How to Create Monthly Cash Flow with these Passive Income Ideas
The only way you will ever be able to stop working FOR your money is when you start making your money work FOR YOU! There are lots of popular passive income ideas and all of these approaches generate passive income. Don't exit, don't skip and watch this.
In this video, I’m revealing seven passive income streams, proof of how much you can make and how to get started right now.
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Why Having Effective Passive Income Ideas is Great
Passive income is how the rich continue to build wealth without having to work 9-5, seven days a week. It is the act of working smart instead of working so hard to the point of having your health at risk. Working extremely rigidly can hinder you from attaining a work life balance and could get yourself sick in the long run. Whereas if you have other streams of income that makes more money for you while you are sleeping and having quality time with friends or spending some time for your self, that makes more sense.
When you have the blueprint for creating multiple streams of income, you can leverage your time and effort to build wealth at your own terms. As you create an avalanche of wealth, you can use that money to generate more and more passive income. Having consistently growing passive income streams can provide a boost to your savings, investing goals, and an unexpected job loss. Who wouldn’t want to earn money without having to clock in for an exhausting eight-hour workday?
The good news is that there are many options to start building a passive income stream. Most passive income sources will require upfront time and energy devoted to building them out before you start to see returns. But if you are determined and have the grit to succeed, you will eventually reach a point where your passive income streams make promising gains with little to no effort on your part.
Whether you’re trying to save up money for something special or working to build an empire, having multiple passive income ideas is the key to help you achieve that goal.
Why Everyone Needs to Create Passive Income
Creating passive income has been one of the most popular subjects here on the blog. In fact, our third most popular video is another list on seven passive income ideas with over 290,000 people using the ideas to generate that monthly cash flow.
But that video is more than a year old so I wanted to update it, improve on it so you have everything you need to create passive income. Why?
Because passive income is the only way to truly be financially free.
I want to repeat what I said earlier because I think the idea is so important. The only way you will ever be able to stop working FOR your money is when you start making your money work FOR YOU!
Passive Income Investments to Get You Started
I’m going to start our countdown of passive income ideas with a few passive income investments. What I love about these first few ideas is they will start making money for you immediately. There’s no set-up, no work involved, you can use these first income ideas to start making money today.
Make sure you watch through the entire list though because we’re counting down to the passive income streams that might take a little longer to set up but will make you more money. These are the passive income business ideas I’ve used to grow my income to average $10,500 a month so far this year.
P2P Investing for Passive Income Returns
Our first passive income idea, peer-to-peer loan investing is a controversial one but bear with me here because this is easily my favorite passive income investment.
Peer-to-peer investing or p2p is really nothing new. Banks almost always sell their loans to investment brokers, pension funds and insurance companies for the cash to make new loans. The only difference is that p2p websites like Lending Club put the process online and connect borrowers with investors directly.
So here a borrower fills out a loan application, investors review loans looking for funding and invest in the ones that meet their requirements. Borrowers make regular payments to the website which passes interest and principal through to the investors.
I’ve been investing on Lending Club for over two years now and make almost a 10% annualized return on my loans. That 9.6% annual return is off an average loan rate of 11.6% on the loans in my portfolio so just 2% of my loans are defaulting and I collect a rate above any other bond investment and not too far off from stocks.
You can invest as little as $25 in each loan you pick and Lending Club makes it easy to automate the entire process to make it completely passive.
I know there are a lot of skeptics about p2p investing but check out a few of the videos I’ve got on the channel for how it really works. I’ve collected thousands in interest payments on loans and the auto-invest tool means I don’t have to do anything. Be the bank for once, put your money to work and YOU collect the interest.
Is Dividend Investing Passive Income?
Next on our list of passive income ideas is going to be dividend investing.
Now I’ll have to admit, I’ve never really considered investing as a passive income source. It’s different from the passive income business ideas we’ll talk about next because you do need to start with that money to invest but this year’s dividend portfolio challenge has made me a believer.
If you’ve been following the channel, you’ve seen our 2019 Dividend Stock Challenge. I invested $1,000 on M1 Finance in January to try and beat the market with dividend stocks.
That portfolio surged to an 18% return in the first five months, beating the stock market by 8% even after a disastrous May for stocks. Even after the selloff, we’ve still got four stocks with 30% and higher returns and have collected dividends every month.
