3 Passive Income Ideas

The banner of this article displays somebody relaxing, not working, but still having money coming in — passive income. Income that doesn’t require work-input. It is also often referred to as “Making money while you sleep.” Warren Buffet said:

“If you don’t find a way to make money while you sleep, you will work until you die.” — Warren Buffet

However, passive income is not all sunshine and rainbows. Building income streams that will constantly pay you, no matter if you keep working or not, requires huge upfront sacrifices. Building the income stream often takes up to twelve months or longer, often without yielding any dividends in the first year. This is often discouraging (understandably), resulting in people giving up their dreams of passive income.

Consequently, in this article I will aim to give some projection of how long it will take before you can start seeing results for each idea I present. I hope you find some golden nugget of value in this article!

1. Content (6–12 months)

Gary Vaynerchuk, @garyvee in most social media, needs no introduction. If you don’t know who he is, I highly recommend you follow him (and his advice!). He constantly stresses the importance of creating content, and always explains the benefits of doing so. This is also the idea that requires the least money up front, thus I’ll put it first.

But what is content?

Anything, really. The only important thing is that you are interested in what you are writing/talking about. If you are a web developer, start producing content regarding web development. This could be tutorials, your personal take on trends in the industry, how to get started with web development, how to become a freelance developer etc. Are you interested in marketing? Start writing about the techniques you have found useful when building brands. Interested in cooking? Create easy to follow “how-to-videos” on cooking, where to buy groceries etc. The most important thing is, provide value first. Don’t try to maximize money in the beginning, focus on providing value, and the money will follow.

Where should I post my content?

It depends. First of all, I implore you to reflect on what your best way of communication is. Are you a great writer? An eloquent speaker? An interesting person in front of a camera?

If you are a great writer, start writing posts on Medium, LinkedIn, Facebook and Twitter. Remember, readers want different things on different platforms. Medium-readers accept longer posts, on LinkedIn people are looking for ways to improve their business / find people to hire (that’s why LinkedIn is great if you are a freelancer!) Facebook & Twitter readers are looking for short posts that provide instant value. Adapt your content to each platform, don’t post the same thing everywhere — you can write about the same things, but modify it.

If you are a great speaker, but not really comfortable in front of the camera, podcasts and Clubhouse is the way to go. Start talking, provide value, and use Facebook, Instagram and Twitter posts to let people know where (and when with Clubhouse) they can hear you speak.

Are you an interesting person behind the camera? Start producing Youtube videos. As Garyvee puts it, you can use this as your “pillar content”, meaning you later can break up your Youtube videos to shorter ones, and then upload them to Facebook, Instagram, Twitter, LinkedIn etc. Remember the target audience!

How long will it take?

I estimated 6–12 months in the title, however it depends on the platform. I started writing on medium 2–3 weeks ago, and my three published articles have returned a grand total of $1. Not much, but if I keep at it for six months I believe it will be more. On the other hand, starting a Youtube channel usually results in a year of producing videos with next to no views. Remember, the end goal is passive income, and it will take quite some active work to get the snowball rolling.

Further reading

All the information you need to start is here. Looking for motivation? As mentioned earlier, @garyvee has it covered on most social media. However, if you are looking to really absorb the knowledge of Gary I suggest reading his book, Crushing It! [Note: This is an affiliate link to Amazon, meaning I get a small commission if you decide to use it. Otherwise, just go to Amazon in a new tab and search for “Crushing it”, and you will find it.]

2. Dividends (0–24 months)

Maybe putting out content sounds too exhausting, like adding another job to the one you might already have. If this is the case, I suggest you start building a stock portfolio holding dividend paying companies, giving you a passive income stream.

But what is a dividend?

A dividend is a company paying a part of its profit in cash to its shareholders. It can be seen as a “thank-you-for-owning-our-shares” kind of thing. The best part is, once you have purchased the stock, you can be completely passive (no need to buy and sell) and your dividends will keep coming in, as long as the company keeps on paying them.

What stock do I buy?

