5 Passive Income Ideas Get Mixed Reviews
Before you leave for work in the morning, you click the crockpot “on” switch. All of your chopping, mixing and measuring will pay off in 6-8 hours as the aroma starts wafting through your kitchen. DAMN, you’re good! The importance of planning ahead for meals or passive income is more obvious than ever in the post-COVID economy.
“Many people think that passive income is about getting something for nothing,” according to Todd Tresidder, former hedge fund manager. “It has a ‘get rich quick’ appeal … but in the end, it still involves work. You just give the work upfront,” Tresidder said.
It’s a great idea to protect your future with good strategies for creating passive income. But not all strategies are created equal. Let’s examine five passive income strategies, grading each on how well they create future income streams.
One of the hottest passive income strategies is affiliate marketing. This approach has been booming alongside the explosion of online commerce. You get paid a percentage of sales you link to on your blog or website. These links can rake in thousands especially for content creators like makeup tutorial YouTubers. I give it a D because you can’t set it and forget it. You first need to build an audience on your blog or website. This requires time, energy and money invested before you even have any readers. Same with all the content you continue to create. If you stop creating and sharing your content, you lose your audience and any related affiliate marketing income.
Voluum has a great article about the ins-and-outs of Affiliate Marketing include some of the top programs.
Hubspot's blog has 44 of the Best Affiliate Marketing programs for 2020 listed on their website.
Here are 5 other common affiliate marketing programs:
Similarly, the demand for your music or books must be there to rack up any royalty checks. As soon as people stop buying and downloading your books or music your income dries up. As sales taper off so do your royalty checks. Case in point, iTunes, Spotify and others pay just $0.091 cents per download to top songwriters and producers.
Investing in rental real estate gets you much closer to the ideal of passive income. As long as your property is in a desirable location, you’ll be able to keep it rented even after you pay off the mortgage. Keep in mind that you'll still need to manage and maintain the property. Figuring out the present and future value of a property requires detailed calculations. But the right property at the right time can sometimes net residual income for a lifetime.
Online courses are a great way to share your knowledge but a lousy way to generate passive income. Creating high-quality online learning requires a lot of time, energy and money. For example, it took three years to develop my Vibrant Money course, including significant investment in software. But that’s only the beginning of the investment. Marketing and selling such courses is an ongoing and demanding enterprise. While the product is valuable and useful, it doesn’t keep paying for itself. Much like politicians who campaign 365 days a year, online instructors must always be marketing their next courses. Income from these courses can be good but there’s nothing passive about it.
Finally, the only place that gets an A for creating passive income is the stock market. This is where you can invest once and earn dividends for a lifetime. When you buy a stock, you’re buying a percentage of that company’s profit every month, quarter or year. You’re earning a right to the company’s future profits. Stockholders ride the highs and lows of a company’s performance through dividends.
If none of these sound like a good fit for you, consider trying out a lower-commitment passive income strategy.
Longer-term savings like Certificates of Deposit earn more interest in exchange for keeping your money in longer. You can also create passive income by lending money to friends and family. Peer to peer lending is on the rise post-COVID as borrowers struggle to meet strict loan requirements. You could also rent out a room in your house through an online booking platform such as Airbnb. You can even rent space on your car to advertisers, the ultimate passive income.
Many people think passive income is about getting something for nothing but it does involve upfront work, time, energy or money to make way for future returns. Start small and experiment with different strategies to earn passive income until you find the right fit for you.
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