The average millionaire has seven income streams…
Many of these will even be passive.
These lucky sons of guns are making passive income, even whilst they’re asleep!
How many income streams do you have right now?
Don’t worry if it’s not quite seven…
Our Passive Income For Beginners guide is here to help. Hopefully we can inspire you to start building passive income streams today!
Table of Contents
Why Having Multiple Income Streams Is Important!
If you’re still relying on your 9 to 5 income stream, you’re missing out on the opportunity for financial peace.
No matter how secure your job feels, it isn’t.
True security (and financial freedom) comes with the ability to walk away from your job, and still be completely fine.
Suddenly your bosses hold less power over you. Push harder for that promotion, safe in the knowledge you can always leave. Work becomes almost “optional” as it constitutes just one of your many income streams. This change in mindset can also make work more enjoyable – you don’t have to be there.
However not all income streams are created equal.
You certainly don’t want to build an income stream that takes more work than your job. This is passive income for beginners after all.
Let’s look into how you can begin building passive income streams.
What Is Passive Income?
Passive income is essentially money you can earn without putting in the work.
Sounds too good to be true??
Unfortunately, it very often is.
Many passive income streams require work upfront (most do), but then provide earnings long after you put the work in. This leads people to wonder… is passive income real?
The answer to this is simple… yes.
But choose your income streams wisely!
The majority of “passive” income streams advertised online are at best “semi-passive” and at worst, a scam. Be very cautious of online “gurus” preaching the latest guaranteed method for passive income.
However, there are still some forms of pure passive income. Later on, we’ll discuss the best options for building passive income streams.
Active Income Vs Passive Income
Active income (as you’ll have guessed) requires active effort and time.
For example, you work a 9 to 5 job and get paid – that’s active income.
Many side-hustles are examples of active income. However they’re commonly misclassified as passive income. This is because “passive income” has become a buzzword. It’s easier to sell a course on the promise of free money… without the workload.
Think of Amazon FBA or Starting A Blog. Both could be more accurately described as “semi-passive” or maybe “active then passive” income. They take a large amount of up-front work but have the potential to payout passive income for years to come.
Similarly, if you buy a property, fix it up and rent it out, the rent becomes passive income. You don’t work daily to earn the income, but you bring in a steady monthly income (obviously there will be some active admin tasks along the way).
True passive income should earn money while you sleep or do other activities. The best methods of passive income for beginners should require minimal setup.
Do not fall into the trap of building passive income streams that are secretly active. Your passive income should eventually lead you towards financial freedom. This cannot be achieved if your income consumes all of your time.
Building Passive Income Streams For Retirement
Can building passive income streams lead to early retirement?
In fact, passive income is the centrepiece of the Financial Independence Retire Early movement.
Ever heard the phrase “it takes money to make money“?
The more money you bring in, the more money you can invest and the faster you’ll achieve financial wealth. As each of your passive income streams grows, the less you’ll rely on your active income. Bingo – retirement time!
Even if early retirement isn’t on your radar, accumulating wealth should be! Not to buy Ferrari’s or a Rolex, but because financial freedom gives you back control of your time.
Additionally, at some point, you’ll retire and want to rely on your wealth rather than wondering how you’ll get by.
Since there’s only so much time in a day and only so much energy in a person – passive income streams are often the best way to maximise your income.
We always recommend building passive income for beginners. It can help you to achieve your dreams without sacrificing sleep or time or fun.
What Are The Benefits Of Passive Income?
There’s no such thing as too much money, right?
However there’s definitely such thing as working too much.
Therefore you should be building passive income streams, not active. You’ve probably got the idea by now, but as this is passive income for beginners – we’ll cover all bases.
So here are some more reasons why you should earn passive income:
- You’ll always have money coming in – You never know what may happen in life. Just look at 2020. Millions of people unexpectedly lost their jobs. When you have more than one income stream coming in, you don’t have to worry about losing one stream temporarily, because you have others to make up for it.
- You’ll achieve your goals faster – With fixed income and fixed bills, it’s hard to reach your financial goals at the pace you’d like. Bring in other sources of income though and you can really expedite your path to financial freedom.
- You can pursue your life dreams – Maybe working at your 9 to 5 job isn’t your ‘dream job’ but it pays the bills. When you build passive income streams, you build the freedom to pursue your passions. Do what you want with your life rather than wasting away at a job you despise.
- You might retire early – If Financial Independence, Retire Early is one of your goals, passive income is the fastest way to get there. You need to be able to live off one income stream while banking the rest. Put it away in preparation for the years you no longer work.
How To Create Passive Income
One of the hardest parts about passive income for beginners is figuring out how to create passive income streams.
So let’s get into some great examples of passive income!
