The Term “Passive Income”
If you’ve ever looked into ways to make more money, I can guarantee you’ve run into the term “passive income”. Passive income is simply an income stream you create by doing the work up front with little to no maintenance. The idea behind a passive income stream is to be able to keep your day job and have a passive income stream to compliment your existing income from your day job. While it is possible to eventually replace your day job with your passive income stream, it’s not immediate.
Why do I NEED a passive income stream?
Have you ever dreamed of making money while you sleep? That’s possible with a passive income stream if setup properly. We all need more money. Whether its to pay off debt quicker, save for vacations or even have extra money to put towards retirement its safe to say we all need more money.
The future is coming and while many of us have job security, there’s a handful that doesn’t. Many jobs are being automated. For example, Walmart is planning to replace humans with robots to scan shelves for inventory. This is just one example, but many jobs may not exist due to automation. If you have created a passive income stream, its possible you may not need to stress about the future as much. You will already have an income that could very well replace your day job income.
There are tons of ideas out there but are all of them truly passive? Probably not. Many ideas you read or hear about require ongoing maintenance and will require a lot of time outside of your day job. Not just at first but for the life of the income stream. This is not truly a passive income. A truly passive income will be mostly hands off after the initial setup is complete. You may need to perform some tasks to keep things running smoothly but you shouldn’t be doing too much.
Its all about the setup
You will hear me reference the term “the setup” many times when talking about creating a passive income or really anytime I talk about starting a business of any sort. I truly believe the setup is the most important part of creating a successful passive income. Without executing a proper setup, things will fail. Before you sit back and reap the benefits of having more money flood your bank account you need to research, plan and do the work up front so you can ensure success. The setup does take work, but well worth it.
How soon can I quit my day job?
While quitting your day job is a great goal it’s not realistic at first for many. At least at first. Depending on what you do to create a passive income, how well you set things up, and how much you have to invest financially will determine how successful you are. Some will make money quicker than others. It just depends. For example, if you purchase an existing Shopify e-commerce drop shipping website chances are you’ll be making money quicker than investing in dividend-paying stocks. The reason is, the work has been done for you most of the time. Of course in the long run investing in dividend paying stocks could have a higher return, that doesn’t mean it’ll be the quickest to make money.
What are some great passive income ideas?
There are so many. A few of my favorites are drop shipping, real estate investing, and stock investing. These are just three ideas and there are tons more things you can do to create a passive income.
It’s really simple. You either purchase or set up an e-commerce website and connect it to Aliexpress (there are many others out there) where you sell products that you never have to touch. The merchant from Aliexpress will get the order from your website that a customer places and will ship the order to your customer. You will make money from the price difference of what Aliexpress merchant sells you and what the customer pays which is generally retail price. This is basically how all products in stores are sold.
There are many ways to invest in real estate. From buying shares via a real estate app such as building bits or fundraise to actually purchasing homes to rent out. Many of the richest people in the world invest in real estate in one way or another. Property is an appreciating asset meaning it gains value over time. This is why real estate is so attractive. If you go the rental property route to make it truly passive you will need to hire people to help do the work for you. You will need a maintenance person so you’re not doing it, someone to help manage the tenants and business side of things, etc…The income potential is unlimited with real estate but does require capital to get started. Not just rental properties but investing on building bits or via the fundraise platform.
There are many ways to invest in stocks. Some are not passive such as day trading or swing trading where you need to micro manage your portfolio to enter and exit trades as the market fluctuates. One great way to invest in stocks where it can be mostly hands off is to invest in dividend paying stocks. A dividend is a royalty the company pays shareholders to hold their stock over time. The more shares you own the more you’ll make from dividend payouts. Keep in mind you will need capital to invest in stocks. You will also need to do your research before purchasing shares. You will need to learn what it takes to anaylze stocks and pick stocks that are doing well and will continue to do well.