The next stop on our journey may be the most difficult because royalties are not known to produce consistent income. In conjunction with our other sources of passive income, they will be a great supplement. But the fun of this exercise is building our models only using royalty income.
Welcome back to the Living Overseas Passively series (101, 102, 103, 104, 105), where we build multiple income streams to take overseas with us. For royalties, let’s start with the basics.
What are royalties? Royalties are payments when people purchase your creative works. Some forms of royalties are from books, videos, music, and artwork. Usually, you will need some form of advertising or marketing to sustain your royalty income.
More Content, More Cash Flow
What are the pros of royalty income? The best part of royalty income is that it costs little to no money to get started and sustain your product. For example, it cost me very little ($200/year) to publish my books and blogs. This cost is from web hosting and access to stock photos.
Another pro of royalties is that you can do most of it alone. You can be a “Company of One.” If we are looking to relax throughout retirement, having a simple, uncomplicated capability to produce income will add to the overall experience.
Royalties are also portable. You can start a blog, write books, produce music on your laptop, or create artwork with your iPad. Royalties are suitable for living the laptop life. For instance, I am writing this article as I fly from Seattle to Tokyo. How amazing is that?
What are the cons of royalty income? Some people feel that you have to be highly talented to earn royalty income. I’d like to debunk that. It takes 10,000 hours to become great at something. You have to give yourself at least that long before you give up.
The main negative of royalties is that it will take years (I repeat years) to gain a following and start producing real income. Becoming “a creative” is not for the faint of heart. And this is where my story begins.
We love royalties, but how do we get them? Our journey’s first objective is to estimate how much consistent cash flow we need from royalties. For all the other articles, I have been using the number $2,000/month.
Why You Need a Job
So we would like to earn $2,000/month in royalty income. This number will be our target. Now, it wouldn’t be wise to hit this number one time and then move overseas. I would say achieve this amount at least for 6-12 straight months.
Yes, it will take a while. By my estimations, depending on what creative work you are doing, I predict that it will take at least five years to achieve this income. Now, you could probably accelerate this number by hiring more people, working more hours, or advertising.
Let’s not forget the point of why we are moving overseas⎼for peace and quiet. Do we want to move abroad and have assistants, interviews, phone calls, and advertising budgets?
My advice is to find a nice steady pace that you can produce consistent content. I just finished a book titled “The Relaxed Author” that talks specifically about this mindset.
What Type of Home Business Should You Start?
If you enjoy producing a video about your garden once a week, then keep that pace. The way to succeed in royalties is over the long term. There is no get rich quick scheme here.
Finding your groove. Before you quit your job, find your rhythm. It may take one year before you even understand what you are trying to accomplish. This timeline is very typical because most people haven’t even considered how to create an income stream.
It took me roughly a year of hardcore grinding to find my lifelong pace. Now, I have enough back catalog content and plans to feel really relaxed. I am settling in for the long run, and it feels good.
When to start your income stream. I would begin my income stream at least ten years before the date when I plan to move overseas. I would start today if possible. We have jobs to pay expenses, invest, and protect ourselves while we start new revenue streams.
The main obstacle holding people back is their unique limiting belief(s). Very few people can ever get themselves to break this destructive mentality. I recommend a couple of books to those struggling to release their works to the public.
The first book is titled “Mindset” and talks about the difference between a fixed mindset and a growth mindset. A person with a growth mindset is constantly looking to push their lives forward, learn new things, and overcome failures.
Create a Never-Ending Stream of Content 2
The other book I recommend is “Limitless.” This book teaches us how to learn. Many of us never learned to absorb information, so we need to focus on this with intention. While building your income stream, you will constantly be learning⎼trust me.
Time to start. Yes, you read a few books, watched a few YouTube videos, and maybe took an online class⎼is that enough? It is more than enough! Whatever you produce at first will suck. That’s a promise. The sooner you get over that realization, the faster you can get to the excellent content.
Producing royalties is about constantly improving your processes, mindset, and artform. It is a never-ending journey and one that engages me at all times. As Seth Godin wrote in “The Practice,” your mission is to create.
Enjoy the ride. Royalties will be the highlight of your day. Creating royalties will keep your mind sharp, which is particularly important in your quiet home overseas. You will be able to interact with other creators and your audience.
Passive Income for Christmas
Receiving royalties (getting paid) is also fantastic because 1) it’s money 2) it means someone liked your work. Both are great feelings. My book “The Biggest Book on Passive Income Ever!” is 1,250 pages. I can follow as people complete the entire book (via Amazon Kindle Unlimited). What a fantastic feeling and the fact that I am working on Part Two of this book gives me great joy.
The Plan. Now, royalties are not consistent. Some months you can earn $1,000; others might be $3,000. The best thing we can do to steady our income is by using a savings account. Even better, we can convert our royalty income into steady cash flow with closed-end funds.
The concept would be to use your royalty income while employed to build your dividend income portfolio. As you go overseas, you can have a consistent payout of $2,000/month coming in from CEFs.
What is Affiliate Marketing?
When you move overseas, you can use your royalties to fund special events, trips, or some minor luxuries. If you have excess cash flow (which you should), you can reinvest your royalties into more CEFs. More shares equal more income⎼a pretty straightforward concept.
Conclusion. Royalties will be the most difficult to live on consistently because they are not consistent. To obtain a steady stream of cash flow, we need to invest our royalties into closed-end funds. Then we will have the best of both worlds.
Royalties are also different from the other sources of passive income. Most of the other streams use numbers, leverage, and metrics to obtain success. Royalties use creativity. It warms my heart when I learn, see, or read something that sparks an interest in writing an article.
If you pick the right niche, you won’t even consider royalties work or a burden. I love everything I do with my articles, artwork, and books. It is now a part of my life that will not go away. I hope you find inspiration as well.
Remember, I started down this path because Robert Kiyosaki wrote in “Rich Dad’s Guide to Investing” that you should create an asset. I started for the possibility of making cash flow, but I stayed for the love of becoming better every day.
If you liked this article, please follow me on Twitter for more on royalties, passive income, overseas life, and business. Enjoy and Happy Investing.
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