Investing is one of the best ways to create passive income for beginners.
As long as you don’t become obsessed (which happens all too easily) then this is one of the most time-efficient methods of passive income.
Once you’ve selected your investment asset, you can set it and forget it.
Any returns you make are therefore truly passive. You really could be making money whilst you sleep!
Of course, there’s always the chance of losing money too, but the gains typically offset the losses (when investing correctly). When you invest you can earn interest, dividends, and capital gains. Nothing ventured, nothing gained!
If you invest with a long-term mindset, you could achieve regular steady earnings. For example the S&P 500 has an average 10% annual return for long-term investors!
Bear in mind that the risks vary between investment types (index funds generally being lower, crypto being very high). We can’t make these investment decisions for you, but we can provide the information.
Investments That Create Passive Income For Beginners:
2. Rental Property
This one is slightly more controversial.
It’s not necessarily the best passive income for beginners. It takes some active upfront work before the passive funds roll in.
The upside is that historically, property has been one of the safest and most reliable investments.
If you want rental properties to be completely passive, buy a property, fix it up and hire a property management company to run it. You’ll own the real estate and earn the rent, but don’t have to do any of the work. Yipee!
3. Start A Blog Or Youtube Channel
A great option when building passive income streams.
Once again… needs a lot of initial time investment. But hopefully it’s a fun time investment rather than more of your boring job!
When successful, both of these can generate passive income for years! Often long after you’ve done any work on them. This is the holy grail of passive income streams!
4. Selling Digital Products
Digital products could be anything – from selling memberships, courses or ebooks.
Digital products are another example of passive income earned after some initial work. You create the product once and then sell it multiple times. Every time you make a sale, you earn passive income.
To make this process truly passive, hire someone on Fiverr to make it for you! Try printables or an ebook for a fast and cheap option.
5. Peer-To-Peer Lending
Another potential passive income stream for beginners.
Peer-to-peer lending is like lending money to consumers but with the help of reputable platforms. You choose the loans you want to invest in based on the borrower’s ‘grade’ or risk level. You can invest as much or as little as you want (some platforms allow investments as low as $25), and earn the interest on the money invested. You can invest in debt (loans) or equity (investing directly in the property).
6. Create A CD Ladder
Investing in CDs means you invest your money long-term.
If you’d prefer to have more liquidity, create CD ladders. You divide your money into ‘ladders’ investing in CDs of varying lengths. Each time a CD matures, you reinvest the money in another CD of a longer length, allowing the interest to compound by reinvesting the contributions and earnings.
For more details, head to how to build a CD ladder!
7. Start A Side Hustle, Then Automate It!
An excellent form of passive income for beginners is a well planned side hustle!
The aim here though is to start a side hustle that can later be automated. Nearly every business can be automated (by hiring staff) but the question is whether it can remain profitable.
Consider a side hustle like Amazon FBA. Once setup, you can hire a Virtual Assistant to handle the day to day. This maintains passivity whilst still bringing in the profits!
Learn how to get started in Amazon FBA here.
How To Create Passive Income With No Money
Ok, this is a tricky one!
Most passive income streams require an initial investment.
Admittedly, some of the above are very cheap. Hence why we selected them as forms of passive income for beginners.
However if you are looking to create passive income with no money, there are fewer options.
First, let me be brutally honest with you…
You can’t create passive income streams with no money.
In order to build a perpetual income source, you will need to expend either time or money.
Without money, you’re gonna need to take some time. Ok, this means that the income stream is no longer passive. But as discussed above, most passive income streams start out with some hard work.
- Start A Blog: As above, a blog is an excellent way to build an income stream. Yes, you’ll need a tiny initial investment, but with our discount link it can be as low as $3 a month! Learn how here.
- Write/Sell An Ebook – Make it as useful as possible! Offer excellent value to your readers and they’ll will keep coming back for more.
- Start A Youtube Channel – This is completely free! However it takes work. Plenty of people have become millionaires through youtube. This doesn’t mean it was easy though!
- Start A Niche Affiliate Marketing Site – Affiliate marketing is free and very simple to start. You will need a $3 dollar monthly hosting investment (less than a Starbucks coffee!). Get started here.
- Monetize things you’re already doing – Online shopping? Use a cashback site like Topcashback! Grocery shopping? Charge people to do theirs for them at the same time! Walking your dog? Walk the neighbours dog at the same time and make a make a few dollars. There are endless options with this one.
Concluding Passive Income For Beginners
And there you have it… passive income for beginners.
Hopefully you’re feeling inspired to get out there and start building passive income streams.
Whether you’re comfortable investing or want something a little more stable, there is something for everyone. The key is to diversify your earnings.
If you’re ready to create passive income, we can help!