When it comes to wealth-building strategies, there’s no hotter buzzword at the moment than “passive income.” And passive income can do much to quell retirement fears and achieve retirement goals.
The term “passive income” sounds so lucrative doesn’t it? Free money without having to do anything. Perfect!
The good news is that it’s not a complete myth—it is possible to generate income streams that take little upkeep. That said, no income is ever truly passive. There’s always work to be done, otherwise someone else will jump in and snap up the opportunity and push you out the door.
Investopedia defines passive income as “earnings an individual derives from a rental property, limited partnership or other enterprise in which he or she is not actively involved.” Popular culture, however, defines it as “any money you earn while sitting on a beach sipping mojitos.”
With that in mind, if you’re willing to put in the work, there’s no reason not to get started. Here are top 10 ways to generate (relatively) passive income efficiently:
1. Build an App
Build an app, put it on the app store, sell a million of them. Okay, you don’t have to quite sell a million, but if you even get a few thousand people to download the app, you can do relatively well. Benny made a simple photo app and ended up making $30,000 in 30 days.
It’s easier than ever to start building an app—so what are you waiting for?
2. Start Dropshipping
If you want to start an e-commerce business without carrying all the annoyances of inventory, think about starting a dropshipping business. With a dropshipping business, you simply build the storefront and the relationships with the manufacturers. Once a customer orders a product, you send the invoice to the manufacturer and they ship it directly to your customer. The only cash outlay you have comes after a customer has paid you. If you’re interested in dropshipping, Shopify has a great starter guide here.
3. Start Consulting
This isn’t quite passive, but it is a great income stream. Take whatever skill set you have in your day job and start consulting outside of your 9 to 5 hours.
It’s work you’re already used to doing, but you’ll be able to charge more and have more flexibility across the board than with a traditional job.
4. Start a Blog
Starting a blog can be both a passive and a rewarding income stream.
Simply install WordPress, grab a WordPress theme, and get started writing. You can make money by advertising, selling affiliate products or even creating your own products.
You should note that blogging isn’t the easiest path in the world.
5. Sell on Amazon and eBay
Sell your old crap on eBay and Amazon! It’s not 100% passive, but it’s an easy way to make more money on stuff that’s literally just sitting around your house or apartment. This is very basic work and you can get started on this today.
6. Become A YouTuber
Bust out your iPhone and start taking some videos!
All you need is one super-viral video to start making money off their AdSense platform, but even more modestly viewed channels can make a regular income by posting videos often. Some channel partners gain fame and end up getting other deals on TV and in commercials. Heck, even Justin Bieber got started on YouTube! Even if you don’t make millions, you’ll still be able to reach some level of YouTube pseudo-fame.
The key to all of this is of course adding value in some way, shape or form. There are very few 100% completely passive income streams, but if you work hard and help enough people, you can find a way to help lots of people and make money while you’re at it.
7. Start a Freelance Business
Have you always wanted to own your own business? You could start a side business while you work a full-time or part-time job. For example, if you’re a graphic or web designer, you could start your own graphic or web design business on the side. If you like to make jewelry, you could sell at craft fairs and online. Starting a business may be daunting, but if you believe in you and your work, you could earn a decent living, maybe even quit your day job. Search out those who are doing what you want to do and interview them. Find out the mistakes they made and ask for guidance.
8. Invest in Dividend Paying Stocks
Dividend paying stock are great ways to earn passive income. If you’re not financially savvy, you’ll want to hire a financial adviser who’ll help you choose the right investments for you. You may want to take a couple of finance classes to understand what your adviser is speaking about when he/she recommends an investment strategy. Done right, investments can pay off for years.
Shareholders of dividend-yielding stocks receive a payment at regular intervals from the company’s profits or reserves. Since the income received from the stocks isn’t related to any activity other than the initial financial investment, owning dividend-yielding stocks can be one of the most passive forms of making money.
The tricky part, of course, is choosing the right stocks. Too many novices jump into the market without thoroughly investigating the company issuing the stock. You’ve got to investigate each company’s website and be comfortable with their financial statements. You should spend two to three weeks investigating each company.
Earn royalties from writing books, songs, selling stock photos or developing products. You can even buy someone else’s share of a song via a writer’s auction. For example, if a songwriter dies, his/her heirs have the right to auction off a percentage of their songs during an estate sale. You bid on a song, and if it’s accepted, you own a piece of it and receive a royalty check each month, which can be deposited into your savings or checking account or a special savings account like a financial freedom account.
10. Affiliate Marketing and Internet Income
You can’t deny it, but you GOTTA love this one. Aside from a fat inheritance, what other platform allows you to create something (a lot of things) from nothing? With a mere $10 investment in a domain name and another $20 in hosting, you can be flying with the pigs.
There are so many ways to monetize your website or blog online. I currently capitalize from at least seven different income streams from my portfolio of niche websites. I generate profits from private advertisement, public ads such as Google Adsense, sales of my digital products such as e-books, lead generation and referrals, affiliate commissions and a few others.
The success of my websites and blog have also led to several one on one coaching and consulting type gigs, with both individuals and small companies. The experience has truly been rewarding and I really enjoy this passive income avenue.
But is this avenue truly passive? Not in the beginning, no way. You can toil for years before the fruits of your labor start paying off. From personal experience, once it starts raining, it pours. And the beauty is that it pours harder automatically on its own with each passing day, week, month, year.
What about you? What are your favorite passive income avenues? What are your current top passive income earning streams?