Let's talk about passive income

[Broken Arrow]

Lately, I've been looking at ways to generate short-term passive income to supplement my normal earned income.

To cut right to the chase, what have you found to be the best options out there?

I myself have looked into all sorts of avenues, from basic savings account to MLMs, dividend stocks and bonds to being a slum lord. So far, I haven't found much better than the overall ease, liquidity, minimal capital requirements, and sometimes, even the level of returns found of my plain, old, vanilla, high interest savings account!

Well, there are exceptions, of course, and it almost invariably comes down to a fair degree of risk... which I am not willing to take, because again, this is meant to be a passive income stream, not aggressive growth. Or, perhaps my thinking is flawed on this.

In any case, what do you think? What kind of short-term passive income do you guys use and how has that been working out for you?

[jIM_Ohio]

short term
passive income
not aggressive

could be considred oxymorons of each other.

if you want passive income, which implies this is money you would spend,
and it is only a short term, why not just spend principle.

Or look at Alpine Dynamic Dividend? ADVDX

In my case right now I am into growing principal. I work two jobs, and the money from the second one goes straight to cash.

Right now I open CDs with each $1200 check. Soon I will be opening positions in mutual funds, with PRFPX and ADVDX at top of list for various reasons.

[sweeps]

A few ideas...

1. 0% APR offers. (See exhaustive list) Put the money into savings paying 5%+. On a $50,000 balance, that is $200+ a month. On a $100,000 balance, that is $400+ a month. You can earn more by taking advantage of bank bonuses.

2. Create an intellectual work that you can create once and sell repeatedly with little effort. For example, a useful piece of software, an e-book, an Excel spreadsheet (for budgeting?), you name it.

3. Create a site that is as "self-updating" as possible. A regular blog requires a lot of work for it to become worth your time. But if you create a site that is user-maintained, for example a forum or a wiki, you can stay more hands off. Or create a site that provides a useful feature which runs on auto-pilot, for example a ticker price and other technical stats on gold and other precious metals.

4. Pimp yourself out as a passive advertiser. Maybe look into car wraps or signs for your front lawn or a design you can shave into the back of your head. Ok... maybe not the last one.

Just thinking out loud here. You were thinking of things besides just investing, right?

[Aleta]

I was wondering if you were still reading Your Money Or Your Life? Joe Dominguez talks alot about using capital to produce passive income. In your case, it seems like it is money you want now to supplement your income. I know that there are certain types of passive income that you don't pay social security on. That being interest you make on your investments (savings accounts, money markets, etc.) You also don't pay social security and medicare on rental income. You also don't pay it on savings bonds that earn money and are not taxed until you redeem the certificates. Savings bonds sort of reminds of of 401K's in a way. It depends what you want the money for. If it is to use it to help with your budget, to pay off debt, or to just become financially independent.

So, if you could clarify, it would help us understand. But honestly, all wealth is a slow process and it's just doing all of the little things and being patient. It doesn't take long to see results.

Doing surveys is also passive income.

[Broken Arrow]

Thanks for the inputs so far.

Yes Aleta, I was thinking of something that would pay monthly, or perhaps quarterly. However, I have also commented that this may not be realistic at all.

But yes, I do understand that it will be a slow process.

[Aleta]

In the past, the best ways of earning extra money and cutting down the tax situation was always doing a home based business. I suppose that the internet has just made that more possible for some people. Ideally, if you could do something with little start up like something on the internet and just expand it. I have a friend that used to be a nurse and now just does work for attorneys needing opinions in court cases. There is a whole lot of ideas out there. You just want to make sure that the money you're making isn't increasing your other taxes and is maybe going to lower your yearly taxes.

[sweeps]

Are we talking passive income or 2nd job? I took the original post to mean something that wouldn't result in a lot of ongoing "work".

[Broken Arrow]

Well, to me, a 2nd job is me going out to get an actual part-time job and calling it a day. That's on the table of course, but if a better arrangement can be made with some other kind of arrangement, I am certainly willing to hear it out. A home business, as Aleta mentioned is a good option I think.

