Passive income is very elusive in that it does not start very passively. You must contribute a certain amount of work to build a passive income stream.
However, once you get the hang of it, you can create as many income streams as you can maintain.
Passive income is a mindset more than an amount of money. Building the correct mindset is the most challenging part of your passive income adventure.
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Creating the right mindset. Our parents (and school) indoctrinated us to work hard for money. Our goal was to get an education and climb the corporate ladder.
Many of us climbed the ladder (I did in the military) and made decent money. However, no matter how much we earned, we needed more.
That’s because exchanging time for money is the least favorable way to make money. Not only does the government tax you at the highest rate, there is a ceiling on how much you can make.
Let’s say you make $100 per hour. The most you can make per year is $876,000 (365 x 24 x $100). So, how do people make millions of dollars per year?
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The answer is passive income. Passive income originates from assets such as dividends, bonds, books, music, real estate, and businesses.
Think of assets as a clone of yourself; however, their only purpose is to make you money. The more assets you have, the more money flows into your accounts.
How to obtain assets. You can buy, build, or create assets depending on your income, knowledge, and time.
Today, I want to review ways to create a $100 monthly passive income. $100 may not seem like much, but how many people can earn $100 per month without working a job or through the gig economy?
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The key to life is having your assets do all the work for you while you enjoy your time. You simply maintain your assets as you would a garden or car. With that, let’s begin.
Passive income from investments. When you invest money to create passive income, you’ll need to turn over your cash to another entity.
–High Yield Savings Accounts and Certificates of Deposit. To earn $100 per month at 4.5% interest, you would need to invest $26,667.
–Treasury Bonds. Treasury Bonds are an alternative to bank deposits because you can participate in some capital gains. To earn $100 per month at 4.5% interest, you would need to invest $26,667.
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–Income Investing with dividends. Income Investing is my favorite way to earn dividends. To make $100 per month at a 9% dividend yield, you’ll need to invest $13,334.
–Options Trading. Options trading can be risky if you don’t understand the game. However, with the proper training, you can earn 5% per month (60% annualized) on your invested capital. You need to invest $2,000 to make $100 per month.
Passive income from real estate. Most people will never own a rental property. However, there are many ways to earn money outside of owning properties.
–Renting rooms. You can rent your room for one month and earn $1,200 or the equivalent of $100 per month.
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–Storage space. You can rent our garage and park space and earn $100 monthly.
–Dog park. If you have a nice yard, you can rent it for $10-20 per hour. You could earn $100 over a couple of weekends.
–Renting your car. Depending on your car model, you can earn $30-70 per day renting your car on Turo. To earn $100 per month, you’ll need to rent your car 2-4 days per month.
Passive income from royalties and business. You can create a business model around your schedule. The most essential element of running a business or creating content is adding value to someone else.
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–Writing. I can speak for writing because I am a writer. To earn $100 per month on Amazon takes a lot of work. However, it is possible because I do it every month.
–Creating content. Consistency is critical to get monetized on a platform (Medium, YouTube, Blogging). It takes at least a year in any endeavor to earn $100 per month comfortably.
–Passive business. You can earn $100 by buying an ATM, arcade, or vending machine. The tricky part is working with business owners to install your gear.
What income stream is right for you? I recommend everyone start with a dividend portfolio. Once you feel money constantly flowing into your account, earning passive income will hook you.
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The key is to convert any additional income into assets. For example, let’s say you get a roommate, trade options, or drive Uber.
You’ll want to convert this extra income into more cash flow via dividends. You’ll have a new dividend income stream if you keep doing this consistently.
My wife and I had roommates for 4.5 years. This allowed us to create $1,300 a month in dividend income. Now, we don’t have to have roommates because we use dividend cash flow to generate more revenue by reinvesting.
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Your entire life will change once you understand the concept of acquiring assets (not liabilities). You’ll buy a car that will rent well on Turo.
You will upgrade your house to help you get better roommates. If you want to change your life, you must change your life.
Conclusion. It’s important to remember that you’ll have to go through a season of change. You’ll most likely have to live below your means for a short time (2-4 years).
The goal of living below your means is to create a large amount of cash flow, which is the difference between income and expenses.
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Once you have a decent amount of cash flow, you use the excess money to invest in dividends. In the meantime, you start additional streams of passive income.
You may live below your means by renting rooms and having your car on Turo on the weekends. You could be miserable for a while.
However, on the other side of the pain is a life you cannot even envision today. My wife and I retired at ages 39 and 42.
We live entirely on passive income from military pension, dividends, rental income, options trading, and writing.
If we could make a hard pivot four years ago, you can do it today. Don’t think of the pain; dream of being able to dedicate all your time to your kids, family, and friends. Good Luck!
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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. All Right Reserved Military Family Investing
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