Tuesday, 24 March 2020

How To Make Passive Income For 2020 - 7 Ways

Passive Income For 2020

We're talking about 7 ways to earn passive income in 2020 and the reason I decided to write this article is that I understand a lot of people are already maxed out to their working capacity with time. So I thought to myself what would be a better article to talk about passive income to earn money while you sleep. 

Disclosure: I am not a fan of the phrase passive income. The reason for that is because it's been bludgeoned to death by all these internet marketers and all these gurus that sell these pipe dreams to naive people talking about oh, you can sit on the beach with the little umbrella and the drink and you'll just have thousands of dollars a day rolling in as you do nothing. That's absolutely not the case. Passive income is not passive at first, you have to work for it.

Some of these have to do with digital products and tangible products. 


1. Start A Youtube Channel

Youtube is the world's second-biggest search engine. The first being Google, Google owns youtube. So you're dealing with the two biggest search engines in the world when you decide to start a youtube channel. The way youtube works is that there's a revenue split. You're paid through ads, the ads that play in the beginning, middle and end of the video are slipt with Google and the creator. You get half, google gets half, or it's roughly a 55/45 split.

So think about it, youtube and google have the platform, you're someone providing eyeballs to that platform. Eyeballs to the advertiser, it's no different than when a radio station sells advertising space to their listens. You get compensated through ads and the reason why I want to talk about youtube is that in 2020 if you have an internet connection, you can make money. There are no excuses as you're only holding yourself back. If you know something about anything, there's definitely a viewer for those videos.

There are 7 billion people on this planet and most of those people at this point have an internet connection, and they are using youtube on a daily basis. So whatever you're good at, whatever you're knowledgeable about, I implore you to start a youtube channel about it. 


  • Pros: Each Vidoe Is An Oil Well

The pros with the youtube channel are that its kind of like a little oil well. The beauty of youtube is that you create a video once, and you don't trade your time for money anymore like you would with a 9:00 to 5:00 job. You can have a video that is a year and a half old and still making you money to this day. It's not life-changing money but it's definitely still money coming in for doing literally nothing. You do the work once, and reaping the benefits. 


  • Cons: Take Time To Build An Audience

Some of the cons of youtube are that it takes time to build up an audience and to build up a viewership of people that actually like, know, and trust you. That way, they keep coming back to your videos.


2. Dividend Investing

Dividend investing is ultimately owning a stock that pays a dividend. So how does this really work? Let's say, for example, you have $10,000 and you buy 100 of a share of a company that is going for $100. You own 100 shares of this company and this company pays a 4% dividend on this share, That means, you're getting $400 per year by doing nothing. Because of this company, every quarter they payout essentially 1%.


  • Investing: $10,000
  • Shares Price: $100
  • Shares Own: 100
  • Company Dividend: 4%
  • Return On Your Investment: $400/year

  • 1% x 100 = $100
  • 4% x 400 = $400/year

These 100 shares not only can go up and down in value with the stock price, but they're always throwing off $400 per year. Companies can increase their dividend, they can lower the dividend, but let's say it's flat for this example. 


Drip = Dividend Reinvestment Program

The beauty of this is that without touching anything or investing any more money than you already have, every year if this stock price stays the same at $100 per shares we're determined, you can buy 4 more shares per year through a dividend reinvestment program. That's called the drip program. Meaning that, that $400 is used to buy 4 more shares at $100, now, you don't own 100 shares, you own 104 shares. Throwing off $416 a year. Then you take that $416 and you buy another 4 more shares, so you have 108, that's obviously assuming if this stock price stays at $100 a share.

You can see overtime dividend are a great way to earn passive income and a lot of investors they base their entire retirement portfolio off of dividend stocks. And a lot of people put those in a Roth IRA where the share value actually increases tax-free over time. 


3. Start A Membership Group

If you're a very good marketer or if you're someone who has an audience already in place, this may not apply to a lot of you people. let's take someone who is a famous Baker or a chef and they have the best recipes in the world and they've built up an audience whether it's on youtube or on their blog or whatever. 


