How to Make Passive Income?

So I have read Robert Kiyosaki, Tim Ferriss, Steve Pavlina, and others. All of their prescriptions for how to live the “Good Life” is to break free from the 9 to 5 job and start building systems that generate income. The notion is that stupid people work for money, smart people create passive income sources that make them money continuously after created.

The idea is pretty well captured here: 10 Reasons You Should Never Get a Job – Steve Pavlina

A friend of mine joked once, though that all of Robert Kiyosaki’s books could be summed up in one sentence: Passive income is good.

The trouble is no one gives any concrete advice on how to build a passive income stream. It seems to me that it’s not just that most people are stupid, it’s that much of the things that can be automated into making money already have been. Most of the advice is rather vague, like Pavlina saying “play to your competencies”. I am competent in security, but not enough to be entrusted to design a security system.

I’m competent in wrestling, but I can’t think of a way to make wrestling instruction completely hands-off. I have a major in psychology, but I’m definitely not licensed to practice. My brother is a musical theater major…how is he going to build a source of passive income with that?

As far as I can tell, there are a rather select few areas where passive income can be made:

  • Ownership or partial ownership in a business (stock)
  • Owning property
  • Owning a website
  • Creating intellectual property (books, videos, etc.)

Most other income seems to come from time dependent features–i.e. producing something or providing some service. If the system is time dependent, it is not passive. And we’re back to square one–we are the stupid people that Ferriss, Pavlina, and Kiyosaki talk about.

Unless you have a foundation in one of these four areas, it seems you are SOL.

So I pose these questions to you–Do you currently make passive income? If so, what do you make it on? Can you think of any sources that are outside my four categories? How would you suggest I embark on building passive income streams?

Ummm…how bout gambling?
Been doing it a long time, and I turn a profit damn near every year.

[quote]Fiction wrote:

So I pose these questions to you–Do you currently make passive income? If so, what do you make it on? Can you think of any sources that are outside my four categories? How would you suggest I embark on building passive income streams?[/quote]

I make a bit of income from a website. Nothing major.

I think the way to go seems to be selling intellectual material in the form of an ebook or something similar.

But then again: think about the term passive income. It’s not really passive. You’re going to have pour you soul into a product to make it the best and get it ready for release. Why do something half ass to try to make a buck? Do it well, and success will probably be more likely. And doing things well takes some time.

[quote]boyscout wrote:
Fiction wrote:

material in the form of an ebook or something similar.

But then again: think about the term passive income. It’s not really passive. You’re going to have pour you soul into a product to make it the best and get it ready for release. Why do something half ass to try to make a buck? Do it well, and success will probably be more likely. And doing things well takes some time. [/quote]

I agree, it certainly takes time to do these things well.
The more time I spend, the more successful I usually am.

[quote]The Bambino wrote:
Ummm…how bout gambling?
Been doing it a long time, and I turn a profit damn near every year.
[/quote]

What he said, i bet on soccer matches every weekend, then every 3 out of 5 weeks ill turn my 50 quid into 300-400 :slight_smile:

Er 460-560 dollars to you guys.

That income basically provides all my extras, like clothes, taking the missus out, unforseen bills.

Have a nice bit saved incase of a rainy day and im not out of college yet :smiley:

[quote]Fiction wrote:
A friend of mine joked once, though that all of Robert Kiyosaki’s books could be summed up in one sentence: Passive income is good.

The trouble is no one gives any concrete advice on how to build a passive income stream. [/quote]

Probably because Kiyosaki doesn’t know anything about generating passive income. He got rich writing a how-to-get-rich book. I’d look elsewhere for credible information.

[quote]malonetd wrote:
Fiction wrote:
A friend of mine joked once, though that all of Robert Kiyosaki’s books could be summed up in one sentence: Passive income is good.

The trouble is no one gives any concrete advice on how to build a passive income stream.

Probably because Kiyosaki doesn’t know anything about generating passive income. He got rich writing a how-to-get-rich book. I’d look elsewhere for credible information.[/quote]

Actually, he got rich originally through real estate, but he has definitely increased his wages through the Rich Dad Poor Dad series.

Kiyosaki’s books were the first I picked up and totally changed how I thought about money. After a while I realised his style of writing was annoying and very drawn out. He did make money beforehand but true, his main income is from his cashflow company.

There is money to be made in stocks, even in down markets. If I had the funds I would be trading the US market right now, its about 100x better then the Australian stock market to trade with. A while back I made $5k on the stock market in a few hours while I was at my job. It was weird making like 2months of income in a few hours.

Obviously to make money you need to provide a service. People won’t just give you money. This is a no brainer, and yes it will take time but something like a website will pay off in the long term. It takes alot to set up and get a suscriber list, but after a while you only need to spend little time maintaining it.