So dividend stocks aren’t going to make you rich like some of these passive income ideas can but it does offer a source that takes no work to set up and will start making you money immediately. That’s the beauty of these first few income streams; fast setup, no work to manage and immediate cash flow.
Invest on a no fee website like M1 Finance and save thousands on commissions. I use M1 for the no-cost and easy automatic investing in my portfolio – Get started on M1 Finance here.
Creating Passive Income with Real Estate
I feel like our next income source, real estate crowdfunding, is one of the best opportunities that almost nobody is using.
Real estate crowdfunding is the social media revolution meets property investing and there’s a lot of great benefits for mainstreet investors. Developers and property managers list their projects on the crowdfunding sites which use in-house teams to vet the investments and analyze the deal. Investors can browse deals and invest in as many or as few as they like with investments in both equity ownership and debt backed by the properties.
I love real estate investing. It’s where I got my start as a commercial property analyst in college and I’ve managed my own rental properties since. There is no other asset that’s created as much family wealth as real estate.
The problem is managing a portfolio of properties is a HUGE PAIN! I had six single-family rentals and a duplex in my 20s and it just sucked the time out of my life! You can hire a property manager, but that’s an expense that a lot of investors can’t afford.
With real estate crowdfunding, you invest in these deals that already have professional management through the developers or investor group. Just like in p2p investing, the crowd platform handles all the payments so it’s a completely passive investment.
I analyzed 92 available and closed deals across five crowdfunding platforms to find average returns on projects. For closed and completed deals, returns averaged over 9% on debt investments and 19% on equity investments. That’s a solid return for an investment that takes very little work or analysis to set up.
I put this one a little lower on the list versus p2p investing because there is more analysis that goes into building a good portfolio of real estate deals. While the crowd platforms will look through these deals to keep the outright scammers off the site, you still need to look through the financials to make sure it’s a good investment.
Here you want to apply the same strategy that you’d use to build any diversified real estate portfolio. Invest in at least 15 properties but I would aim for 20 to 30 properties across these different factors. You want to hold debt and equity investments in each of the major property types; so office, residential, retail, storage, leisure and you want exposure to properties in different markets so different regions of the country.
Check out my favorite real estate fund, paying a 10% dividend yield since inception, the Streitwise Office REIT.
Making Passive Income with Affiliate Marketing
Number four on our list, affiliate marketing, and this one is the first non-investment type income source.
Affiliate marketing is where you partner with companies to advertise their products or services. You get a special link that if someone clicks on it and ends up making a purchase, you get a commission on the sale.
What I love about affiliate marketing is you don’t need a big website and you don’t need to be some famous Instagram celebrity to do it. Anyone with a social media following or even a small blog can turn this into a couple thousand a month very quickly.
In fact, in a survey I did of income sources used by bloggers and online entrepreneurs, affiliate marketing accounted for almost half of total income reported. I average about three grand a month from affiliates which turns out to be about a fifth my monthly income.
Getting started with affiliates means joining a network, a website like CJ Affiliates or ShareaSale. Here you’ll be able to find hundreds, even thousands of companies in any type of product or service. You sign up for the program and that’s it. Then you just need to get your link in front of people and tell them why you think it’s a good deal.
That brings us to a few important rules of affiliate marketing.
First, never promote a product you haven’t tried or one you wouldn’t recommend to your mother. Life is too short and friends are too precious to be shilling for crap products.
Second, focus on just a few products that have really helped you and that resonate with the people in your group. More than 80% of my affiliate income comes from just a few really great products that I love and use myself.
Also here, you need a strategy for talking about the products. You can’t just drop your link in a Facebook post and expect people to click through and buy.
There’s a lot of hype here on YouTube about making money online and half of it is bunk. Nothing comes free but I can show you how to make a passive income strategy for your affiliates that takes maybe a few days to set up at the most and then goes on auto-pilot to make money.
These next three passive income sources are my favorite and can make tens of thousands a month alone. First though, I want to get your opinion. How much would you need to make each month to feel rich? What’s that goal for you, that point where you’ve put enough of these income streams together to quit the rat race and do what you love?
How to Make Passive Income on YouTube
Our next passive income idea, starting a YouTube channel, is easily the one I’m most excited about sharing.
