Yesterday we featured Mr Movember better known as Mr Money Mustache. In the article we spoke about establishing financial freedom through Passive Income. If you missed it here is a link to the https://theyoungmillionairesbible.com/2014/11/04/our-movember-millionaire-who-retired-before-the-age-of-30/
But what is Passive Income?
Lets take a look at the definition: *Passive income is an income received on a regular basis, with little effort required to maintain it. It is closely related to the concept of “unearned income“.
I look at this sentence and specifically I focus on: “Income received on a regular basis, with little effort required to maintain it”. So essentially passive income is a means to make money (I don’t mean 20% of your salary or even 40% of your salary – the key to financial freedom is for the Passive Income to be your primary source of income with the view of taking you to retirement) without a huge amount of effort to maintain the steady flow of income. To me that sounds like the dream, to be able to put a few hour in here and there to cash generating ventures and consistently growing this to one day be able to rely solely on.
Conventional view of making money – day to day grind in a salary based job. Each year you work yourself to the bone for a market related 10% odd increase –
With passive income generating ventures you could work from the beach. Your bottom line could be increasing every month to the point where you are in control of your own time.
This sounds great…. But how do you do it?
1) Dividend Stock Investment
What’s better than a stock that goes up in value? How about one that pays you along the way. That’s the idea behind dividend stock investing: Picking stocks that not only have a high potential to show growth (capital gains) but will also pay you a handsome cut of the company earnings every quarter (the dividend payment). If you can manage to collect enough shares of these high quality stocks, then you could set yourself up to receive thousands of dollars in annual income for doing nothing more than being a shareholder (now that’s passive income!) Dividend stocks can be bought either inside your tax advantaged retirement accounts (where you probably won’t be able to touch them until age 59-1/2) or with your taxable broker account (where you have access to them anytime and could potentially retire anytime you are ready). Two places to start if you’re a beginner: The Dogs of the Dow and the Dividend Aristocrats.
2) Vending Machines
Have you ever wondered who owns the vending machines you see at universities and in public places? Some of these machines are privately owned and is a fantastic way to generate passive income with very little effort. One of the safest types of vending machines that you can buy is a cigarette vending machine – there is a very real need for more cigarette vending machines all over the world.
Depending on where you live and what country you are in there may be a saturated market. But in South Africa specifically there is a real lack of reliable Trailer rental companies. Once you ensure your legal paperwork is in order you are able to rent out your asset on a regular basis to ensure a consistent stream of passive income with very little effort.
An annuity is a type of insurance product where you pay them a certain amount of money and they pay you a set monthly amount for the rest of your life. For the rest of your life! There is obviously a lot to consider, but annuities have been around since the days of the Romans. Basically in this case you are paying to create a stream of passive income.
5) Rental property
Probably the highest return on your investment is renting your property to other people. Have you ever heard anyone complaining that they are paying off someone else s bond? That someone else could be you. And it does not take a huge amount of your own capital to get this going. We are in the process of working on our buyers guide to buying property so watch this space!
6) Stock investment.
This is simply investing in companies or shares on an exchange. A few people view this as a gambling method but some people have managed to make huge amounts of profit on the stock exchange.
7) Kiddies rides hire
This one might sound strange but again there is a very real market for blow up castles and slippy slides. For a less effort
type solution kiddies rides in petrol stations or restaurants is a very low effort means to passive income.
8) App Creation
This is for the more technical minded and skilled but creating an app and selling it online is one of the most powerful means to passive income. If you are not strong enough technically try team up with someone who is and share the profit?
9) Write a book
This method does not imply that you need to be the next JK Rowling and land a massive book deal. People are always looking for content and if your content is worth buying you should put this on a website for people to buy for a fee. PDF’s are also a regularly sold product online and require less effort than a book.
10) Storage space and parking rental
Depending on which country you live in there are many opportunities to buy and rent out storage units and parking bays. London as an example has a massive problem for parking and people are willing to pay a tidy fee to rent your space. Once you have paid off the initial investment the rest is pure profit.
An Extract From The Young Millionaires Bible