I was making money on ebay for a while but then the AUS dollar went from 0.95 to 0.60 and it wouldn’t be worth the time now. All I did was list my items, when they sold I walked the 100m to the mailbox and post them. I averaged about $200 a week from very little time and effort - less then 15minutes/week

Everything may be done, but there is no reason that you can’t do it better. You gotta research. When I was selling stuff on ebay, I found a product with demand and good profit returns yet there weren’t that many listings for it. So I went for it.

Its not ‘that’ easy since if it were everyone would be doing it. It will take effort.

The current economic market actually favours thouse who want to make some money. espesially in the UK. Traditionally the UK has a real estate ownership culture, everyone owns their own house and traditionaly the house prices keep going up. Now at the min the house prices have crashed, BUT the climate here is far and away removed from the US house market. In the UK there always has been, and still is a shortage of houses.

The demand for houses is way more than the supply, this ‘dip’ in the house prices is unsustainable and the only reason they are so low is a combination of low buyer confidance and an unwillingness of banks to lend money for mortgages.

If you can, buy as many houses as possible in the UK, you won’t get profit like it, i just got a semi-detached that was valued at £200,000 last summer for £120,000 i’m re-ordering the internal layout cos the kitchen was too small for a 4 bedroom house and i expect the price to go beyond its price last summer in maybe 1-2 years. if things go to plan i expect to make about £90,000-100,000 profit in about a year. if not, then i’ve just got a nice house to live in.

also, not all banks and finacial institution will be loosers from this crisis, if you can predict which banks will win, when the crisis is over their market share will be greater (as their competitors will have been taken over or gone bust) But at the min all banks share prices are really low, so buy shares in banks that you think will win now while their share prioces are low. even if they get taken over you’ll get something.

its a more profitable bet than betting on some stupid soccer game. think of it this way, how often do you see a bankrupt gambler? and compair that to how often you see a bankrupt stoke broker.

[quote]Fiction wrote:
malonetd wrote:
Fiction wrote:
A friend of mine joked once, though that all of Robert Kiyosaki’s books could be summed up in one sentence: Passive income is good.

The trouble is no one gives any concrete advice on how to build a passive income stream.

Probably because Kiyosaki doesn’t know anything about generating passive income. He got rich writing a how-to-get-rich book. I’d look elsewhere for credible information.

Actually, he got rich originally through real estate, but he has definitely increased his wages through the Rich Dad Poor Dad series.[/quote]

He may have been rich before Rich Dad, but it wasn’t from real estate. Most people that know anything about real estate agree with me. His real estate advice is misleading, ambiguous, conflicting, and often times just plain illegal. He even later admitted – after he was found out – that most of the Rich Dad story was false.

He’s nothing more than a smooth talking salesman. And I give him credit for that; he’s done a great job of selling millions of books.

[quote]hardgnr wrote:
After a while I realised his style of writing was annoying and very drawn out.[/quote]

Lol…I realized that pretty quick. But I just really loved his diagrams. They really made the difference (box-arrow-box).

/sarcasm

[quote]malonetd wrote:
Fiction wrote:
malonetd wrote:
Fiction wrote:
A friend of mine joked once, though that all of Robert Kiyosaki’s books could be summed up in one sentence: Passive income is good.

The trouble is no one gives any concrete advice on how to build a passive income stream.

Probably because Kiyosaki doesn’t know anything about generating passive income. He got rich writing a how-to-get-rich book. I’d look elsewhere for credible information.

Actually, he got rich originally through real estate, but he has definitely increased his wages through the Rich Dad Poor Dad series.

He may have been rich before Rich Dad, but it wasn’t from real estate. Most people that know anything about real estate agree with me. His real estate advice is misleading, ambiguous, conflicting, and often times just plain illegal. He even later admitted – after he was found out – that most of the Rich Dad story was false.

He’s nothing more than a smooth talking salesman. And I give him credit for that; he’s done a great job of selling millions of books.[/quote]

Who cares that its false? There is still alot one can learn from his books. I know I did. If you can’t figure out it’s false by the first book then you need to think harder. How the fuck could somebody remember every part of a conversation they ever had with someone(his rich dad) over their whole life?

If the books were shit, they wouldn’t be recommended by so many people. They aren’t all great, in fact you only really need to read the first 2 books to learn everything from him. The dude had a good idea, marketed it well, and made millions. He used the companies reputation to sell more stuff. That’s how you do it.

I think besides real estate the only realistic “passive” income for most people is multi-level marketing. It’s certainly not passive at first, however. Actually, neither is real estate if you become a landlord.

Not for me. Can’t stand all the “meetings”.

dividend stocks, reinvest dividends 100%, and hold onto all you can by avoiding taxes. Roth IRA.

There are lots of those types of mindset books out there. I have about 4 of Robert’s books. The first one I read was “Rich Dad Poor Dad” about 7 yrs ago. His other books normally talk about the same stuff as Rich Dad Poor dad. His way of making more passive income, new books with the same info.

