Passive Income Ideas

[disneysteve]

Robert Kiyosaki: 6 Best Ways To Earn Passive Income (msn.com)

That article is delusional.

1. Buying properties and renting them out is NOT passive.
2. Dividends aren't really income but they're taxed as if they are. When a $50 stock pays a $2 dividend, the value drops to $48. There's no net gain.
3. Royalties are kind of sort of passive income except for all of the work you have to do to create the product or content that results in those royalties.
4. Building a business that then operates without you certainly isn't passive.
5. Lending money for interest is passive except the part where you need to vet all of the potential borrowers.
6. Most annuities are a complete rip off, though there are exceptions. Variable annuities should never be purchased by anyone pretty much. Immediate annuities can be legit but you really need to do your homework to select a good one.

[QuarterMillionMan]

Robert Kiyosaki: 6 Best Ways To Earn Passive Income (msn.com)

[Vincent Smith]

When I think of "passive income" streams, I generally think about things that don't require much work.
Many of the above items could involve significant to full time work in order to be successful.

My thoughts exactly.

[james.hendrickson]

It also sounds like interest payments don't start until the offering is fully funded and closes. Do they just hold your money until then? What happens if the offering doesn't get fully funded? If there could be weeks or months where you're not getting interest, that's an issue.

Disneysteve, yeah they debit the funds when you make the purchase of the bonds, and you get the actual electronic bond certificates about a month after the bond offering closes. If the company doesn't make the minimum bond offering, your money gets returned to you. So, yeah in some cases your money gets locked up for two or three weeks.

And yes, you start getting paid about a month after the offering closes.

[disneysteve]

DisneySteve, so one reason why they don't have a lot of listings is strict underwriting standards. Their default rate is really low, because they're using the same standards as a lot of the major banks.

I have about $1,100 in the platform - which is fine for speculation.

What isn't clear to me is, what do the risk adjusted returns look like? I just don't think anyone has run the numbers for the direct lending small business loan market yet. Its probably too small.

It also sounds like interest payments don't start until the offering is fully funded and closes. Do they just hold your money until then? What happens if the offering doesn't get fully funded? If there could be weeks or months where you're not getting interest, that's an issue.

[james.hendrickson]

I took a look at SMBX. It looks like they're only operating in a few states. NJ is one of them but there is only one listing in the state which doesn't happen to be anywhere near me so not quite local. Still a neat concept if you're looking for something very speculative in nature. The one offering in NJ is paying 11% interest. I certainly wouldn't risk a lot of money on it but might be willing to gamble a couple thousand. I had looked into peer to peer lending years ago but it wasn't legal in NJ. I hope they've changed that.

I'm guessing it's a fairly new service as they're only showing 9 offerings total nationwide. I guess you could diversify and maybe put $100 in each of the 9 to reduce your risk.

DisneySteve, so one reason why they don't have a lot of listings is strict underwriting standards. Their default rate is really low, because they're using the same standards as a lot of the major banks.

I have about $1,100 in the platform - which is fine for speculation.

What isn't clear to me is, what do the risk adjusted returns look like? I just don't think anyone has run the numbers for the direct lending small business loan market yet. Its probably too small.

[disneysteve]

I took a look at SMBX. It looks like they're only operating in a few states. NJ is one of them but there is only one listing in the state which doesn't happen to be anywhere near me so not quite local. Still a neat concept if you're looking for something very speculative in nature. The one offering in NJ is paying 11% interest. I certainly wouldn't risk a lot of money on it but might be willing to gamble a couple thousand. I had looked into peer to peer lending years ago but it wasn't legal in NJ. I hope they've changed that.

I'm guessing it's a fairly new service as they're only showing 9 offerings total nationwide. I guess you could diversify and maybe put $100 in each of the 9 to reduce your risk.

[james.hendrickson]

Kork, thats an advantage of the SMBX platform. It brings local back to finance and lending. Also a lot of the bigger banks discriminate against Black people. Thats less of problem for apps like SMBX.

[kork13]

I checked the app a few weeks ago and I saw that a brewery local to Portland, Oregon had a bond offering out to expand their locations. So, I went down the brewery and checked it out. The place was full, it was clean and it had customers. So, I put like $550 into the bond offering. Its enough to get some decent payments per month (given how the bonds are structured) and it was enough that I wouldn't any sleep if the brewery went under, so I pulled the trigger and placed the order.

That's pretty cool, that you were able to invest directly in a local business without getting wrapped up in the minutiae of becoming a partner or major investor. I love this.

[james.hendrickson]

Oh and one more update for this thread.

DON'T FORGET ABOUT BONDS!!!!

I've been investing in small business bonds through an app called The SMBX. SMBX stands for small business exchange. I regularly log into the site to reinvest my coupon payments.

