How to make passive income

Breaking down passive income, with ideas and tips to build ongoing wealth.

“Time is more valuable then money,” Jim Rohn once said, ” you can get more money but you cannot get more time.”

Most people have this idea that they must work to earn money. There are two ways to work for money. As an employee and as a Entrepreneur. I’m not here to argue which one is better, arguably both can do very well if budgeting and investing are done early and consistently.

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This article is about building passive income. Money that earns money without you having to touch it. Or maybe do very little to maintain the investment. This is the idea you need to think about, how can my money earn money?

You need to think about it like that. Your money is held in the value of the “asset”. The asset being the item that brings you income. It could be an idea, or a business for example.

That leads us to the basic question…

What is Passive Income?

Very simply put passive income is income earned without direct interference. You could be sitting on a beach somewhere and the checks would be rolling in. Just to paint a better picture I will give a few examples, going into them in depth later in the article.

  • Royalties (Books, Music)
  • Rental Income
  • Software residuals

There are plenty of other ideas, and I’m sure plenty more to be discovered. If you just thought in this mindset of can this asset earn me money. Some of the more serious avenues for passive income require a large amount of capital. (Real estate, Business Acquisitions)

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Though these avenues are some of the most rewarding the risk involved is much greater. As the other two ideas shine the light on the other path to creating streams of income.

How can I make Passive Income?

There are two ways I know of you can make passive income, if you can think of any others put them in the comments! One, you can buy it. Two, you can make it.

Buying a stream of income is pretty straight forward. You are going to be buying an asset that earns you money. Some examples would be Stocks, Real Estate, and businesses. You need to understand that the amount of money required to buy some of these assets is very much out of reach for most people.

That is no issue though, you can always make your own streams of income. Just remember that working to build a stream of income can become tedious and some consider it just work in itself. But the work has a life to it and can be use time and time again, once complete, to earn you money.

When someone asks me how can they earn passive income I ask them what do they like to do? A simple question that opens up a world of possibilities. For example when a friend of mine asked how he could earn some money while he went on a cross country trip we shot ideas back and forth.

He would talk about selling items along the way, trying to flip up and live on just reselling. But the idea came to me and I asked how much time he had before he left. He said he was leaving in four months, I suggested building an online course, this was years ago before everything was on youtube, and I helped film it. We edited together a 4 hour basic course on guitar repair and an addition extra 2 hour course on more in-depth repair.

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This course was marketed with a small budget on some websites before they were very strict with ads. It was not a crazy seller but it definitely helped him sweat less on his trip.

Still to this day his course is out there for purchase, I tried to contact him and ask but he didn’t get back to me in time, if he does I’ll try to share the financials from it from the past few years.

This goes into one of my skills photography. Stock-photos today are a madhouse. I wouldn’t suggest it unless you love taking a bunch of photos and earning pennies until one finally blows up for a bit. If it even does.

I’ve found that it was much easier to pivot and do something else. We turned our cameras on local businesses before the facebook wave was really taking the country by storm. Back when ads were dirt cheap and no one really knew what was going on.

I was young but the idea worked the few businesses that let a few teenagers make videos for them did see some increase business and we earned a nice wage for 17-19 year olds. Most of the time we just hung out.

More Passive Income Ideas

Another friend from college, loves to make video games. He was making computer games but in the last few years strictly turned mobile. His games are pretty simple he keeps the idea the same, something fun and catchy while also allowing some sort of customizations to allow transactions for more models.

He also displays ads in what he calls the “free version” of his games, while allowing players to pay to opt out of the ad version. He also added that the added cosmetics he puts into the game allow for increased revenue.

For any game designer out there, he said you can buy new designs but make sure you understand how much revenue you earn from micro-transactions before you dump a ton of money into designs.

Games are not the only apps that make money, if you think you can design an app that makes money then go for it. Make sure there isn’t competition or if there is that you have that upper hand somehow.

These days you don’t even need to really code or design yourself, you can find a freelancer willing to do it for a certain rate. You can see past designs and interview multiple candidates allowing you to get the best possible product.

That goes back to buying an asset to earn money. I hope you begin to see how passive income can be earned.

One of my favorites which I have been adding to for years, is dividend stocks. A lot of people shy away from them because you need a large amount of money to see anything that you could consider “income” but think of it like this. The account pays itself along with you paying it. If you do it for years rather than wait till you have the money you’ll reach the payout point faster.

Understand that buying an asset is a risk and there is no guarantee the value will hold or be salvageable.

Learn about diversification in ETFs that pay dividends or find some single stocks you like that pay dividend and get a few in sectors you feel will be strong for the future.

Creative ways to make passive income

The name creative says it all. Can you sing, songwriter? Why not buy a nice microphone and download some recording software and try to put a demo together. You can market it through instagram, tictok, make a story about you. The creative way to passive income will require something called content.

Content is just what your viewers/listeners interact with. whether its a video of you playing a show, or a podcast about a recent release or story, the items draw viewers which draws advertisers which draws money.

It is not an instant thing, there is so much competition out there that you can’t really expect anything, you just need to put yourself out there keep trying and see if something sticks.

A quieter way is to write. Books are a great way to earn some passive income. First you need something to write about. Are you a researcher who has some interesting information? Do you think about stories in your head? Put them on paper see where they go.

There are so many ways to write a book, the issue isn’t writing it, it’s finishing it. Once you actually finish the book you’re not done. You need to market that book. Which can be done through a publisher, if they like your book. (You just lost most of your money) Or through other channels. Amazon allows you to sell books, you can also use crowdfunding if you think you can get a fan base around your book.

Both of those require a large amount of work by the author as you will be the person trying to market the book. You could try to hire someone but then you may be spending more than you can earn.

Once money is involved there is always risk.

Im not going to go into much detail on the ways you can buy assets to earn passive income, it’s very straight forward. You buy something like an already established business with channels of producing goods and selling those goods. There is a general manager who has been there for five years and he reports to you every month to make sure everything is good. You sit back and collect the profits.

You can buy a rental property. (Multi – family property allowing you to collect rents) You should have a formula for your area when looking at properties to figure out if the amount of rent collected can beat the mortgage + taxes + safety. You need that cashflow.

I think there are ways to buy the royalty rights on songs or other intellectual property. I would say do a few google searches but I bet the prices on these things would be crazy high. The pay out my also be seasonal on certain songs. I would need to do more research on these topics.

That just about sums up the idea behind passive income, and how to start going about obtaining some. Start thinking can I turn this money into income buy owning this? OR – Can I turn my time into future income by building this?

Build a business that turns into stream of passive income, or write a book and take your profits and buy a functioning multi family property.

The combinations are endless, if you keep working the sweat equity will pay off.

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