Other good books are Think and Grow Rich by Napoleon hill, Multiple Streams of Income by Robert Allen. Oh yea and don’t forget about Tony Robins :stuck_out_tongue_winking_eye:

Passive income is mainly created through Business and Investing ( Cashflow Quadrant by Robert Kiyosaki, talks about how the rich people live on the Business and Investing side and how the poor people live on the Employed - Self Employed side).

In my early years of college, I started learning about JOBS - Just over Broke or Journey of the Broke, The “Rat Race” (the 9-5) etc… I started reading these books and attended seminars and have started applying what I learned. Being a full time student, I joined a network marketing company (AKA MLM, and no, to some of you might call a pyramid scam) and looked for real estate. A few books from different authors says MLM is a great way of building passive income.

Doing part time MLM while in school, I was able to make about $300-500/month passively. As for real estate I started low by buying cheap leans and deeds for properties.

Building passive income is hard, you just have to do what normal people wouldn’t do, “It Hurts, but it doesn’t HURT ENOUGH to make that change.” Its kind of like the Christmas Bob article, but instead it’s building towards passive income.

Good luck…

Funny, I am currently working on my own book on a similar subject.

Pay Me: How to Collect an Income by Selling Gimmicks over the Internet.

If you’d like to learn more just PM me and I will send you a web link where you can make a payment with Pay-Pal. ;>

Seriously though, I agree with the author that the path to wealth will not be found in a 9 to 5 career. The surest way to build wealth is by ownership of productive assets – which is not passive at all.

Even something as simple as collecting rent on a property requires a certain level of maintenance – which is not passive in the least. Collecting dividends on stocks could, at first glance, be considered a passive income but then that still requires maintenance on ones portfolio even if doing nothing more than paying someone to do it for you. That hardly seems passive to me; especially considering how volatile the market can be.

What does the author take the word “passive” to mean – nearly effortless but not?

Ever wondered why all these passive income guys write so many books and host so many seminars?

Is it because they just have to share the good news? Or is it because it is the easiest way to make money?

The biggest obstacles to “passive” income are

1.) You need a lot of time and talent, or
2.) You need a pretty big pile of seed money to start.

You’ve heard the phrase “Spend money to make money”? Passive income is similar.

“In order to generate a lot of passive income, you need a lot of money.” And if you already had a lot of money…

I’m not saying “passive” income is a pipe dream, but you need to realize that you’re going to need to bust your ass to either earn the seed money the “conventional” way or to create the marketable whatever-you’re-going-create. No shortcuts.

There is no money tree.

I’ve been getting substantial additional income (I dislike the term “passive”) since high school, so I know a thing or two about this topic.

There is NO income without work. Thinking that cash will flow in while you do shit is only good in teleseminars and “get-rich” books.

The difference is motivation. When you are doing something that results in more money for you personally and right-away, it’s a hell lot more fun and interesting and you’ll work harder as a consequence. Not to mention that the income per unit of work is dramatically higher.

Or you work for someone else like crazy and hope that your boss will notice next year that you stayed in your cubicle till 9 pm every night.

Here are three successful business ventures from my early days:

  1. When I was in college, I noticed that many students who were economics majors didn’t have a clue about mathematics and especially statistics and had trouble passing those exams. So I started charging my lessons in those subjects. Soon I expanded this by including other friends of mine as “teachers”. I would bring in customers and for a commission. I would organize the website, flyers, advertisments etc. and soon we became a household name on campus.

  2. Seminars and lectures - that’s where the money is (or was, until the financial crisis). Renting out a small conference room or a hall is fairly cheap, as well as organizing lunch/buffet at the venue. And the topic of the seminar? Not important. Lecture about the marine life in Antartica, business ethics, new CAD software… Someone will pay for it. Companies will send their employees to “trainings” and “lectures” and the employees will love it under two conditions - if they can get out of work and eat well at the seminar.

  3. Writing. Write about different stuff in your area of personal or professional expertise. Write n your blog, to your friends in an e-mail… With time you’ll improve your writing skills and what is more important, you’ll need less and less time to produce a quality text about a certain topic. Submit it to portals, magazines etc. Eventually some will respond. Currently I’m writing monthly columns for two web-based magazines. I earn around, converted to US$ around 600 bucks a month. However, I can produce those two-page columns in about hour to hour and a half total. 600 buck for an hour of work? Not bad.

HEY I’VE GOT THE SECRET TO TRUE PASSIVE INCOME!!!
You’ve got to inherit it.

If you think something is truly passive you haven’t trailed it back to the beginning. People are getting all excited “I’ve got to escape the rat race and get some passive income”. Yet nobody wants to do the incredibly hard work to get to the point where it will become passive.

Real Estate, Banking, Stocks, and Business all require you to bust your ass to come up with starting capital, knowledge, marketing, and/or manual labor. The question you have to ask yourself is “Do I won’t to work myself into the ground for the next few months/years? Or do I want to do regular work forever?”