If you are currently employed then you have an active income. This means you only earn money when you are active. You don’t earn anything when you are not actively working except for your bank holidays, public holidays, sick leave, maternity leave and paid holidays, – even these holidays have been worked for in one way or the other.
Passive income, on the other hand, earns you money while you are not active. For most sources of passive income, once you set them up, they only require the occasional maintenance.
In this article, am going to show you the seven sources of passive income that you can set up today, which, if maintained properly and combined together, will be paying you a minimum of your current annual salary every month in three to five years time.
1. Dividend Stocks
Dividend stocks are simply stocks that pay dividends at the end of each financial year. The trick is to find a reputable company that has a record of consistently paying dividends. Coca Cola is a good example of a reputable company that pays good dividends to its shareholders each year.
In order to truly make dividend stocks a source of passive income for your portfolio, you must deploy the law of compound effect in your investment strategy. This means each time you get paid dividends for your stocks, you simply reinvest the dividends along with the original stock money.
If for example, you invested $550 in Coca Cola stocks and at the end of the financial year, you received a dividend of $25 (4.55% return), you must reinvest the whole $575 ($550 + $25).
Based on this strategy, you should get the following for:
Year 2 = $601.16
Year 3 = $628.51
Year 4 = $657.11
Year 5 = $687.01
As you can see from the example above, your initial investment of $550 has increased to $687.01 in just five years, which is a percentage increase of 24.91% even though you the stock annual return stood still at 4.55%. This is the power of using compound effect in your investment strategy.
2. YouTube Channel
Having a YouTube channel is another great source of passive income. You need to have had a minimum of 1,000 subscribers and 4,000 hours of watched videos within the past 12 months before YouTube can allow you to monetise your YouTube content.
The question people usually ask when it comes to creating a YouTube channel is (1) What should my channel be about and (2) How will I get subscribers? I will answer these two questions below.
(1) What Your YouTube Channel Should Be About
Your YouTube channel should be about your passion or interest. What do you love the most? It doesn’t matter if your interest is monkeys, fish, cars, sex, relationship, family life, immigration, politics, healthy eating, dancing, football, basketball, cricket, softball, baseball or anything. It doesn’t matter what your interest is, what matters is that you completely love it.
I have seen YouTube channels which are completely about Crows. The surprising thing was that each of them had enough subscribers to make more than $30,000 per year for its owner. In fact, there is a YouTube channel about Koi fish. That’s how specific you can get. Whatever you like, there are thousands of people out there who are equally interested in that subject.
(2) How To Get Subscribers
The fastest way to get subscribers is to spend at least $100 advertising your YouTube channel on YouTube. Depending on your niche and keywords, you should be able to get between 100 to 300 subscribers by the time you’ve spent $100.
The other way of getting subscribers is simply by visiting other channels covering your niche. When you visit these channels, leave a comment and engage other subscribers in a discussion. Doing this every day will get you at least 100 subscribers in 90 days.
Whichever route you take, you must upload good content regularly on your channel and ask people to subscribe to your channel at the beginning or the end of all your videos. If you spend your money advertising your YouTube channel but your content is awful and in addition to this, you failed to ask people to subscribe to your channel, people will just assume that your videos are probably bad ads.
3. Fulfilment By Amazon – FBA
If you don’t know what Fulfilment By Amazon is, – it is service provided by Amazon to sellers who sell on Amazon platform. When you signed up for FBA, Amazon will store your inventory, so when a customer purchases your product on Amazon website, Amazon will pick, pack and ship the item to the customer. Amazon will also handle the customer service side of the business for you. So, it’s really a no-brainer.
Before you signed up for FBA, you need to first research which items people are buying on a consistent basis and then try to sell to those people by giving them a better option through your quality product. The shortcut to success is to fulfil a need that already exists. If five million people purchased a marker pen on Amazon this month, it simply means that there is a market for marker pens and you can tap into that market.
FBAis very competitive which is why you need to have at least a research tool in order to succeed. Some people attend a seminar, some buy FBA courses, while some just subscribe to research tool website for identifying products to sell. In terms of research tool, I will advise you to use JungleScout or AmazeOwl.
(2) Once you have identified a product that is in high demand, you need to find a manufacturer on Alibaba that manufactures the item you intend to sell. Make sure the manufacturer has been in business for at least 7 years and have good reviews.
Negotiate price, packaging and international shipping with the manufacturer. Pay through Alibaba in order to protect yourself against fraud. Never pay through Western Union Money Transfer.
