Passive Income Ideas That Actually WorkPassive Income Ideas That Factually Work by Steve Silverton Ideas for passive income: You might find several different definitions online, but in the simplest terms, passive income is more precisely defined as: any sustained income that you receive without having to trade your time for money. Granted, it might require some work up front, but once the income stream has started, it does not require additional effort to continue earning money (additional effort might help to increase passive income). With this definition, something like having a rental property and being the landlord or writing a blog even, would not be conducive to passive income, since both of these require continual work in order to maintain the income stream. How to Get Passive Income Making a passive income is an investment of time and money now, in order to free-up time later. The end-goal has more to do with freeing up time than it has to do with becoming ultra-rich. It's about putting assets to work now, so that in the future, you can be living off passive income and do not have to continually spend time working in order to maintain your desired standard of living. Creating a passive income really is quite simple, once you know your preferred source of passive income. Traditional Forms of Passive Income How To Create Passive Income With Dividends One of the most popular ways to build passive income is to buy stocks that pay dividends. These are usually shares of very large, mature companies that are cash cows, but do not have many growth prospects, so they pay out a large percentage of their yearly earnings as dividends. The more shares of stock you own, the more dividend income you receive. However, the percentage return (dividend yield) is usually very low, and the company is not contractually obligated to pay dividends. As such, this is not necessarily one of the most reliable sources of passive income. Low Tech Businesses Some people view a vending machine as a place to buy a snack or a drink. Others view a vending machine as a passive income machine. Most vending machines are owned by small business entrepreneurs, as one of their favorite ways to create passive income. One managerial headache is the need to continually re-stock the machines. Another managerial issue is the lack of barriers to entry. If someone else puts a competing vending machine nearby, you can expect your volume of sales to fall. While you can create a passive income with vending machines, the annualized returns can be low, because of the commodity nature of the products and the vast amount of competition. Huge Passive Income Through Billboards This one might have caught you unexpectedly, but billboards are one of the few forms of real estate that can generate passive income. How are billboards different from rental properties and apartment complexes? Simple; you don't have any residents. The only trick is to continually have someone advertise on your billboards. The nice part is though, all you have to do is put the words 'Advertise Here' on your billboard, and you're good to go. However, during bearish times, many companies cut back on some of their less effective marketing strategies, resulting in an increase in the 'Advertise Here' signs you might see as you drive. Therefore, billboards do not provide recession proof passive income. Mortgage Notes A less traditional way to create a passive income is through owning mortgage notes. In this scenario, you basically replace the bank as financier of the purchase of a house. People may know the term 'seller financing', but you can actually buy mortgage notes from other people, at a discount. This is how you increase your percentage of return. The only problem is that if the tenant does not pay, then you have to replace the bank as the 'bad guy' and you have to initiate the foreclosure lawsuit yourself. In addition, mortgage notes are not traded on the public markets, so if you want to sell your notes for any reason, you have to find the buyers yourself. This might entail you selling your notes at a discount, too. While it is possible to make returns in the low-teens with this strategy, it takes a lot of expertise to do so. Generating a passive income with this strategy is possible, but not without its hazards. Managed Accounts An even more unique method, but perhaps more powerful than all the above mentioned, when it comes to creating excess passive income, is that of using managed accounts. Simply put, a managed account is where you hire a professional trader to trade your money for you, but in your own brokerage account. This is also sometimes referred to as professionally assisted trading. The key is to look for trading professionals that have track records of generating the kind of returns that you want to get. You do not personally have to become an expert in trading. You only need to find the really good traders to work for you. Once you find them, it does not require any further personal involvement on your part, except to withdraw your trading profits. If you hire multiple professional traders, then you'll have multiple passive income. Some of the key benefits of passive income from this source is that you do not have any tenants, not products to stock, no advertising services to advertise, and your investment is very liquid. You can access your funds at any time. Through this method, you can realize the full power of passive income. In summary, there are several ways to build passive income. These include dividends, low-tech businesses, billboards, mortgage notes, and managed accounts. Each has unique attributes that make it more or less attractive than the other methods. If you want smart passive income, then the preferred strategy would be that of managed accounts. Steve Silverton is with http://TheFinancialFreedomFoundation.org, a non-profit that show people how to achieve individual financial freedom by learning and correctly applying advanced financial concepts. They have a very insightufl FREE REPORT found on the home page of their website. What's New?... blog comments powered by Disqus Partner Sites.... Home Business Millionaire Wealthy Internet Entrepreneur My Success Secrets Web Site Traffic Generation Passive Income Ideas That Actually Work Passive Income Ideas That Actually Work |
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