I checked the app a few weeks ago and I saw that a brewery local to Portland, Oregon had a bond offering out to expand their locations. So, I went down the brewery and checked it out. The place was full, it was clean and it had customers. So, I put like $550 into the bond offering. Its enough to get some decent payments per month (given how the bonds are structured) and it was enough that I wouldn't loose any sleep if the brewery went under, so I pulled the trigger and placed the order.

So, the bottom line here is another classic way to make passive income is buy lending money/buying bonds. And this option has lots of flavors as indicated by the SMBX example here.

[james.hendrickson]

Just piping up with another passive income idea. Over the past couple of years I've been on a kick of looking for passive income streams that are actually passive.

And there aren't a whole lot of them out there - evidently you can't just get something for nothing. There has to be a fair exchange of value.

One thing I've been doing thats actually been working is selling my browsing data. There are a couple of legitimate apps that do this.

Savvyconnect => This is basically a research panel similar to Nielsen. What the company does is give you $5 a month for read access to your browsing history. And they bundle the information and sell it to marketers. Or they survey their panel participants and sell the data to market researchers. I've been using them for about a year and the checks come regularly. They are here.

Nielsen Opinion Rewards => This is the original Nielsen television ratings panel, just the internet version. It works the same as SavvyConnect. You install their software on your electronic devices and it reads the data you generate. Then it pays you in points. The points are redeemable for cash. it averages out to around $5 a month. You can find them here.

Datacy. This is an interesting beast. They pay significantly more than Savvyconnect and Nielsen. And I presume they are using the same model. However, the platform doesn't exactly say how they making money - and in fact, I haven't pushed the issue that much. Its also hard to get into, I had to apply several times and it took months. Their website is here.

There are a couple of issues with selling your bandwidth. First, the major hazard is not that your data will be misused - these platforms are aggregating behavior statistics, not selling social security numbers or passwords. Instead, the major hazard is that selling your data will shift your mental focus to small things. In retrospect after having done for for a while, it might have been better to focus on larger dollar generating opportunities rather than installing apps for $5 a month. For example a skill upgrade, or forming new relationships that could lead to higher value gig work or a promotion might have made more sense.

But that, said, if you want some small consistent passive income wins, selling your bandwidth isn't a bad way to go.

[Annieadox]

This is something I have looked into as well. We have an outbuilding that I was thinking I could rent out, but waaaay too much risk involved.

I couldn't bring myself to rent something like that to friends or family (I'd just let them use it free). One thing I have had success with is renting out catering kit that I have stored. It all has to be checked and signed off anyway, so I occasionally rent that out to local pubs etc that want to put something on themselves.

I had a similar scenario with a spare room in my old apartment. Felt like there were too many strings attached to let a friend stay, but also couldn't be bothered with the rigmarole of finding a trustworthy tenant.

Anyway, there are cases when renting out is not stressing you out, but it boosts your financial flexibility and peace of mind.

I dipped my toes into real estate last May. Bought an apartment in Nea Smyrni – a pretty popular tourist zone. I list it on Airbnb, and it's been doing pretty well so far. The income's been helpful for sure, and the whole renting thing doesn't feel so risky when it's not your backyard.

[mattbram]

I have some good indoor and outdoor space that I could rent for vehicle storage. I looked into it. NO THANK YOU. Storing a vehicle for a close friend or family member is one thing to make some pizza/beer money on the side. There's a good amount of risk renting to people you don't know and you may run afoul of other regulations.

This is something I have looked into as well. We have an outbuilding that I was thinking I could rent out, but waaaay too much risk involved.

I couldn't bring myself to rent something like that to friends or family (I'd just let them use it free). One thing I have had success with is renting out catering kit that I have stored. It all has to be checked and signed off anyway, so I occasionally rent that out to local pubs etc that want to put something on themselves.

[ua_guy]

I have some good indoor and outdoor space that I could rent for vehicle storage. I looked into it. NO THANK YOU. Storing a vehicle for a close friend or family member is one thing to make some pizza/beer money on the side. There's a good amount of risk renting to people you don't know and you may run afoul of other regulations.

[mattbram]

When I think of "passive income" streams, I generally think about things that don't require much work.
Many of the above items could involve significant to full time work in order to be successful.

I can't help but agree with this. Ultimately, I don't think there is such a thing as a 'passive' income.

Either you have to invest significant time into an asset to make it pay. Or you have to invest significant money (which you would have had to work for).

I guess income could be passive if you base it off someone else's work - such as using an inheritance to buy an asset that pays a fixed or varying amount over time.

Personally, I look for low risk/low maintenance income. Where I can invest some time and money then mostly be hands off whilst the money trickles in.