So, feel free to interpret it any way you like.

[disneysteve]

Well, that changes the question. You are basically looking for other sources of income, active or passive. Certainly, selling things online is a good source of supplemental income, assuming you can come up with something worthwhile to sell.

Turning a hobby or craft into a small business is another common route. For example, my wife knits. Over the years, she has made a couple of relatively quick knitting projects that, if desired, she could easily crank out and sell at craft shows or online. She sold some knitted bears once at our temple holiday bazaar and people loved them. She doesn't pursue it at the moment, but might at some point.

I do plastic canvas work and have made some very nice coaster sets that I've given as gifts. I could easily start knocking those out and sell them if I wanted to. And there are lots of other plastic canvas projects like tissue boxes, notepad holders, fridge magnets, picture frames, etc. that I could do pretty quickly and easily in my spare time.

Do you have any hobbies that you could start doing for profit? How about skills? Fixing things, helping folks with computers, teaching a class at a local community center, something like that.

[Broken Arrow]

Um, can I manage your money for a small (10%) commission Steve? Just kidding.

I've done websites before. Last one netted about $400, which was nice. Fixed people's computer, but that was largely for free. Actually, although it hasn't been mentioned before, I've been offered to teach martial arts, but I declined because I wasn't officially qualified to do so. A couple of friends of mine are trying to talk me into something like that again. Dunno. I'll have to think about that some more....

But yes, you are correct that I originally had asked for passive income, but in the end, I don't really care how I make the money so long as I make more. In fact, I'm tempted to try to do as many as I can. So, sooner or later, I'm going to need fairly passive ones that I can cram in there as well....

Just thinking out loud.

[Sporkman]

Thinks of things you're good at & enjoy doing, other than your regular job (hobbies, talents, etc). Then try to monetize it in some sort of non-stressful, passive way. Like somebody else mentioned, if nothing else, you can start a website & blog about your interest, maybe make it a source of expertise on the subject that attracts other with the same interests, etc. Then you can monetize it via ads. For example (these are retirees though, but you get the drift):

'Gray Googlers' strike gold - USATODAY.com

[safari]

Reselling event tickets on the secondary market can be a good source of extra income without investing too much time into it. You will need to know the market and do research to find out which tickets are hot and when they go on sale to the general public. If you're lucky and can score some good tickets for a hot event through ticketmaster, you can then resell them on eBay or Stubhub. There is always risk that the event won't sell out, so you'd have to sell the tickets below face value and will lose money; however, if you do your homework, that shouldn't happen very often. You can easily earn a few thousand dollars a year that way.

[Coleroo]

I have found my "easiest" sources of income to be... ((((i consider some of them passive in comparison to regular work, but they are not completely without some work involved)))):

1. Cafepress.com (I make a healthy passive income from my online collie shop - its been open for 6 years and the only work involved for me is a few new designs every now and then and seasonal store HTML updates... takes maybe 2-5 hours per month at most?)

2. A website or blog with Adsense (this only works if the site is large or consistantly updated...i've tried those adsense "business in a box" type of sites and it doesn't generate hits or clicks). My 6 year old educational collie site now has a nice large stream of traffic and the adsense revenue is good, passive income for us. I put perhaps 10 hours of work into my site a month? I enjoy it though so it doesn't seem like work at all.

3. Cheap Digital Downloads - public domain ebooks, etc. (this is a tricky area - you must know your copyright laws really well and what you can & can't use!)

4. Savings account with high interest rate.



Those are, in order of how well i fare with them, the best passive income generators online, in my experience. What do you enjoy doing? All of the above (ok, except for #4 ) involve person hobbies of mine - things I enjoy doing and just happened to have struck upon over the years. Figure out what you like doing and apply it online!

[Raseker]

check out prosper.com for p2p lending. i've been doing it since sept. so far soo good.

[snafu]

When I needed to generate passive income I hosted an international student. That's room, board, orientation and making that individual a part of the family for the 6 weeks they were in ESL classes.

The sums generated were invested in an index fund with a a minimum 5 yr. lock-in. If space permits you could share your apt.