you have some cash saved for a downpayment you can buy a rental real-estate property that you can rent out.
- Affiliate Marketing – Selling and promoting products for other retailers. Neil Patel has a great step-by-step guide on Affiliate Marketing.
- Selling Digital Content – Write an ebook or software, WordPress plugins and sell them online. The good thing about selling digital content is you need to work to create it and it keeps selling over and over again.
- Write a Book – Write a book and sell it on Amazon. If your book is good you will keep making money off of it. That said, writing a best seller requires a ginormous amount of work (and luck :))
- Invest in business – If you have money to invest you can buy out equity in a startup or any other business. You can be paid in dividends as well as an appreciation of equity as the business continues to grow.
- Write a Blog/Build an online business – Start an eCommerce store or a blog where you create content on topics you are passionate about. A reminder again starting a blog or eCommerce store is super easy but it takes a huge effort to make it profitable.
- and the list goes on…
You can find a lot more passive income ideas for 2020 here. You get the idea of how to generate money while sleeping.
How Much Money Can I Make?
The short answer is the sky is the limit but I will reiterate – generating passive income requires a lot of work and commitment. That said, the end result is really sweet.
Leaving the big guys like TechCrunch, Life Hacker, and Mashable aside there are quite a few bloggers and YouTubers who are pulling in thousands of dollars every month.
- Pat Flynn from Smart Passive Income made $125,819.91 in December 2017
- Michelle from MakingSenseofCents.com made $159,592.42 in November 2018
- Ryan Robinson from Ryrob.com made $33,563.02 in Feb 2019
- Amit Agarwal from labnol.org makes over $100,000 (estimate as he doesn’t publish his income reports)
- Harsh from ShoutMeLoud made $40055 in Feb 2018
As you can see there are many people out there who are making a boatload of money from blogging and different combination of passive income ideas.
Keep in mind that these successful bloggers have put in a lot of hard work over the course of many years to reach the levels they have reached. That said the potential to make money from blogging and related stuff has never been bigger.
Thinking of starting a blog take your first step here.
Passive Income Tips for Beginners
Confused! Don’t know where to start? Don’t get bogged down.
I am here to help If you are just starting on the financial freedom journey and looking for passive income tips for beginners.
Start with your passion and think if there is something that you are doing anyway. for e.g. Maybe you like taking pictures then you can start selling your pictures.
So here are my top 5 passive income ideas for beginners:
Got a year-end bonus or a raise? Have some cash in your bank? If your answer to any of these questions is yes. Start investing right now. Do your research and start investing in funds that pay a dividend.
Rent out Extra Room in your home
Sell Your Pictures
If you like to take pictures you can start selling them online for extra cash. There are quite a few stock photography websites like ShutterStock, iStockPhoto. You don’t have to be a professional photographer to sell pictures. You can start with just your smartphone and won’t need any special equipment.
A lot of credit cards and Bank Accounts offer a new account bonus from time to time. for e.g. Chase right now has a $1000 bonus to open a qualifying account ($75,000 deposits required).
Sell Stuff You Don’t Need
I bet you have stuff in your home that you don’t need and don’t use anymore i.e furniture, old toys, clothes, etc. If so, it probably is time to say goodbye to your old belongings. You can sell them on websites like FB Marketplace, Offerup, Craigslist or OLX.
Bonus: Rent your Car
If your day job doesn’t need you to be on the road I bet your car is parked in the parking lot. You can make money by renting out your car and probably other things that you don’t need on a regular basis.
So you have passive income tips for starters which one of these is your favorite?
There is no – Get Rich Quick Idea and don’t fall for it. Generating passive income requires a lot of hard work, commitment, and determination.
A lot of these passive income tips can be used by beginners and experienced users alike.
I would leave you with one final thought – Passive income doesn’t FREE money and in most cases, you’ll have to frontload a lot of work in order to get paid at a later point.
There are a lot of beginner tips available for you to start generating passive income including the ones above. Take the first step to start and don’t get discouraged if you don’t see immediate results. Do your research and decide how are you going to make passive income?