1. Property
The first thing I did was buy a house when I was 21. I used the money I’d been saving for years as the downpayment. I didn’t live in the house, instead I had tenants and they paid me rent.
The house was very modestly priced and was in a good neighbourhood for rent prices. The trick was researching areas where rent was quite high, but home values were low. Working out the balance meant that my house was immediately positively geared and I had a passive income from day one.
Two
years later I bought a second house and paid absolutely nothing. I used
equity from the first house to pay the deposit and all the fees
associated with buying a house.
I bought the house off someone who
was very motivated to liquidate, so I got a great price. The rent was
even higher than the first house, so my passive income increased a lot.
Since then I’ve been very aggressively paying back my mortgage, putting as much money as I can into it every year. By my mid thirties I aim to have no mortgage left, meaning 100% of the rent payments will come straight to me as income.
If you’ve saved some money and want to get into property yourself you can easily achieve this. Just make sure the rent being paid in the area you want to buy is much higher than what the mortgage and other bills will cost. Some Googling and an Excel spreadsheet are all you need.
2. Dividends
I’m a big lover of investing in ETF’s, shares and bonds. I really feel like I’m shopping in the mall when I get to jump online and buy into some of my favourite companies.
What matters to me though is whether they pay interest or dividends. It’s important to me that an investment gives me a distribution at least once a year, because it rewards my investment.
Dividends and interest payments are great ways to track a company’s progress and an indication of whether things are going well or poorly. But they’re also a great passive income that you’re missing out on if you’re not invested in companies that pay them.
I’m rewarded 4 times a year with payments of varying sizes and it’s wonderful because it’s cash that’s earned by my invested savings which continue to grow and thrive within the companies I’ve chosen.
Dividends are the real way of earning money forever because they’re not coming out of your bottom line, they’re paid to you as a thank you for trusting someone else with your money.
3. Writing
The third way I make my passive income is through royalties. The best platform for me is Medium, where 98% of what I write becomes nothing, 1% does ok, and roughly 0.0001% does really well.
My second best platform is Amazon where I sell about a dozen e-books a month over a spattering of various genres and pen-names.
My final platform is RedBubble where I have written a few catchy quips onto t-shirts and sell them to unsuspecting drunk people who’re scrolling the site late at night and have a laugh at my lame jokes.
Some don’t consider writing on Medium to be passive at all because of all the work you put it.
When
thinking about it, I also wouldn’t consider the money I make in the
first week after writing an article to be passive. I count that cash as
payment for the time I put in.
But when the article continues to pay me for months after writing it, these payments must be considered passive.
If they’re earning money far longer than I can even remember writing the article, it can’t be anything other than passive.
The passive income life
There are many more ways to make a passive income. Anywhere you can release your talents and earn a royalty for years to come is a passive income.
But as great as royalties are, perhaps the best and most reliable passive income of all is generated though investment.
We don’t all have talents that can make us more than a few bucks online, but we’re all capable of making a few bucks somehow. The smartest thing we can then do with those bucks is invest them somewhere safe..
.. Somewhere that pays a dividend of course.
Need to save money but don’t want to do it alone? You don’t have to..
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