For many people, the traditional way of making money is putting in your time and earning an income. But for those who need to earn money, may it be for retirement, extra spending money, there are numerous ways which one can make passive income.
But how can one make passive income that doesn’t take 8 hours or more a day, five or more days a week?
Well, there are numerous ways to make passive income.
But do know, to make money, you have to spend money. And sometimes, you’ll need to spend time in order to make that passive income. And I’ll go into that in this blog post.
Do know that, earning passive income is great on top of maxing out investments such as 401K, your Roth IRA, your life insurance, investing in investment funds, etc. And also building an emergency fund and eliminating debt.
So, before we get into discussion of “Ways of Earning Passive Income”, first…the disclaimer:
FULL DISCLOSURE:
I am not a financial advisor. This post is to provide information and not provide financial product advice. I discuss why I personally chose to invest in a stock, ETF, REIT, investment fund or cryptocurrency (which I have held for over a week) and also share information that is public about the following stock, ETF, REIT, investment fund or cryptocurrency and they are based on my own personal opinion.
I will not blog about any positions of stocks, ETFs or REITS and cryptocurrency which were initiated just within the last 72 hours of posting this blog article.
It is recommended that you should always consider visiting a financial advisor for independent financial advice before making investment decisions.
I do not work in the financial industry, so just because I write about it, doesn’t mean you should own it. So, consult with a financial advisor and do your due diligence, RESEARCH!
I am not receiving compensation by the company for this blog post.
I have no working relationship with any company whose stock, ETF, REIT or cryptocurrency mentioned in this blog post. Nor do I have a family member or friend who works with the company.
INVESTING IN HIGH DIVIDEND STOCKS, ETFs, REITS
One way to make passive income is through investing in high dividend stocks, ETFs and REITs. This is one which many investors use by purchasing shares that pay a monthly, quarterly or annual dividend. This requires money and takes time in terms of doing research. But it’s what people do to prepare for their retirement and it’s what people do to help retire early. But the concept works this way.
STOCK #1 paid $25 per share which pays .60 every quarter ($2.40 annually). But let’s say that they bought 10 shares at $25, then that would be $24 annually. Then if they bought 100 shares, that would be $240.00 annually but let’s say they bought 1000 shares at $25 (they spent $25,000 in those ten years to accumulate 1,000 shares). That would mean they would earn $2,400 annually.
But where the research comes in is to find out if the company has slashed or increased their dividend each year, how their business has been doing each year and they have been making money or taking continual losses. Also, looking at their dividend yield and more.
Also, one who invests typically owns more than one stock, ETF or REIT and investors set out a goal. After they achieve a goal of making an amount annually, its natural for one to want to to try to make $100 per month, $500 per month, $1,000 per month, $10,000 per month and so on.
Look at Tawcan’s April 2021 dividend payout and see how his grew from 2011 to 2021 so far. In 2011, he earned $675.21 in dividends and in 2020, he earned over $26,975 in dividends. Let’s look at Mr. Tako’s 2020 dividends, he’s earned over $12,000 in March and over $14,000 June, September and December through dividend investing alone in 2020. That’s pretty awesome!
Also, many companies tend to increase their dividends each year. So, do your research on the company and keep tabs on the company as nationwide crisis or a merger may lead a company to eliminate or suspend their dividends. So, you’ll often hear people emphasize diversification. If a few sectors like tech, energy, utilities are down, what other sectors are doing well? May it be industrial, materials, consumer staples, etc.
As for elimination of the dividend, during the pandemic, some did, some didn’t. So, it’s good to do your research on the company and if you invest, do know what’s happening. Just don’t be amiable and assume that the stock is doing great and the company is paying a dividend.
For me, I make passive income via dividends, but I do the DRIP (Dividend Reinvestment Plan). I do not take the money and deposit in my bank, I automatically set my dividends to be reinvested back into the stock, because if I’m holding out long term, if the dividends can purchase, and I accumulate more shares, that’s great. But when I retire then I can stop the DRIP on a stock and then use the dividend income.
So, look at it this way…if you have a job that pays a great pension after retirement, that’s great. But if you don’t have much invested in your 401K, IRA or on social security, it’s good to plan on ways of how you can earn passive income when you get older.
INVESTMENTS
Investments in Stocks, Bonds, CDs, Cryptocurrency can earn you money. May it be purchasing it low and it going up high. Those who invest in penny stocks and are able to make a lot (very risky).
Some who crowdfund a REIT.