(3) Register for FBA with Amazon. Amazon will provide you with the details you need for shipping your inventory from China to their warehouse. You will also need to sort out your item ASIN code. Amazon will help you with this. Once Amazon provides you with the warehouse details, you need to give it your manufacturer in China because that’s where they will have to ship your items.
(4) Make financial provisions for the customs fees. You have to pay customs fees for every imported item excepts for items that are exempted from customs and import fees.
4. Print On Demand
Print on Demand business is one of the easiest to set up. Just in case you don’t know what it is, it is simply a business that deals in the printing of artistic designs on phone cases, shirts, mugs, posters, pillowcases, leggings and etc.
To set it up you need (1) artistic designs, (2) a website or platform and a (3) printing company. Let’s cover each component of Print on Demand business.
(1) Artistic Designs
If you are creative you can design your own graphics using Adobe Photoshop, CorelDraw or Canva but if you are not creative, you can outsource the design work to a graphic designer on Fiverr, Upwork, Freelancer, Behance and 99 Designs.
Most people avoid using Fiverr for their graphic designs because even though they might be cheaper than the rest, you might run into copyright issues with some of your designs. The graphic designers on Fiverr have been known to use the same graphic design for several customers. You should always discuss exclusivity of artworks with your graphic designer.
(2) A Website Or Platform
If you choose to go down the route of having your own website for your Print on Demand business, I will strongly advise you to use Shopify. They have a strong reputation and experience when it comes to Print on Demand service. So, their websites are designed to handle the demands of a Print on Demand integration and execution.
Shopify is not free. There are monthly subscriptions starting from $29 per month + 2.9% and 30¢ per transaction for the basic plan. In addition to this, you have to budget for advertisement. People need to know that your business exists, which means Facebook, Instagram and YouTube advertisement.
The other option, which is the one I prefer is, selling on platforms. The two main Print on Demand platforms are Merch by Amazon and Etsy. With Merch by Amazon, you simply upload your artworks, add descriptions and keywords and you are good to go.
Etsy requires you to create your account, set it up as a shop and then integrate your Etsy account with Printful website. After you have linked-up (integrated) your Etsy account with your Printful account, you have to then upload your graphics to Printful website.
After you have successfully uploaded your artwork to Printful, it will automatically appear on your Etsy shop along with all it details and description. You still have to go to your Etsy account to publish the item for sale.
(3) A Printing Company
Merch by Amazon is better than Etsy because it doesn’t require an integration with a printing company website in order for your item to be fulfilled because Amazon fulfils all your orders but Etsy requires integration with a printing company website, – which at the moment is Printful.
Printfulis the world number one printing company for Print on Demand business. They print everything in the Print on Demand niche.
If you have your own website, you can integrate it with Printful. If you created your Print on Demand website with Shopify, you can automatically integrate it with Printful. The great thing about Printful is that they work with all the major e-commerce system. So, even if you created your own website using WordPress and Woocommerce, you can still integrate it with Printful and run a successful Print on Demand business.
So, in summary, artistic graphics + a website/platforms + printing company = Print on Demand business.
Blogging is one of the best means to generate a passive income. At the fundamental level, blogging is about writing about your interest. Just like creating a YouTube, you need to focus on a subject that you are passionate about. It doesn’t matter if your interest is a sports team or a type of sport. Obviously, someone who blogs about football will have more audience than someone who blogs about Manchester United.
Let’s assume you already know all that needs to be known about blogging, your main interest is how to make blogging a source of passive income. If this is you, then am glad to inform you that you can make money through blogging by:
(I) Selling a course on your blog.
(II) Allowing ads on your blog site. Google Adsense is a safe choice.
(III) Selling merchandise on your blog.
(IV) Directing buyers to Amazon through Amazon Associates. Each time you review a product that’s available on Amazon platform you can link your readers to the product and if they purchase the item through your link, you will get a commission from Amazon.
(V) Recommending a new product or service to your readers provided the owner of the product that you are recommending compensates you through his or her affiliate marketing remuneration scheme.
Making money through blogging is not difficult once you have a clear roadmap to follow. A lot of people fail to make money through blogging because they naively assumed that all it takes is good content. People need to be able to find you and the search engines will only start ranking your blog website properly after about 18 months. You need a successful strategy to make it work.
You need a mentor to help you succeed with blogging, because of this, I recommend that you check out Melyssa Griffin free blogging course. What you will learn in her course will make the difference between success or failure. She has other courses that ain’t free but if you don’t have money, her free course is more than enough to help you succeed at blogging. You can find her by visiting this link.
