9 Passive Income Cash Flowing Ideas
Hey friends, we're gonna talk about 8 different ways that you can make passive income and make some extra cash to invest. Here’s how it’s going to work. After exploring each idea we’ll discuss how hard it is to get started, how hard it is to make $100 a month from it. Lastly, how hard it is to maintain once you've started.
What is passive income?
So if you’ve ever read Rich Dad Poor Dad, the author starts off the book by saying “the rich don’t work for money”. If you breakdown this concept it would look like this; The typical person works a 40 hour job that likely pays them some wage. If you stop working there, the wage is gone ei you always have to be working to make money. Passive income is finding a way to generate cash flow without the time investment. So your 40 hours could essentially be - infinite.
So, let's say you were to write an ebook. You publish your ebook that is now on digital bookshelves. You've done the work, kind of once, to write and publish the book. But now anytime the book sells, you make money from royalties, that is passive income.
You could literally be making money while you sleep because you've created this cashflow system, which is generating income for you.
It’s a trap
So, if you see any ads before this video talking about how you can get rich quick by whatever scheme, or if you see people in the comments pretending to be me (screenshot pops) saying, "Oh my God, here's how you can get rich quick with crypto, WhatsApp this number." That is all a scam, it's not gonna work and you may actually end up losing some money.
There is no way to get rich quickly. It is not a thing. So, if you're looking for a get rich quick scheme, those things just don't exist. I think of this, is that ultimately money is just a medium for exchanging value. The only way to make money is to provide value. And the only way to make passive income, is to provide value in a way that is not directly tied to your time.
So please, please, please, do not try to join a get-rich-quick scheme, they don't exist. I've had lots of messages over the years from people who have tried signing up to a get-rich-quick crypto scheme or a gambling scheme or a, "Hey, here's how you kind of play poker online." None of these things ever work. People always end up losing money.
The only way to make money is by providing value. And so, let's talk about the nine different ways (icons pop) that you could provide value if you wanted to.
1) Investing in dividend stocks
To kick things off: investing in dividend stocks. And in this context, the way that we provide value is by offering up our money. Providing money and investing in a service is in a way giving a form of value. And so, when we give our money to a company in the form of buying their stock, it makes sense that we would get some kind of return for that investment. And we're starting with this because investing in dividend stocks is the easiest and maybe even the safest way to make any kind of passive income.
If you have any sorts of savings and they're sitting in a savings account, earning 0.01% interest, they're not really doing very much for you. Whereas if you had those stay savings and put them in stocks, you could potentially be earning passive income from the money that's otherwise just sitting there.
Now, I've got a whole video called "The Ultimate Guide to Investing in Stocks for Beginners", which is gonna be linked over there somewhere. So that is a solid half hour-long introduction to stocks and exactly how they work. But the thing that I recommend for most beginners as a non-financial advisor, is that basically you should invest your money in index funds.
Now an index fund is something like the S&P 500. And when you invest, let's say $1,000 in the S&P 500, that basically means that your $1,000 is distributed amongst the top 500 biggest companies in the US. So, weighted by how big they are.
So like, 2% of it would be Apple, 2% Facebook, 2% Google, 2% Microsoft etc,. And then you probably won't have heard of the 500th company on the list, but basically, all the big US companies you've heard of you end up investing in all of them a little bit at a time.
How hard is it to start investing in stocks? ⭐
So, if you wanna get started with that, all you need to do is sign up to a stockbroker. If you're in the US you can use Robinhood, I’ll drop a link in the description. Basically, whatever country you're in just Google the phrase, best stock broker platform, your country name and you'll find something that works for you. And then it's very easy to be able to invest in an index fund. So, within our famous side hustle assessment matrix, we're gonna give the difficulty of starting, a one-star rating, one out of five. It's very, very easy to get started with stocks.
How hard is it to make $100 a month by investing in dividend stocks? ⭐⭐
Well, this kind of depends, because it depends on the performance of the stock market overall. So, in the last 12 months, from 2020 to 2021, the S&P 500 has actually increased by about 50%. That is a lot, it's like gone up by a solid 50% despite COVID and everything going on. So if in April 2020, you had invested $2,400 in the S&P 500, the fact that it's gone up by 50%, means you would've made $100 a month. But obviously, this is not the way to look at it because things can go up and down, and the stock market has different levels of performance depending on what time period you're looking at.
