There’s no magic trick that turns your time directly into money. Examples: What is and is not passive income Active Side Hustle IncomeĪ course on your area of expertise that you sell onlineīuilding a program you can sell over and over There are many times where these investments should get some allocation of your portfolio, but investing like this is not a stable passive income strategy. The difference is, are you getting a cash on cash return, or will you only see return if you sell the investment?Īlso, investments like cryptocurrencies and commodities are reserved for price speculation. On the other hand, investing in stable companies that throw off cash in the form of dividends is definitely a passive income strategy. Why? Because stock appreciation is not income. I do not consider stock investments for capital appreciation only to be passive income. For consulting to be passive, you’ll need to build the practice with other people, and be able to step away from the work eventually. Consulting.Ĭonsulting is just another job – perfect for a side hustle, but not exactly passive. You have to evaluate the passive income opportunity on its long term state for you. Be careful here, because remember, in the beginning, a passive income stream could require more time, money or work than it produces. If you need to continually invest the same (or more) amount of time for the same amount of financial output, the venture is not passive. Side hustles are usually active, and maybe with systemization, they can turn into passive income streams. Side hustles are great ways to make money, but not all side hustles are passive. The whole idea of passive income is to supplement, augment or get you out of your job so you can retire, travel or spend more time with loved ones. You get the picture? Now let’s talk about what passive income is not. Once the course is complete, I do some continued marketing and client support which amounts to just a few hours per week, while sales roll in month after month. At first, I’m earning no money and my effort is very high. But as that account grows and I check it 4 times a year, my returns go up, and my effort goes down. On the other hand, if I open an investing account today that takes some effort. I’m all for you actively building a business or a side hustle, but for the income stream to truly be passive, it must require less and less effort to produce income, eventually requiring no effort (or very little to maintain).įor example, if it takes you 2 hours to generate $100 today, and it takes you the same 2 hours to generate $100 next week or a year from now, that income stream is not passive, because it takes the same effort (money, time, etc).
You could do a lot of things to make money, but not all income streams are passive. Passive income is more about time than anything else. The golden rule of passive income – protect your time. Income - generating cash inflow to you that either represents income you use in the course of daily life or that you re-invest.Ī good litmus test is that you should be able to go out and get a full-time job, that takes up the majority of your working hours, and still be able to run your passive income streams. Passive - requiring little or none of your most precious resource, your time! Passive income is money earned with minimal activity through any venture that requires little daily effort or upkeep on the individual’s part.
Skip to the Passive Income Ideas What is Passive Income? I’m going to break down passive income, and show you the steps I took to create my passive income streams, but if you want to get right to the ideas, you can. You just need to know where to start and decide what resources you’re willing to expend for your passive income ideas to take flight. If you’re willing to commit your resources to the steps and ideas below, you could be earning effortlessly for years to come. Passive income is a long term choice that requires short term tradeoffs. We’ll come back to this.īuilding multiple streams of passive income has an additional benefit in the short term: it can make you more resilient, and better able to weather economic shocks. But where do you start? The first step is to just build a small nest egg savings account that you can use for later. It requires time, money, skills or all three. The truth is that building a passive income stream usually isn’t passive at first. “Making money while you sleep” has a nice ring to it, doesn’t it? After all one of the goals of financial independence is to build wealth that doesn’t eat up your time, so you can enjoy life and do the things you choose to do.