Passive Income Ideas: $7,027 from $1,000

Wow! $7,027 from $1,000. That is a cool 700% return. Is it really possible? Of course it is. And you can have everything up and running by next weekend. The caveat is….you are not going to like what it entails. But you are not here to be comfortable, you are here to become rich! I will following my 4 principles of building wealth: employment, rental income, investments, and businesses. Let’s jump right into it and then see how you feel about it afterward.

Employment income. For this, we are going to put $250 in a Roth IRA. I like to use the STASH app for my Roth. The security we are going to chose is Vanguard Total Stock Market Index Fund or VTI. We will put $250 in VTI which would give us roughly 1.30 shares. It usually appreciates at 8% annually with a 2% dividend. That’s a 10% return and we will re-invest the dividends. The total after one year is roughly $275.

Rental Income. Ah, now for the first of the painful ideas. We are going to rent out a room for $500 a month. We will use the $250 to buy some nice digs for our room. The nicer the room, the nicer the roommate. Chances are you can command a lot more than $500 a month, but we will go with this amount, for simplicity’s sake. After doing this for a year you will have made a cool $6000. Sorry, I know you don’t want to do this, but it is probably the fastest, easiest way to get rich. If you invest this $6,000 into VTI, you will accelerate at an even faster clip. You may laugh at this idea, but Kris and I made over $15,000 in income from renting rooms (read) in 2020. You can also do other things to earn even more, like buy a small storage unit and put it on your property. You can then rent it out for $50 a month to your renter. Most room renters have a storage unit. They would love to use your garage or a unit on your property. 

Investment Income. Since we have started our safe income stream in our Roth IRA, we will be a little riskier in our standard brokerage account. For this, we will use the Cash App (join MFI Cash App challenge). I like Cash App because the dividends are paid right into your cash account, so you can use them as you get them. We will invest $300 into my favorite bond ETF, which is SDPR High Yield Bond ETF or JNK. High Yield bonds are riskier than standard bonds, but they pay a higher dividend yield. JNK pays about a 5% dividend yield. This will pay you about $1 a month. The reason why we are taking this $1 and spending it on candy bars is that this will give us a taste of truly passive income. When you get $1 from heaven, trust me you will be sold on passive income. If you put your $6,000 from the room rental into JNK, that would be would be roughly $24 a month. That’s 2 fast food meals a month. 

Business Income. Now for the other idea that you are going to hate. We are going to rent out our car on Saturdays, via the Turo website. We will use our remaining $200 as a buffer just in case we need to use an Uber while our car is rented. However, if we are planning correctly, we should be able to work around this. If we are married, have friends, or roommates, we should have alternative methods of travel. You can also rent your car throughout the week or on Sunday. The goal is to make $120 a month from Turo. That is roughly 4 days at $30 a day. If you have a nicer car, even more. Yes, it sucks that someone will be driving your car. However, it is just a car. At $120 a month, this would produce $1440 for the year. That is a nice chuck of change!

Let’s look at the totals and then do a quick debrief.

So there is a cool 700% gain, without doing anything very difficult. It may seem like I am making everything seem easy, that is because it is. There are even more ways to increase your return. You can rent out another room (may as well). You can add things like better WiFi and HBO to command more on the rent (it works). Your investment portfolio can add securities that pay 10%, such as AGNC (a REIT). You can buy another car with your room rental money and rent out another car, full time. Can you imagine renting two rooms and two cars? Add in some extras for the rooms, and let’s do the math. Room #1 ($600), Room #2 (600), Car #1 (part-time $120), Car #2 (full-time $500) = $1,820 a month or $21,840 annually. Yes, your life would be a mess, but you could do this for a year to buy a house, invest, or start a business. And to make it even more ridiculous, start a blog about the whole ordeal. Again, you are not even doing anything special, just sacrificing some of your liberties for the greater good. This is how you become Rich! Do you like these ideas? Do you have to give up too much of your freedoms? What do you think? Write your answers in the comments below.

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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it.  I have no business relationship with any company whose stock is mentioned in this article.