But if we average out the last 30 to 50 years, the S&P 500 has had a roughly 10+ percent return. Which means every year, on average, over the long-term, it goes up by around 10%. This is not inflation-adjusted for any economists among us. And so if we do some back of the envelope calculations, if we wanna earn $100 a month, passively, through stocks, we would need around $12,000 invested in the S&P 500, to make that 10%, $1,200 a year, which is $100 a month.
But as I mention in the Ultimate Guide to Investing, that stocks, overtime, compound, and so, if you put in $7,500 in the S&P 500 and you left it there for five years, then five years later you would be making roughly $100 a month, if we go by this very average figure of 10% a year. Or if you invested $5,000 in the S&P 500, then 10 years later you'd be making $100 a month in purely passive income. Again, assuming the 10% average.
Well, it kinda just depends on how hard is it for you to make $5,000, $7,500, or $12,000 in savings and put them into a stock market index fund? And crucially this is money that you shouldn't need to touch in the next five to ten years, at least.
How hard is it to maintain the $100 stock monthly income? ⭐⭐
Obviously varies massively depending on which country you're in (laughs) and what your circumstances are and what your job is. But if you're in the US where the median kind of average salary is about $50,000, something like that, then again depending on your circumstances it's not that hard to get $10,000 in savings. Obviously, if you're supporting a family of 15 people on $50,000, it's different. If you're a single person, again, it's different but I'm gonna give this roughly a three out of five-star rating for the difficulty of getting $100 a month. Obviously, if you live in a country like India where the average salary is $3,600 a year, it's very very difficult to make $10,000 in savings overall.
And finally, the third category in our side hustle assessment matrix is how hard is it to maintain this income once you've set it up in the first place? And we're gonna give this a one star out of five because once you've got the money in you just like set it and forget it and it's not that hard to maintain. There are other sources of passive income that require higher degrees of maintenance over time.
But stocks and shares is a very easy way to make passive income and to use my personal example these days my stocks and shares portfolio, which I've been investing in since 2012 and since then I have invested money almost every week. In the last 12 months I’ve made about $16,228 from my investment portfolio in unrealized gains. That is roughly $1,352.33 per month.
2) Starting a Youtube channel
So as you can probably tell I’m fairly new in this topic but I genuinely believe it could be a great passive income system especially if you’re doing something you love.
How hard is it to get started? ⭐
So let's use a side hustle assessment matrix and we'll talk about this. How hard is it to start a YouTube channel? Well, I'm gonna give this one out of five stars because it's actually very very easy to start a YouTube channel. You just go on youtube.com. You click to create a channel and you can upload videos by just filming with your phone and uploading it.
In reality, it's a lot harder to make good videos, and making good videos is how you grow on YouTube. But getting started on YouTube is very, very, very straightforward.
How hard is it to actually make $100 a month? ⭐⭐⭐⭐
So again, let's say we wanna make $100 a month in passive income. What does that look like? Well, firstly, to be eligible for monetization on YouTube, you need a thousand subscribers and 4,000 hours of watch time.
Since I am not there yet I can’t truly specify my personal experience but when I get there I’l make a video specifically about what the cash flow from the channel looks like. For now, I did a ton of research and here is what I got.
It takes an average of 9 months and 90 videos to get the first 1,000 subscribers. And if we look at the averages. So that's quite hard if you're thinking you're gonna start a YouTube channel and start making money from day one.
Well, on average, the kind of revenue per thousand views on YouTube is about $2. So this varies massively, but let's say on average about $2 per thousand views. Therefore if you want to make $100 a month you need 50,000 views on YouTube to make $100 a month. Let's say you make one video per week and let's assume you're not getting any traffic on your older videos. That means every video you make needs to get around about 12,500 views.
And very roughly the average YouTube channel can expect about 20% of their subscribers to equal the average view count for each video.
So on YouTube, if you had 62,000 subscribers, very roughly, very average, you can expect 20% of them i.e. 12,500 views on each video. And assuming you have no evergreen content of the long-term you would need to run about 60,000 subscribers to be making $100 a month.
In reality, you make $100 a month a lot before 60,000 subscribers. But when it comes to assessing how hard this is to do I'm gonna give this a four out of five stars. It's actually very hard to make compelling YouTube videos but it's very easy to get started.