  • Pros: Recurring Revenue

Membership websites are beautiful because the pros of them are that someone is paying you monthly recurring revenue to get access to your content. Say you're the best chef in the world, and your recipes are so good that someone is going to pay $5 to $10 a month to get access to these recipes. That may not sound like a lot, but if you have a big audience, imagine 1,000 people paying you $5 a month, you're not just created a revenue stream of $5,000 a month and you're only doing the work once. You create the recipes once, you inform your group, they come back. 


  • Cons: Have To Create New Content

However, membership sites are kind of a double-edged sword because you have to keep creating new content to keep your members in the group. If you're in the group and the person's not updating the membership site, you're most likely going to cancel your membership. That's one of the cons of the membership.


4. Create A Digital Product.

What is a digital product? A digital product can be something that is very low overhead, meaning that you're not taking up materials and time and all these different things to put together little widgets like you would if you're selling shoes for example or something that you create. 


  • Pros: Create it Once

A digital product is beautiful because you create it once. This could be an e-book, if you want to stay with the gardening or the cooking example, now this famous chef that has the membership site they create a cookbook, They create the cookbook once, but they sell it over and over again, and if it's an online platform, it can be bought 24/7. So they truly can be on the beach and check their phone and say wow, look at that, John bought their cookbook for $10. A digital product can be anything from an e-book, it could be anything that you create.


  • Cons: Lot Of Up Front Work

A lot of upfront work to create the book, to create the cookbook, to create the spreadsheet, but once you do it once, the money keeps coming in.


5. Create An Online Course

Unlike the membership group, it's a course, it's the same thing as creating the digital product. You take the time upfront to create it once and that way, it just keeps selling itself over time. You can make a one-time course, charge a fee for it and if you have enough audience members or if you how to market really well, you make the thing once, and it brings you in money passively over time. 


6. Affiliate Marketing

This all goes back to if you have an audience or if you know how to market properly with Google Adwords, you can easily make money selling other people's products. 


Affiliate = Commission Salesperson

Whenever you recommend a book or something else that you truly believe has helped you, whenever people click on your Amazon link or whatever company you're using, that amazon link plants a tracker like a cookie, amazon knows when you refer people to amazon and when they make a purchase, you get a small commission of whatever that purchase is. Affiliate marketing can work for anything. Any site that has an affiliate program, there's a plethora of ways that affiliates get paid and this can be extremely powerful. 



7. Real Estate Investing

  • Rental 
  • Syndication

There are many ways that you can invest in real estate. You can have "rental Properties", these can be single-family homes, you can invest in a "syndication", this is where a bunch of people is pulling their money together to invest in a really big apartment building. There's multifamily, commercial, industrial, restaurants, mixed-use. There are a million different types of real estate that you can invest in and all of these have different risk profiles and also different returns. Especially if you're talking about class A, class B, class C and obviously location dependent.

Everyone is attracted to real estate especially single-family homes. Because that's what they know, that's what they used to, some people have lived in a single-family home at one point in their life or they lived in an apartment so they know what that's like, your typical investor will gravitate towards a rental property.


  • Pros: Can Truly Be Passive

The pros of real estate are that if you know how to systematize the business and you know how to screen for good tenants, this really could become a nice passive mailbox money passive income stream.


  • Cons: Real Estate Isn't 100% Passive

Unless you have management in place or you have systems in place or if you have economies of scale, it's very hard to manage real estate by yourself. Unless you turn it into a true business. 


Syndication

A lot of people are attracted to the allure of rental properties. Although they may not know the headaches that come with it, however, another truly passive model is real estate syndication. And this is what I'm considering investing in, in the future. These syndicators, these are people that pull together a bunch of money and they put down the down payment on a much bigger, much better easier managed property like a 300 unit apartment complex. they're looking for a market that booming, they're looking for apartments that are recession-resistant and all you do is you invest $20,000 to $100,000 whatever, I know that's a lot of money I'm not saying it's not, I'm just saying that that is a truly passive way to get mailbox money every month or every quarter and not only that, at the end of 5 to 7 years is typically when the investment pans out, you get your money back that you originally invested, plus 8% to 12%, obviously you can lose your money as well.

But this syndication model and being a limited partner in commercial real estate is by far one of the easiest ways to collect quotes unquote mailbox money.






Those are the 7 different ways of earning passive income in 2020. I hope I provided and I hope I explained throughout the whole thing and I hope I explained these clearly. 

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