In these series we have been examining different multiple streams of income ideas, whether you work from home/online, are a college student, are a retiree or you simply wish to quit your job eventually. Last time we explored how to create multiple income streams from your hobbies . Today the focus is on generating passive income ideas.
You’ve probably seen many enticing marketing materials extolling the virtues of generating passive income streams with images of people permanently residing by the seaside, enjoying sangria and fine foods or driving fast cars. Of course these can be associated with the lifestyle passive income provides, however, there’s more behind this painted picture.
The truth is that there’s no such thing as completely 100% passive income. There’s plenty of hard work up front. But before we get into that, let’s look at the difference between active income and passive income.
We touched on this briefly elsewhere and will add more details here. The good news is that both active and passive income streams bring in consistent incomes, nevertheless, the risks associated with each differ massively.
What is active income? It comprises the job, the business, freelance or anything you do where you trade time for money on hour by hour, day to day basis.
Some people feel trapped in a rat race of 9-5 job or business and do not actually enjoy it. Of course there are others who enjoy the “security” of the paycheque in exchange for working on someone else’s passive income generation business. If you are in that category and are happy, there’s nothing wrong with it. The main risk associated with this losing the ability to earn money through illness, loss of job or any unplanned eventuality.
On the other hand, if you want to create your own, there are some simple passive income ideas we’ll be sharing below.
One of the greatest benefits of active income is that it can provide a secure launch pad for creating passive income streams. With a day job or business, you are receiving regular income. You can begin to develop passive incomes gradually on a part-time basis until such time when this income stream overtakes the income from your day job so you can happily quit.
What is Passive income? If you look online, you will see various definitions such as “earnings an individual derives from a rental property, limited partnership or other enterprise in which he or she is not actively involved” (Investopedia) OR “an income received on a regular basis, with little effort required to maintain it.” (Wikipedia). It is also called residual or recurring income.
It is income that comes to you without having to be there all the time. It is your repeat income from initial investment of time and effort. Creating a passive income is not easy to begin with and is never 100% hands-free afterwards for reasons that are outlined further below.
For example, if your chosen field is blogging, you invest plenty of time upfront, creating great content for your people. It helps you to establish trust with your audience and you have to maintain that trust by continuous quality outputs. As the wise saying goes: “they sow in tears and reap with joy”, so are the benefits of the time and effort invested initially.
If your primary focus is money, then it is the wrong premise. In situations where your passive income idea is connected with people, they will detect that you are making them your cash cows and will not buy from you. There are a number of important principles to consider in creating a successful and sustainable passive income.
First here are some of the benefits…
- You work less and earn more
- You earn while you sleep!
- You enjoy time freedom to do other things you enjoy
- You set your own schedule
- You give yourself a raise when you want
Generating Passive Income Ideas
If you love writing, you can blog as I mentioned in the last post. Once you establish a sizeable audience, adding Google AdSense to your site will generate residual income. You can also create affiliate links that will continue to generate income.
From your blog ideas and trends, you can also write an eBook. Sales and promotions from the eBook create additional recurring income.
Exclusive Training or Courses
The amount of work upfront as you see with many training companies or universities such as Wealthy Affiliates blows the mind – sheer hard labor going into 1000’s of hours. When this work is complete, aside from maintenance, the rest is recurring income from online courses and services.
If you have purchased a recording of any kind of training, this is the trainer’s residual income. They made the recording sometimes while they are training people ‘live’. They did the work once and the sales of their products will carry on generating passive income for them.
Gone are the days when your money in the bank is generating sizeable passive income for you. Then interest rates were reasonable and the global economy was stable. Nonetheless, if you desire the warm feeling of knowing that your money is safe in the bank, and you are prepared to not have access for long periods, then there are options such as bonds to consider. Best to stagger the maturity dates so that again all your eggs are not in one basket.
For serious financial investments including stocks and shares, it’s best to seek the advice of a qualified professional.
This is one of the most solid and long standing passive income generators around. To do this, you need to understand the property market cycles to be able to capitalize properly. When I started out in real estates, I didn’t learn properly and threw all my hard earned cash into it and lost them all.
Done properly, you buy dips in the market. As your property is appreciating in value, your tenants are paying your mortgage.
Before considering real estate investing, do your due diligence and learn from the experts.
Multi-Level Marketing (MLM)
Love it or hate it MLM is here to stay. It is a legitimate business model that has helped millions of people but has also burned many. Like all businesses, if the model doesn’t work for you and you are not passionate about the products, there’s little point in joining the business.
I am in a multi-level marking business myself and what attracted me to it are the products (heart health and circulation) because I know many people that have conditions associated with circulation issues. I had to study this business with a fine tooth comb to ensure the company philosophy aligns with mine. You can earn via products alone or by bringing other people on board.
One of the key things that has given MLM a bad name is poor leadership. There is a good proverb that says the fish rots from the head and if the leadership in a company is poor, so will everything it advocates. It doesn’t matter how clever the compensation plan is, satisfy yourself that you align with the company ethos and their products. If the products are great and they treat people badly or are deceitful, it defeats the purpose. There are many brilliant MLM companies still standing but it important it aligns with you.
Important Principles to Consider…
Offer value for free
In any niche you choose, if people are involved, investing time in them is key to your success. A great example is Wealthy Affiliates University where you get to build and host your website for free with plenty of learning materials on how to succeed online.
Know what motivates you
What drives you? What’s your WHY? Is it financial security, time freedom, time with your family, supporting a cause close to your heart or be of service to humanity?
Remember that passive income is not 100% passive
When money starts flowing, do not forget to keep oiling the wheel of your income machine. For example, if you wrote a book that took you two years to complete, while that book is generating income to your bank account, you have to maintain publicity, marketing, conversation with the audience to keep the interest going. Stay focused on the customer and not the profit.
How to automate your Income Streams
I’ve been asked a number of times about the notion of automating your income streams. This idea has run through this article right from the start. For example, to put your passive income on autopilot requires hard work upfront as we’ve discussed. Once your business credibility is established, the systems you put in place thereafter will ensure that income flows into your bank account seamlessly.
Different ideas we’ve shared so far create this automation, such as eBooks, books, products, courses, MLM or anything that generates passive income. Sale after sale creates a funnel of income that do not require your presence or involvement in real time. Automation allows transactions, cashflows and growth to take place without requiring your presence or input on a day to day basis.
What other passive income streams ideas are you working on? I would like to hear your story. Thank you for reading my article.