If you don’t know what dropshipping is I will explain. Dropshipping is a supply chain management system in which the seller of a product or products does not physically store any of his or her inventory. This means when the seller receives an order, he or she forwards the order to the wholesaler, who then fulfils the order. Dropshippers are the middlemen between the final customer and the wholesaler.
A dropshipper makes his or her money from the difference in price between the amount he or she purchased the item from the wholesaler and the price he or she sells it to the final customer.
For example, a dropshipper might contact a handbag wholesaler, he will then negotiate the price of a particular handbag for £12.50 each. The dropshipper will then create an e-commerce website using Shopify, BigCommerce or EKM. The website the dropshipper created will be completely focused on the specific handbag he has negotiated with the wholesaler.
After the creation of the website, the dropshipper will then proceed to make an advertisement video for that handbag. Once the video is made, he will then place the ad on YouTube, Facebook and Instagram. He can also get the services of influencers to help create awareness and buzz for that handbag.
After all these are done, he then starts selling that same handbag for £35.99 to the first 500 people. Once he sells 500 pieces of that handbag for £35.99, he might increase the price to £49.99. The selling strategy and price depends on the dropshipper marketing and sells strategy.
The price of £49.99 is the price the dropshipper intended to sell the handbag from the onset. The price of £35.99 was just a marketing ploy. This is why you see influencers on Instagram posting things like “Use code BUZZ20 for 20% discount – Only available for the first 500 people.”
As you can see from the above example, a handbag which was bought for £12.99 was finally sold for £49.99. That’s a profit of £37 each. If the dropshipper sells 1 million pieces of that handbag at £49.99, he becomes an overnight millionaire. But for his business strategy to work, the dropshipper has to spend his money on making marketing videos, placing the videos on YouTube, Facebook and Instagram and he also has to employ the services of influencers in order to create a buzz around the handbag.
Although the dropshipper does not have any inventory, he needs to have good capital in order to make it work. But his strategy is a whole lot cheaper when you compare it to your typical e-commerce business that stores inventory and hire staffs.
The dropshipping market is highly competitive right now, so I will advise you to get a mentor to help you succeed without wasting your time and resources. Alex Becker and Franklin Hatchett are two of the best in this field. Check them out. They will surely guide you to success in this field.
7. Kindle Publishing – Self Publishing
Gone are the days when your chances of being a writer depended on book publishing houses. Now you can become the authour of a bestseller without ever leaving the comfort of your house.
The great thing about writing is that you can write about anything. From fiction to personal development to history. You can even write about your life story and struggles.
Let’s assume that you can write. Once you have written a book in either Microsoft Word or Google Docs, you must format it for Kindle. This is easily done with the help of Kindle Create. You can download Kindle Create by visiting this link. The software is designed and developed by Amazon for Kindle.
Once you have Kindle Create installed on your computer, the next thing for you to do is to import your Microsoft Word or Google Docs file into Kindle Create and format it on Kindle Create for Kindle readers. You can preview the final output before publishing it on Amazon Kindle.
Once your book is published on the Amazon Kindle platform, you should sign up to the Kindle Direct Publishing – KDP Select program. This is how you make a passive income from your book. Each time a reader borrows your book through the Kindle Unlimited program, you will get compensated for it. This is in addition to the money you will make whenever someone purchases your book on Kindle platform.
In addition to this, once you upload your book to the KDP platform, you will be given the option to make it available for prints. I will advise you to make it available for prints because some people still prefer reading a physical book. Staring at a screen for an extended period is bad for human eyes. Making your book available for prints increases your market reach, thereby increasing your sales volume.
In this article, I have given you seven sources of passive income which I have found to be profitable. Blogging and YouTube might take 2 to 3 years before they actually take off and become profitable but the rest of them starts making you money within 60 days of setting them up.
They all require capital except Kindle publishing. If have no capital at all, I will encourage with to start with Kindle publishing but if you have some money, the cheapest ones to start are YouTube and blogging and they are also the slowest to get off the ground when it comes to making good money.
The fact is that, if you discipline yourself, work hard, you will be making more than your current annual income every month without even leaving the comfort of your house. The trick to converting your annual income into your monthly income is to combine all seven sources of passive income mentioned in this article.
I encourage you to implement all the seven sources of income mentioned in this article. If you are able to set up all seven and have them all running smoothly, then you can be rest assured that all your money problems are now obsolete.
I hope you’ve found this article useful in one way or the other. If you know anyone who might find it useful, please be kind enough to share it with them using the share buttons at the top of this article.
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Have a wonderful day.