How hard is it to maintain the $100 monthly income from YouTube? ⭐⭐⭐⭐
Finally, in terms of effort to maintain. Like actually getting that first thousand subscribers is a lot harder than keeping it growing. 'Cause once you've got a thousand subscribers and once your channel is growing it means you've landed on a formula that works. And so maintaining it then becomes easier then starting from scratch. And so in our side hustle assessment matrix we're gonna give maintenance of a YouTube channel passive income stream to be round about two out of five stars.
3) Become an affiliate marketer
Affiliate marketing is a pretty common term these days. If you’re unfamiliar it means that you are selling other people's products but you're getting a percentage of the sales from those products. Now, apparently 48% of affiliate marketers globally earn $20,000 a year which is $1,660 a month. Which is actually not bad at all. Like people are doing very well with affiliate marketing overall.The biggest issue here is for you to run successful affiliate marketing campaigns you need an audience - which takes a lot more time and effort to build.
Back in 2012 I started an Instagram account called Jesus Centric. Wow, that's almost a decade ago. Anyways, we have over 400,000 followers. The account is fairly average and we get tons of dms. From that account I probably get 3-4 ad inquiries per month and we typically turn down 90% of them since the business doesn’t need the income now and we want to preserve the honest and quality of the content.
The ones I do look at come from agencies typically and want to advertise a Christian book or movie, or something larger than the typical bracelet shops I get. The interaction is simple. They tell me about the campaign and ask if I’m interested. They typically want the last 30 days of data from your account and the audience breakdown as well. From there I’ll send them my rates, and we’ll sign an agreement.
For JesusCentric I’ll typically charge anywhere from $50 for a story to $750 for a feed post.
So how hard is it to get started with affiliate marketing? ⭐
Well, I'm gonna give this a two out of five stars. Basically, you can just sign up to an affiliate program like Amazon Associates. So Amazon have their own affiliate program which I think is probably the biggest in the world. And then once you have your little special links you can post those on your website or on social media or whatever. And if people buy the product through your link or in fact buy any product on Amazon through your link you'll get like some tiny percentage of the sales.
So pretty easy to get started with affiliate marketing, but
How hard is it to make $100 a month? ⭐⭐⭐⭐
Well, this is actually kinda hard. So let's say you had a product that was $50 that you were trying to sell and you were getting 5% commission on it. That'd be pretty good. Amazon doesn't offer nearly as much as 5% it offers like two or 3%, something like that. And let's say your average conversion rate i.e. people visiting the thing versus people actually buying the product after visiting the thing, let's say that's 1% which is pretty reasonable for conversion rate.
You would need 8,000 visits to your website or whatever to make $100 a month. It's actually quite hard to get 8,000 visits per month to your website, to a specific product page. And generally doing well in affiliate marketing requires lots of upfront effort in terms of either building an audience or building such domain authority in whatever space you're in, that you're sort of organically getting traffic.
So on JesusCentric for instance we reach about 250,000 people per month and get about 90,000 interactions. Based on those numbers, if we were to post once a month and get 90,000 clicks and convert at 1% with $5 from each conversion, well that would be a nice number. $4,500 but it’s not that easy and those figures include all of our monthly posts and not just a single post. But for giggles it’s fun to consider the possibility.
Now there are hundreds of affiliate programs you could sign up for and earn money from. You just need to be consistent and build up your referral loops. We’ll do a video on that some other time.
How hard is it to maintain the $100 monthly income from affiliate marketing? ⭐⭐⭐⭐
I'm gonna give this a 3.5-star rating, because again you need an audience. And as we always talk about on this channel the way you build an audience is by creating useful content, putting it for free on the internet once a week and doing this for at least two years. If you just follow those three steps I guarantee you'll have an audience and you'll be able to make some kind of money through this passive income stuff. But that's quite hard to do. No one sticks to it for at least two years.
So we'll give that a 3.5-star rating. But the good news is once you've created it. And once you start making money from affiliates it's actually quite easy to maintain because especially if you have evergreen content, the sort that isn't relying on, like current affairs or the latest news, the sought that people might search for over a long period of time, this becomes like relatively reasonable passive income.
4) Selling digital products
Now these are products that you create once, like an ebook or a download or an app or something like that. So you create it once and then you can sell it multiple times because selling digital products doesn't usually have any costs associated with it.
One really good example is this guy called Traf, who I follow on Twitter, who made an iOS 14 icon set and sold it for like $30 a pop, a few months ago and ended up making, I think like $300,000 in the course of like a few weeks, just because loads of people around the world wanted to buy his icon pack.
