Many people dream about leaving the workforce and retire early or just have more time with family. Some dream about having the ability to travel without worrying about a paycheck.
But a dream without a plan is just a wish.
To put some wheels on that dream, you need to consider passive income.
There are plenty of different passive income options and explanations of how to build it. If you’re new to the idea, I’m about to break it down for you.
What Is Passive Income?
Passive income is money you earn in a way that requires little to no effort. Some passive income ideas—like renting out property or building a blog—may take some work to get up and running, but they could eventually earn you money while you sleep.
Relevant Articles:
11 of The Best Side Hustle Ideas for 2019
9 Best Ways to Save $7K This Year
Why Build Passive Income?
Your income is your greatest wealth-building tool—a tool that typically requires your active participation in the form of a full-time job. You know what I’m talking about! Even if you love your job, I’m willing to bet you wouldn’t mind earning some extra income without the blood, sweat, tears, and time commitment of another job. In fact, there are several benefits. Building a passive income:
• Increases your wealth-building plan
• Creates an opportunity to retire early
• Protects you from a complete loss of income if you lose your job
• Provides an additional source of income when you’re no longer able to work or if you outlive your retirement fund
How Much Money Can I Make?
Passive income generally won’t make you wealthy overnight, so forget about any get-rich-quick schemes you’ve heard of. But steady, profitable passive income options can build some serious money over the long haul. We’re talking anywhere from a few thousand dollars to hundreds of thousands of dollars—depending on the income stream.
How to Build Passive Income
Passive income can be built in many ways, but first let’s take a look at what it truly is and which income streams are available.
Investing
When we say “passive income,” some people tend to think of investing because it can produce the largest results with the least amount of work. But your retirement plan and passive income should be thought of as two separate things.
The whole idea behind long-term investing is to create income for retirement.
Read about The risk to the current stock market here.
You want to make sure you’re investing in your company retirement plan, like a 401(k)—if your fund choices are good and they offer a match—in addition to other tax-favored plans like a Roth IRA if they don’t offer a Roth 401(k).
These are great options for building a solid retirement plan, but you will incur taxes and penalties for any withdrawals before a certain age. With retirement planning, you want to let your money grow for the long haul and not touch it!
On the other hand, we want to think about passive income as a type of low-effort income that can be accessed at any time. Let’s take a look at some of these options below.
Real Estate
One way to build passive income after you’re debt-free and have some cash saved up is by purchasing real estate and renting it out to tenants.
Before you buy rental property, pay off your own home first and purchase your investment property with cash. Don’t ever go into debt to buy rental property!
The last thing you need to do is take on the expense of owning another house or commercial building on top of a monthly mortgage payment! Cash only. Period.
I also suggest buying close by so you can personally keep an eye on the property. Find a real estate agent who knows your area well so you can buy property in a location that will attract renters.
Rental property can be a great source of extra income, but it isn’t the most passive choice because you’ll put a lot of time and effort into managing the property—unless you hire a property management company.
Other Passive Income Ideas
Affiliate marketer
Affiliate marketers earn commissions by promoting other companies’ products.
You can become an affiliate marketer by creating a blog and writing product reviews or sharing information about a particular product, service, or pastime.
Read my post on how to begin a blog here.
For example, if you love cooking, you might start a blog where you share your favorite recipes but include links to certain ingredients or kitchen tools you’re looking to promote.
If your readers click on those links and make purchases, you’ll earn a commission. It’s really that simple. And while you probably won’t start out earning $1,000 a month with this sort of gig, once you build up an audience and find more products or services to promote, you could end up banking that much or more on a monthly basis.
Relevant Articles:
11 of The Best Side Hustle Ideas for 2019
9 Best Ways to Save $7K This Year
Monetize your blog:
Monetize your website via Share a Sale and Flex Offers.
Max Bounty, This affiliate network partners with dozens of survey companies and has lots of great offers available. Rated as the number 1 top CPA Network by mThink’s BlueBook Rankings 3 years in a row, promoting offers through Maxbounty is a solid choice.
- Their interface is attractive, easy to use, and fun affiliate contests are held regularly. Run by a very friendly and fun group of people who have been in the business for over 12 years.
Igain Network: iGain specializes in market research offers and features high quality advertisers on their real-time tracking platform. Offering superior support is their primary objective, and they do so with their friendly team of passionate individuals.
- These are the best affiliate programs that help you make more money from your followers. Imagine receiving and extra $1500 a month from your blog traffic. Advertisers want exposure to blog audiences. So, it is a win-win.
Ready to start your own blog? … Read my post on the 7 Rules to a Profitable Blog here.
If you have a brilliant idea that appeals to a specific audience, you could create something like an educational blog or a YouTube tutorial series to generate online traffic.
If your content is engaging and it sees enough daily traffic, you could sell ad space on your blog or ad spots on your channel. After you put in the heavy lifting, you can sit back, relax, and enjoy streams of passive income.
Sell Digital Products
If you’ve discovered how to create content that produces enough traffic to host ads, you could make a product your audience would love to buy. That could be anything from a simple e-book to a complex app that generates income for years after it’s released.
Rent Out Useful Items
Do you have any items you don’t use all the time that others would like to borrow? Useful items like a truck, trailer, trampoline, kayak, or even your own yard could earn you passive income as rental items. This also includes renting out spare rooms in your house with the help of websites like Airbnb. Hop on your favorite social media site, upload pictures of your items, set a price, and tell the world they’re ready for rent.
Passive Income Tips
The list of passive income ideas could go on forever.
You might want to check out the Podcast Side Hustle School by Chris Guillabeau, Author of $100 Startup. Quick profiles of unique side hustle ideas of entrepreneurs who create side businesses.
As you search for the best fit, keep an eye out for ideas that show positive long-term track records. Do other people make money on the idea? Has it come back to bite someone who tried it? Look for ideas that are steady, profitable, and trustworthy. Do your research. And never go into debt.