Passive Income Ideas

In my opinion, passive income is one of the best ways to generate money, especially when there is a need to supplement retirement income.

Why?  Simply because after you get it started, you don’t have to do much work to keep it going.  The problem is that while you’re setting it up, it’s easy to make mistakes that can be very, very costly.

The following are four passive income methods that I’m familiar with and have used.  In most cases, there’s not much needed as the initial investment to get started.

Four Passive Income Ideas

1. Investments:

Invest in stocks that pay dividends. Cash dividends are usually paid per quarter on a rate per share of stock. All you need to do is own some of the stock. The more shares you own, the higher your dividend check will be.

The hard part is picking stocks that actually pay dividends on a regular basis.  The problem is that you have to be actively engaged to make it work.

It’s a must to investigate each stock you’re considering and be absolutely comfortable with past performance.

Keeping in mind that past performance is not a guarantee of future performance.

After you pick a stock or company to invest in, I recommend looking at two or three years of financial statements if you can get them to see what was paid out in dividends. The New York Stock Exchange has a historical data base that could provide some useful research information.

You can join an online brokerage or buy shares of an exchange traded mutual fund. Your choice will depend a lot on how much involvement you want to have. You can buy individual stocks at a brokerage and your dividends will usually be deposited in your brokerage account. An exchange traded fund will spread your investment over many stocks and reduce your risk of loss. Either way, you may be able to have dividends distributed to you or reinvested to buy more shares.

As a side note, you might consider looking at publicly traded companies in your state or local area for stocks that pay dividends. I know one old guy who gets several hundred dollars each quarter from a local utility. It might be worth looking into.

As with almost everything else, there’s a ton of information available online about investing. There’s a significant amount of information for new investors at investor.gov that can help take some of the mystery out of investing.

Take some time to research several different resources and get comfortable with procedures before making up your mind about investing. After all, it’s your money, protect it.

2. Create and Sell Information Products:

This could be anything from video training courses sold on Udemy, skillshare or slideshare to (my personal favorite) content articles or e-books that you develop and publish.

The hard part is deciding what subject to do the information product on. There are literally thousands if not millions of ideas out there. Find something you like or know something about and do some research to find out if there is a demand for the product. If there is no demand, you probably won’t be able to make any money off the product so there’s no sense wasting your time.

The disadvantage is that it can take a long time to develop, publish and market information products. I have a retirement e-book that took about six months to research, write and format. I’m giving it away on this website. I have another on koi fish that took even longer but, after almost ten years and no advertising, still generates some passive income.

This leads into another way to make passive income that I’ve used, affiliate marketing.

3. Affiliate Marketing:

This involves selling products that belong to someone else for a share of the selling price. Affiliate programs can be for products ranging from cars and auto accessories to dieting to wrist watches to almost anything else you can think of.

There are also opportunities on websites such as clickbank, commission junction and shareasale. I used clickbank and made some good money when I started affiliate marketing about twelve years ago.

The concept is simple enough. When a visitor to your website clicks on a link and buys a product, you earn a commission. I’ve seen commissions vary from 1% at some commercial sites to up to 50% for some clickbank offerings.

The downside is that it’s very difficult and can take months to make any money.  You need a website that gets a lot of traffic and it takes a lot of traffic to generate sales. The upside is that if you have a lot of traffic, the commissions can be substantial.

Do your research. I can’t emphasize this enough.  There are hundreds of websites devoted to affiliate marketing and there are a lot of scams out there. Do a search for any product or idea + affiliate program and check out the results. Chances are there’s an affiliate program that you might be interested in.

While there are a lot of legitimate opportunities out there, there are also many that I would not want to promote on my website. If you promote a product, you should be willing to use or stand by it.

4. Rental Property Income:

Everybody’s got to have some place to live and everybody who doesn’t want to or can’t buy a house is a potential tenant. Being a landlord can be an effective passive income stream. But, it’s also possible to lose your shirt if you’re not careful and don’t do your homework.

Two questions that must be answered are; Is there a rental market for the area the property is in and can you cover the costs if the property is not rented.  If you can answer these two questions, rental property might be worth considering.

You have to determine how much you want from a given rental property, how much it will cost to own and rent it and the financial risks involved when the property is not rented. There’s a lot of rental analysis software that will help figure all this out. Doing an analysis of property you’re considering can help you avoid costly mistakes.

Recently, the China virus pandemic has caused many people to lose their jobs and be unable to pay the rent. This has also created some new challenges for landlords who may have a tenant that is unable to pay the rent, but still have a mortgage holder that expects to be paid. In this case, it may be necessary to renegotiate the rent to help the tenant and have enough in reserves to cover the contingency.

In Conclusion

The information here is my opinion and no one should make any decisions about passive income based on my opinion.  What I like and what works for me may not work for other people.  But passive income could be a way of generating retirement income that lasts for years and maybe even leave something for your family.