5 Passive Income Ideas

All right, so, when I say "passive income", I prefer to air quote it because there is really no way to make money without doing anything at all.. But when I say passive income, what I mean is money that is not directly tied to our time.

So, let’s say you were to write a book. If you wrote a book, and you published a book that is now on bookshelves, You’ve done the work, And now anytime the book sells, you make money from royalties, that is passive income. You could literally be making money while you sleep because you’ve created this thing, which is out in the world, which is generating income for you.

There is no way to get rich quick. It is not a thing. So, if you’re looking for a get rich quick scheme, those things just don’t exist. So, you might as well not even try. And the way I think of this, is that ultimately money is just a medium for exchanging value.

The only way to make money is to provide value. And the only way to make passive income, passive money, is to provide value in a way that is not directly tied to your time. So please, please, please, do not try and join some get-rich-quick scheme, they don’t exist. The only way to make money is by providing value. And so, let’s talk about the five different ways that you could provide value if you wanted to.

1. INVESTING IN STOCKS AND SHARES

with investing in stocks and shares. And in this context, the way that we provide value is by offering up our money.

Providing money and investing in a service is in a way giving a form of value. And so, when we give our money to a company in the form of buying their stocks, it makes sense that we would get some kind of return for that investment. And we’re starting with this because investing in stocks is the easiest way to make any kind of passive income.

If you have any sorts of savings and they’re sitting in a savings account, earning 0.01% interest, they’re not really doing very much for you. Whereas if you had those stay savings and put them in stocks, you could potentially be earning passive income from the money that’s otherwise just sitting there.

the thing that I recommend for most beginners as a non-financial advisor, and this is not financial advice, is that basically all my money that’s in stocks and shares is invested in index funds. Now an index fund is something like the S&P 500. And when you invest, let’s say $1,000 in the S&P 500, that basically means that your $1,000 is distributed amongst the top 500 biggest companies in the US. So, weighted by how big they are. Basically, all the big US companies you’ve heard of you end up investing in all of them a little bit at a time.

So, if you wanna get started with that, all you need to do is sign up to a stockbroker. whatever country you’re in just Google the phrase, best stock broker platform, your country name and you’ll find something that works for you.

There are other sources of passive income that require higher degrees of maintenance over time. But stocks and shares is a very easy way.

2. BECOMING AN AFFILIANT MARKETER

Affiliate marketing means that you are selling other people’s products but you’re getting a percentage of the sales from those products.

Now, apparently 48% of affiliate marketers globally earn $20,000 a year which is $1,660 a month. Which is actually not bad at all. Like people are doing very well with affiliate marketing overall. So how hard is it to get started with affiliate marketing?

Basically, you can just sign up to an affiliate program like Amazon Associates. So Amazon have their own affiliate program which I think is probably the biggest in the world. And then once you have your little special links you can post those on your website or on Twitter or on social media or whatever. And if people buy the product through your link or in fact buy any product on Amazon through your link you’ll get like some tiny percentage of the sales. So pretty easy to get started with affiliate marketing.

but how hard is it to make $100 a month? Well, this is actually kinda hard. So let’s say you had a product that was $50 that you were trying to sell and you were getting 5% commission on it. That’d be pretty good. Amazon doesn’t offer nearly as much as 5% it offers like two or 3%, something like that. And let’s say your average conversion rate i.e. people visiting the thing versus people actually buying the product after visiting the thing, let’s say that’s 1% which is pretty reasonable for conversion rate. You would need 8,000 visits to your website or whatever to make $100 a month. It’s actually quite hard to get 8,000 visits per month to your website, to a specific product page. And generally doing well in affiliate marketing requires lots of upfront effort in terms of either building an audience or building such domain authority in whatever space you’re in, that you’re sort of organically getting traffic.

Once you started making money from affiliates it’s actually quite easy to maintain because especially if you have evergreen content, the sort that isn’t relying on, like current affairs or the latest news, the sought that people might search for over a long period of time, this becomes relatively reasonable passive income.

3. SELLING A DIGITAL PRODUCT

Now these are products that you create once, like an ebook or a download or an app or something like that. So you create it once and then you can sell it multiple times because selling digital products doesn’t usually have any costs associated with it.

So how hard is it to get started making digital products? Well, anyone can write an ebook, an ebook counts as a digital product. but obviously like again money is an exchange of value. So the thing that you’re selling you have to be providing enough value to compensate, to make up for the price that you’re selling it for. And that’s often quite hard, especially if you don’t have any experience in this sort of field.

How hard is it to make $100 a month? Well, it’s very easy to create an ebook but it’s a whole different ballgame trying to get people to actually buy your ebook or buy your icon set or buy your app or buy your website themes. And because the market around this stuff is so competitive like you have to be genuinely really good to get people to buy your stuff. And the way you get people to pay you money for something is that you identify a problem that they have, you solve that problem, and then you charge money for it. And if you can do those three things, then, I wouldn’t say it’s easy to make $100 a month but it’s very doable to make $100 a month. You just genuinely have to have something unique that solves a pain point that other people are willing to pay for.

4. AUTOMATING A BUSINESS

So idea number four for generating passive income is creating a business that sells goods or services and then automating or delegating aspects of that business so that the income that you generate from it is reasonably passive.

This is the stuff that Tim Ferris talks a lot about in “The 4-Hour Workweek”, where there are a lot of businesses that you could make where you’re selling a good or selling a service and then you can delegate, outsource, automate and intelligent ways to make the income passive.

To get started, you need to create a business and it’s quite hard to make a business that genuinely provides value. and providing value is hard. Like it’s not as easy as making an account on a stocks platform and just putting some money in. You actually have to give value to people which is kind of hard. But the nice thing is once you get started like with anything, maintenance is a little bit easier, and with this method you can always increase your business level of automation.

5. BUILDING AN APP OR A WEBSITE

Idea number five for passive income generation is to build an app or a website or some kind of software product that you can offer either as a one-offer, or more likely these days, as a subscription service. And there’s a whole category of this called SAS. software as a service.

Now, if you look at the website, indiehackers.com there are like literally hundreds of examples of people who have built software businesses that are making passive income and they share their revenue numbers and they tell you how they got started and they give you their tips.

In terms of starting to make an app it’s actually quite hard. You have to know how to code for the most part you have to be able to offer something compelling and you have to actually build it which takes a lot of work and it’s very hard, but it’s a lot of fun. And then once you’ve made it, it gets easier.

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