This is what I found after trying side hustles for 20 years
The short answer is that yes there is such a thing as passive income.
I’ve heard many people claim that there’s no such thing as passive income. I will explain here why I think they’re wrong. But before that, we have to define what passive income is.
What is Passive Income?
Investopedia.com claims that there are three types of income: passive income, active income, and portfolio income. Here’s we’re only interested in passive income.
Investopedia defines passive income as:
“Passive income is earnings from a rental property, limited partnership, or other business in which a person is not actively involved.”
When I’ve seen people claim that income from rental properties is passive, there will always have a bunch of people that disagree. They claim that there is active work involved, such as collecting the rent, dealing with repairs, etc. While that’s true, you’re not generally actively involved.
With a day job, you would generally be worked 9–5 Monday to Friday. If you rent out a property, you could go months or even years without being actively involved. There is a real difference that some people refuse to see.
If you’re one of those that thinks even two minutes of activity means the income isn’t passive, then for you passive income (by your definition) doesn’t exist.
You need to choose what income style suits you
We need to get away from such strict definitions. In real life, there is a whole range of income types from almost 100% passive to 100% active. If you’re looking for passive income, it’s up to you to decide how much time you’re willing to put into it.
If you could earn a full-time income by working an hour a day, I don’t see the point of complaining that it’s not passive. I see plenty of people doing just that.
Often it seems like they are just too lazy to work.
In this post, I’ll try to cover a range of different passive income ideas that have worked for me and could work for you.
Some Passive Income Ideas
This can be almost entirely passive. In the last 20 years, I’ve owned around six rental properties. The amount of work involved was minimal. They were all in different cities to where I lived, so I always had a real estate agent take care of them.
All I had to do was sign contracts and check estimates for any repair work needed. It should go without saying that I had to spend time upfront to find the properties, secure a mortgage, and sometimes renovate them a little.
As well as the passive income from rent, you usually get great capital growth over the longer-term. Property is also a great hedge against inflation.
You might think that this isn’t passive at all because you have to sit down and spend time researching and writing the books. That’s true, but once the books are written, the income can be 100% passive. You may decide to spend time promoting the books but you don’t have to. The choice is yours.
I wrote 8 Kindle books, and you can see what I earned in the following post.
If you’re a musician, your royalties would also be passive once the music is written. Writing music and writing words are similar when it comes to passive income.
Writing on Medium can also be a source of passive income over the longer term. The secret is to write evergreen stories that will be read for years to come.
This is much less passive at the start. It generally involves a lot of work. It can be quite lucrative, although I’ve found it to be quite hit and miss. I made a total of $60,000 with my travel blog and an additional $12,000 flipping websites.
But I also had quite a few sites that made $0. They all had set-up costs, so ended up losing small amounts of money.
You have to be dedicated and consistent to make money from blogging. It’s not a get-rich-quick idea. But it can result in passive income once it’s making a regular income.
Here are my two success stories with blogging. I’m considering starting another travel blog when I go traveling early next year. I’ll be traveling with my wife, and we’ll be visiting some interesting countries (Russia, Ukraine, Belarus, Georgia, and Turkey), so I think it’s worth documenting our journey. If it doesn’t make any money, at least we’ll have a record of our travels to look back on.
My ecommerce store was the biggest success of my whole life. I ran it for three years. After the first few months, it rarely took more than an hour or two a day to run. For the first two years, I ran it alongside my 9–5 day job. I would consider it pretty passive once it’s set up.
I know this isn’t the case for everyone, as I know people that work full-time on their sites. The key is to set up everything efficiently. I stored all my products at a fulfillment warehouse. The goods arrived from overseas, and the warehouse staff took care of everything. I rarely saw the products.
The only things I did were to answer customer queries, send an orders file to the warehouse once a day, and make sure everything was running smoothly.
Here’s a full account of how I started all the way through to selling the site.
I don’t consider this truly passive, but if you have an hour or two a day to spare, you could make a good additional income from it. Maybe that is passive enough for you.
Don’t make the mistake of looking for something 100% passive. I often see posts on reddit along the lines of… I have $100,000. How can I generate a $20,000 passive income?
I’m sorry to have to disappoint you, but that’s just expecting too much. If you think you can easily make a 20% annual return without doing any work at all, then think again. It might be possible for a select few, but it’s not possible for most of it. Life isn’t that easy.
If you want to earn a passive income, you usually have to put in at least some work.