So, if you were one of those people who purchased Dogecoin for $20 and got 10,000 dogecoin at $0.0002 and when it went up to .73 cents. Imagine those who invested only a thousand or two.
Imagine saving all your life and investing regularly so you can stop working at 65 only to be beaten to retirement by some teenager who YOLOd his savings on Dogecoin
— Dr. Parik Patel, BA, CFA, ACCA Esq. 💸 (@ParikPatelCFA) April 16, 2021
HIGH YIELD/INTEREST EARNING ACCOUNTS
For cryptocurrency, I have my Bitcoin, Litecoin, Ethereum in BlockFi where it earns interest while it’s sitting there (8.6% APY).
Another is having your cash in a High Yield Investor Checking Account like Charles Schwab where it earns money while it sits there. Of course, the more you in the account, the more interest you can make it.
CRYOTOCURRENCY MINING
If one knows how to underclock their graphics card (via software like MSI Afterburner) to lower energy consumption, by cryptocurrency mining, you just fire up the software, leave your computer on and let it mine crypto. You earn cryptocurrency and as a miner, you may avoid fees, so you can send it to your wallet or exchange and from their, you can keep the crypto or sell it for a profit.
And parents, because many kids have learned they can make money through this on their computer and earn passive income (especially ethereum mining) while they are out or sleeping through software like Team Red Miner or via Ethermine, please keep an eye on your electricity bill.
OWNING REAL ESTATE
If you own real estate, you can rent out the property and charge monthly rent or if you have property in a city where people vacation, you can put it on AirBNB and make money that way.
Of course, this also costs money to purchase the property and it may be a bit costly in repairs alone. The more properties you own and if you live far from those properties, you may need to hire a property manager.
And other risks can also happen. Iou can have bad tenants who are late on payment(s), do more damage or worse, in an economic crisis, if you are unable to find people to rent your property to.
But there are those who have made a lot of money through real estate and once they got the property all ready to go and find good tenants, it’s been a constant flow of passive income for them.
Ad Revenue/Affiliate Marketing
Do you have a popular website or YouTube channel? Adding ads on your website, may it be Google, Amazon, etc. or some sort of affiliate marketing can earn you passive income.
Of course, you need to have a website or YouTube channel that has people wanting to visit. That takes time and money.
Flipping
May it be homes, domain names, artwork, toys, comic books, baseball cards, etc. What you invested in for a little, may gain you high income in the future.
Of course, there are risks…buying a cheap home and inspectors find major things that need to be repaired before selling it, merchandise which you hope can make money being damaged upon transit (or stolen from UPS, FedEx or USPS), deliveries where packaging is crushed and merchandise damaged.
MEMBERSHIP REWARDS
If you have a credit card or are a member of an airline mileage club or some club which offer rewards, get free merchandise or free flights or more!
COIN-OP MACHINES
Some invest in laundry machines for apartment complexes or at shopping complexes because not everyone owns a washer and dryer. At the end of the week, those who invested in these can collect their earnings for each coin-op machine at these locations.
Some do it as well for anything coin-op, may it be snacks, soda vending machines or even arcade or ATM machines.
SELL YOUR PHOTOS OR MUSIC
May it be stock photos or photos in general, photographers may get paid for their work.
The same for musicians who create music and license their music.
Amazon Mechanical Turk / Prolific
So, let’s say you have want to do different types of work and make quick money that compounds each day, each week and how much you make, it all depends on you of how much time you want to put into it.
Amazon Mechanical Turk (MTurk) is a crowdsourcing marketplace where people outsource their processes and jobs to people who do these microtasks virtually.
Prolific allows one to take part in engaging research, earn cash, and help improve human knowledge.
There are people who can just do these things for hours straight and some have made an income just by doing these microtasks. May it be for gas money, grocery money or whatever. It’s all up to you.
So, these are only a few options of making passive income.
Many of which require time and/or money. But income is income and if you earn small today, you may earn much more ten years or even more towards retirement. Granted, it can work the other way around if you are not smart with your investments and not know the risks involved. Always learn the positives and negatives!
Last but not least, passive income is income. May it be dividends, sales of merchandise or even making big money on cryptocurrency, you will need to claim the income for your taxes. So, if you earn a lot, be prepared to pay on Capital Gains Tax, but also know about losses, to lower your income (read more here).
As always, perform due diligence and do a lot of research before investing. Talk to a financial advisor and be honest if you are considering long term investment or short-term investment.
