Escape the 9-5 Grind: 6 Passive Income Strategies
Passive income is the best invention of life.
What could be better than making money while you're sleeping, traveling and enjoying quality time with your family.
In this article we will be talking about the 6 different methods to make passive income, now let me contradict myself already.
Remember, there's no such thing as passive income, no one will throw money at your feet without you moving a muscle, you’re gonna have to do some work to get these things up and running, well except for the fifth idea because that one's truly passive, but more on that later.
But let's be honest, no matter how badly we all want to be rich, building passive income is not really about the money right?
It's more about freedom, it's about investing in your future so you don't have to keep working a job you hate for the rest of your life.
You get to pursue your passions, whether that is giving to charity, traveling the world or simply chilling at home, all that matters is that you get to make that choice.
Sounds good to you?
Alright, let’s get started.
Method #1
Method number one: putting ads on your car.
Now hear me out, this might sound like a joke, but there is actually a way to make money by putting ads on your car.
Think about it for a second, you drive your car anyways, you might drive every morning to your office, drop your kids at school, or just hit the supermarket to do your groceries.
Why not let your car generate some income while you're doing that.
I know that putting ads on your car may seem too much for you, but you might feel a bit uncomfortable but who cares, you are earning money and in case if you get tired of that, you can get rid of it whenever you want.
You can expect to earn anywhere from 100 to 500 dollars extra a month.
This is especially helpful if you have a car loan, it is essentially going to pay for your car.
But be careful because there are a lot of scammers in this industry.
It's going to take you some time to find a proper company that's willing to put ads on your car, but then you can forget about it while you get a few hundred dollars every single month for just driving your car.
Method #2
The second method to make passive income is real estate.
Now hold on I know what you are thinking, I don’t have a million dollars to throw towards a property.
But check this out, there's a trick where you can just start off with a couple hundred dollars through “real estate investment trust” or REIT.
This is where the REIT pools together money from a bunch of investors and collectively you have enough capital to buy real estate without dealing with the hassle of mortgages, tenants, inspection, and so on.
Which makes it popular among investors who want to invest in real estate but don't want to deal with the hassle of management and tenants and all that stuff.
Most REITs are publicly traded, which means their shares can be bought and sold on a public exchange, by anyone with a brokerage account – much like a stock or ETF.
The difference between a REIT and a typical stock is they offer a much higher dividend rate.
For example, the current dividend yield for Brandywine Realty Trust is 15.48%, which is incredibly high.
Not to mention, its long history of consistently paying out these dividends.
But you have to understand that their stock price doesn't increase much, most of the money you're going to make out of this company is from dividends.
Properties in a REIT portfolio may include apartment complexes, data centers, healthcare facilities, hotels, infrastructure, office buildings, timberland, and warehouses.
In general, REITs specialize in a specific real estate sector.
However, diversified and specialty REITs may hold different types of properties in their portfolios, such as a REIT that consists of both office and retail properties.
The high dividend yield is what makes them so good as a passive income candidate.
However, you should still do your own due diligence, because just like with stocks, that return is never guaranteed.
So beware of any red flags and how it has been performing historically.
Method #3
Alright and method three, we have vending machines, when we talk about passive income we never mention vending machines because they don't sound as exciting as real estate for example.
But if you think about it, it's an asset that provides a constant stream of income and requires minimum effort if you automate it, it’s incredible!
Check this out, according to the article published by step by step business, the US vending machine industry has a market size of approximately $10 billion dollars.
However, the marketplace is largely fragmented.
Anyone can buy a refurbished vending machine for as little as $2,000 to $3,500, and the key to growing a profitable vending machine business is to do your homework upfront.
You have to find your location first and assess its potential for success before you buy machines for that site.
Once you’ve locked in a site, it is best to think through the following variables.
The type of vending machine you’ll use. Determine whether you’ll dispense snacks, refrigerated drinks, or a combination of both.
Where will you buy your products? Sam’s Club and Costco are popular options.
The kinds of products you’ll sell.
Think about the demographics of the people who will be walking by your vending machine.
How you’ll collect payment. Older customers prefer paying with cash and coins, but collecting your money can be a hassle.
If you equip your vending machine with a credit card or Apple Pay terminal, the money will go straight to your bank account.
The challenge is to pick the right place and sell the right products, if you place it somewhere where there aren't many people it's going to be one of those machines that earn five dollars a week, but if it's in the highly visible location where it will regularly attract buyers, that's when you can expect a few hundred dollars from it every week.
It requires a lot of work in the beginning but really pays off later.
Before getting into the space, I highly recommend everyone to study it further because you have to understand what kind of products will sell the best, what vending machines turn the highest profit and what type of locations attract more buyers.