Anyone that says you can’t make money on YouTube, doesn’t know what they’re talking about. I started developing my channel December 2017 with just 22 subscribers. A year and a half later and we’ve grown the community to over 75,000 people. I average $120 a day on the ads alone and that’s not counting sponsorships or affiliate marketing.
But how can it be passive income? You have to keep making videos, right?
Yeah, you have to make videos for the channel but those videos are going to last forever. You’ll get views on videos you did years ago and you’ll make ad revenue on each one. A video I did more than a year ago, the video has made over $7,700 on ads and still makes about $25 a day.
That’s about as passive as you can get and it is not as difficult as you think to make videos and grow a channel.
Creating Online Courses to Generate Passive Income
I’ve called courses the next level of making money online and they’re one of the best ways to create passive income.
I just created my first course in December and booked over $9,000 in the first four months. Course platform Teachable reports four-in-ten course creators on its site make over $50,000 a year and another 40% make between $25,000 to $50,000 a year.
You can make a lot of money creating online courses and this is one where you don’t have to keep making new content like YouTube. You can create a single course, set up your marketing strategy and set it on auto-pilot. I’ll show you how to make that marketing completely automated and keep generating income every month.
We’ve talked about how to create a course on the channel before and actually, that’s the easy part. If you look at some of those courses available on Udemy or other platforms, it’s obvious you don’t have to be Einstein to make a great online class.
Your course idea starts with something you’ve got personal experience in, something you’ve learned and can share that journey with others. That’s what’s important, that personal journey. People don’t buy courses from ‘experts’. They buy courses from someone that can share their personal journey and help them relate to make that story their own.
After creating your course, the marketing strategy is the critical part to making this passive income. Most course creators do a couple of blog posts or videos about their class, they get a few sales but then wonder why the income just fizzles out.
Making your course passive income, getting those sales every month means setting up a funnel system in your marketing. That means creating a few videos or blog posts that will guide people through the decision-making process, help them understand the value of the course before they buy.
You might offer a free checklist or webinar that gets them into an email list to really drive the point home that they would have to be insane to pass up this kind of value.
That funnel system is going to continue working every month, generating sales and passive income long after you’ve created your course.
Is Blogging Passive Income?
Blogging is where it all started for me and it’s by far my favorite passive income source.
It’s through four blogs that I’m able to generate that $10,500 a month with the different sources, the blogs hold everything together and act as a single point for my online business.
Few other online business models are as easy or inexpensive to start as blogging. For less than three bucks a month, you can have a website online and start reaching thousands of people within the month.
Now I’m not going to lie to you and tell you everyone makes lots of money blogging. That survey I did of blogger income found about half making less than fifteen hundred dollars a month. Treat it like a business though and you CAN break into that group, that three-in-ten bloggers making five thousand or more a month, every month.
Making money blogging is about using a lot of these separate ideas we’ve talked about in the video, putting affiliates and courses together to sell through the blog. It’s that mix of different income sources that really makes a blog powerful.
Making it passive income is going to happen naturally as those blog posts start ranking on Google and showing up on the net. You’re going to notice your monthly income gradually reach higher just like I have over the last four years.
To get you started, I’ve put together a five-video series here on YouTube about developing your blog idea and making it a business. I guide you through every step of the way from making writing easy to the income sources I use.
I’ve also negotiated a special deal with webhost provider Blue Host to get your blog online for less than $3 a month to anyone that uses this link.
Click through to the video on the right for that five-part series on starting a blog and making money. I’ll guide you through step-by-step and will even provide a free checklist to follow along. Don’t miss this passive income source and don’t miss your chance for the financial future you deserve.
Read the Entire Passive Income Ideas Series
- Passive Income Dividends Portfolio [Monthly Dividends to Pay the Bills]
- The Truth about Passive Income Real Estate Investing
- Passive Income Myth: Passive Income Dividend Investing
- Definitive Guide to Passive Income Bond Investing
- The Myth of Passive Income: Online Stores
About the Author
Joseph Hogue is a financial expert and investment analyst. After serving in the Marine Corps, he started his career investing in real estate before becoming an investment analyst for some of the largest private investors. He's appeared on Bloomberg and on CNBC as an investment expert and has published ten books in personal finance. Now he helps investors reach their financial goals and invest in the stock market with some of the same advice he used when working for the rich.