Well, I am not in the financial advisory business and I don’t intend to be anytime soon. However I would recommend you to google “Dividend Kings” — companies with 50 consecutive years of dividend raises — and “Dividend Aristocrats” — 25 years dito. Here you will find well known and established companies like:

• Coca-Cola
• 3M
• Johnson & Johnson
• etc.

I would also look into REITs, or “Real Estate Investment Trusts”, a special form of corporation focused on real estate receiving tax benefits if they have a high payout-ratio, simply meaning they pay out a lot of their profits in dividends resulting in high dividend yields. E.g.:

• Realty Income Corp
• Digital Realty
• Store Capital
• Etc.

Although not paying the largest dividends today, I think big tech companies will — as a result of less growth opportunity in the future — pay larger dividends. You might want to read more about:

• Microsoft
• Apple
• Visa
• Mastercard
• Etc.

Not financial advice

Again, I wish to remind you that this article is in no way shape or form investment advice. I simply try to open your eyes to the potential of passive income, and three different ways you can build up a passive income source.

How long will it take?

In the title I said 0–24 months. The reason is that you will start seeing your dividends coming in quarterly as soon as you have purchased a dividend paying stock, no matter the dollar amount invested. However, this so called “Dividend portfolio” you have begun building requires nurturing, meaning you will need to add cash (preferably on a monthly basis), to see your dividend snowball and compound effect take place. Given enough time, it will grow into a steady and respectable passive income stream.

3. Start a business (or buy equity in a friend’s) (1–5 years)

“Just start a business.” We have heard it everywhere, and the advice is always useless since it all too often leaves us with questions like: “But what should be my business idea?”,“What if I get sued?” and “What if I lose money?” Thus, I will try to address these questions.

Having entrepreneurial friends might be enough

Who said it has to be your business? I’m going to give you an example from my life: I am a full stack developer, meaning I can write web applications with login-systems etc. My friend, having started a company selling clothes, realized he needed a website. Knowing that I had the required knowledge, he contacted me and asked if I had time to build a website for him. I said yes, and here is the interesting part: After some discussion I realized he wouldn’t be able to pay in cash, so I proposed I get an equity stake instead. He agreed, and I now own 10% of the company, and as a result we work together more long-term.

How does this apply to your life? You don’t have to be a web developer, you can be a designer, marketer, an accountant, anything that a small business needs. Then, network (meet new people at parties or networking events), and when their needs arise, offer your expertise — for equity, not a salary.

Starting your own

Maybe your expertise — or hobby — is too niched to provide any value to a friend’s company. Then the best thing is trying to build a business revolving around it. This ties nicely together with passive income idea one — Content — since starting a Youtube-channel can be seen as starting a business. It doesn’t have to be the traditional drop-shipping you here from all the “gurus”, social media has become a real career path, and more importantly, a business idea on its own.

If you feel you don’t have any hobby / interest that lights a spark in you when thinking about it, just do anything, really. Search for “100 business ideas” and scroll through, see if you like any. To develop your sales skills, I would suggest trying drop-shipping or flipping (i.e. buying cheap and selling with a markup) things on eBay/Amazon/Craigslist. It doesn’t really matter, the first business you start will only serve as a building block for the future. You will learn all about how to start a company — what website to go to, if you need an accountant, bookkeeping etc. (Google is your friend). This information will be priceless later on when you find a really solid business idea.

How long will it take?

Starting a business is the hardest one of the three. In addition, it is probably the one that will take the longest to be profitable. However, it probably provides the largest upside of the three. If scalable, the “size” of a business has no ceiling. Notwithstanding, you should be prepared for years of unpaid labor before starting to see results when deciding to start your own business. However, If you go the “friend-route”, you can shorten this time substantially.

Final Thoughts

Now, before rounding up, I’d like to remind you that this article and the ideas presented are worthless unless taken action upon. I understand and accept the fact that these three ideas might not be applicable to your life, and that’s okay! I hope another article can provide you with other ideas that align with your interest, therefore allowing you to live the life of your dreams.

Furthermore, if anything sounds ridiculous, impossible, wrong or if you simply have any questions, write a comment! Criticize me, and I will make sure to respond so we can have a discussion.

One final reminder: Just start.