Method #4
Now the fourth method is named after a very specific group of people, the royalties.
Despite the name, royalties isn't like your emperor's new groove, it's just a fancy word that describes someone paying you each time they use your thing.
In 1999, Jeff Bezos filed a patent for a method of ordering items online.
It's called one click buying, it's a technique that allows the customers to make a purchase with the payment information that they have used previously and saved.
In other words, instead of manually inputting billing and shipping information for a purchase every single time, a user can use one click buying by using a predefined address and a credit card number to purchase the item when you buy an app from the app store.
You don't need to re-enter your credit card information, you simply double-click on the site button and the software will automatically use your saved credit card.
And until 2017, Apple and every other company that used this technique paid a small royalty to Jeff Bezos for using his innovation.
This is just one example of royalties that went well, so how can you make it work for you too?
Well, it's pretty easy to get started, all you need is an internet connection, a computer, some time and some creativity.
Thanks to the internet you can earn royalties in many different ways with stuff like ebooks, stock photography and more.
The tricky part is to stand out with your products, your content needs to provide enough value that it differentiates itself and selling your royalty products really depends on your own marketing skills.
There are a ton of royalty based products out there that don't even make any money because no one knows about them.
The key is to focus on marketing and showing why your product is gold compared to everybody else.
And here's my favorite part:
the maintenance.
The beauty of royalties is once you get your product up and running, ebook or whatever you can leave it and forget it, because your work is done other than maintaining your marketing efforts you can just wait for the royalties to roll in.
Method #5
Okay, you quite literally cannot get more passive than this passive income idea. All you need to do is click a few buttons and you're done.
The fifth method is that you use your money to purchase a piece of ownership of a company and if the company does well then congratulations you made some money.
The money made is known as a dividend, which is the financial returns investors receive for holding stock in a company.
When a company is profitable, shareholders receive dividends as a reward for the risk of owning their portion of the business.
When a company makes money, it has a couple of options for what to do with the cash:
reinvest it in the business or pay dividends to shareholders.
If it chooses the latter, each investor obtains a reward according to how many shares they have.
For example, let’s say a company issues a cash dividend of $1 per share. In that case, a shareholder with fifty shares would make $50 from their investment.
Although investing in stocks can be inherently risky, there are ways to mitigate that risk.
In this context, it’s wise to diversify on two levels:
firstly, in your investment portfolio, and secondly, in your passive income streams.
You can never eliminate risk entirely, but you can reduce it.
Don’t put all your eggs in one basket; instead, thoroughly researched investments among a variety of assets and opportunities will provide more reliable returns.
For example, you can look at this thing called index funds.
Index funds are investment funds that follow a benchmark index, such as the S&P 500 or the Nasdaq 100.
When you put money in an index fund, that cash is then used to invest in all the companies that make up the particular index, which gives you a more diverse portfolio than if you were buying individual stocks.
Let’s use the S&P 500 as an example.
The S&P 500 is one of the major indexes that tracks the performance of the 500 largest companies in the U.S.
Investing in an S&P 500 fund means your investments are tied to the performance of a wide range of companies.
Because the goal of index funds is to mirror the same holdings of whatever index they track, they are naturally diversified and thus hold a lower risk than individual stock holdings.
Market indexes tend to have a good track record, too.
Though the S&P 500 certainly fluctuates, it has historically generated nearly a 10% average annual return over time for investors.
Method #6
The last passive income method would be affiliate marketing.
Let’s say you run a blog about fitness and health, one way you can monetize this blog is by recommending some protein shakes or workout equipment that can help you lose weight faster.
Pretty much every product or service has an affiliate program, which means you can get paid anything from 1% to 10 or even 20% if someone uses your link to buy that product.
If someone were to stumble upon your blog and find it valuable, they would definitely use your link to buy that product since you have established trust with them.
Now conventional wisdom makes you think that you need to be a super influencer with a huge following to make any money off of affiliate marketing but that's a lie.
Affiliate marketing is simply talking about someone else's products or services and you getting a commission each time someone uses your link.
Check this out, many brands specifically work with micro influencers.
People with a couple thousand or even just a couple hundred followers, so if you have a YouTube, Instagram, Facebook or whatever even with a small following you can still make some money.
It’s a win-win situation as you can make money even with a small following, and it’s cheaper for brands when promoting their products.
Plus, the engagement rate of smaller audience sizes is typically higher, meaning your audience is more engaged with your content.
Of course with one or two links you aren't going to go far but imagine if you have dozens of links, you might drive hundreds if not thousands of people and those small commissions will turn into a decent amount of money each month.
Now if you learned something from this article, then be sure to share it with your family and friends.
Stay invested & Cheers!
- Ivan