How hard is it to create a digital product? ⭐⭐⭐
So how hard is it to get started making digital products? I mean, anyone can write an ebook an ebook counts as a digital product.
So I'm gonna give this a two-star rating, two out of five stars, but obviously like again money is an exchange of value. So the thing that you're selling you have to be providing enough value to compensate, to make up for the price that you're selling it for. And that's often quite hard, especially if you don't have any experience in this sort of field.
How hard is it to make $100 a month? ⭐⭐
Well, you know, it's very easy to create an ebook but it's a whole different ball game trying to get people to actually buy your ebook or buy your icon set or buy your app or buy your website themes. And because the market around this stuff is so competitive like you have to be genuinely really good to get people to buy your stuff. And the way you get people to pay you money for something is that you identify a problem that they have, you solve that problem, and then you charge money for it. And if you can do those three things, then it's, you know I wouldn't say it's easy to make $100 a month but it's very doable to make $100 a month. You just genuinely have to have something that solves a pain point that other people are willing to pay for.
How hard is it to maintain the $100 digital product upkeep? ⭐⭐
So we're gonna give this a three out of five stars to make $100 a month from selling digital products. And finally, in terms of maintenance, we're gonna give this a two out of five stars, because usually, you do have to maintain your product a little bit but it's often easier to do like it's much easier to maintain a product then creating a product in the first place.
5) Create an online course
Now online course's sort of like a digital product but generally online courses are in video format. In fact, this whole video is so long, it could basically have been an entire online course. Maybe I'll do one about this very topic. And in terms of getting started, we're gonna give the starting difficulty a three out of five stars, 'cause it's not that hard to make an online course but generally, you do need to know how to do video.
How hard is it to create an online course? ⭐⭐⭐
So, you know, you actually could film an online course on your iPhone. Stick your phone on the side, talk to the phone, teach something. So it's not hard creating one, but in terms of making $100 a month, again, at that point, your course needs to actually be good. And the only reason people will pay for it is if the course is actually good.
I published a course on Udemy a few years ago which I published in my tiny studio apartment. I have the JesusCentric account and tons of people have asked me about how to grow the account. So I decided to dedicate time and create a course. It probably took me around 2-3 weeks to research, shoot and edit the course but it was well worth the investment.
As of today the course has over 17,000 students and even though it is highly outdated people still buy it.
So, pretty easy to start. We're gonna give this a two out of five but
How hard is it to make $100 a month from teaching online courses? ⭐⭐⭐
Now, this kind of depends. If you're going down the Udemy route then to make $100 a month in Udemy you need to sell your course a few times based on your price. My course for instance sells for $89.99, so if I sell two I’m above $100. Unfortunately Udemy discounts the courses heavily so for example today it’s on sale for $14.99 (83% off). At that price I would need to sell to at least 7 students to cross over $100.
How hard is it to maintain your online class? ⭐
Well, if your class is actually pretty good, it shouldn't be too hard to get a few new people a month buying it. If you have an existing audience it's very easy because people already know, like, and trust you hopefully. And so they'll watch your stuff and give you a shot because you've already built that goodwill with them. But again, the nice thing about Skillshare as a platform is that they have their own algorithm. So the good stuff rises to the top.
So if you genuinely have a really, really, really good class and you put it up on Udemy, then even if you don't have an audience, there is still a high chance that if the class is actually good and people watch it a lot and people recommend it and give it high ratings, it will rise to the top. And it will start getting recommended to people.
6) Start a business and set it to autopilot
So that the income that you generate from it is reasonably passive. This is the stuff that Tim Ferris talks a lot about in "The 4-Hour Workweek", where there are a lot of businesses that you could make where you're selling a good or selling a service and then you can delegate, outsource, automate and intelligent ways to make the income passive.
How hard is it to start? ⭐⭐
I started a business a few years ago called FOUR24. We sold high-end bracelets and a few other accessories. When the business started it took a few months to get it off the ground but with a ton of time and dedication within 6 months we we’re doing over $1,000 a week.
As the business grew, I was able to put systems in place, hire outside help, and focus on scaling instead of the dreadful day to say things. I built a remote team, set up Slack, Zapier automations, retargeting ads and everything was flowing. Towards the end we saw multiple days where we were getting over $1,500 per day in gross revenue. All with third-party dropshipping and only 5-10 hours of work per week on my part.
This is where I learned one of my most valuable lessons ever. Don’t really focus on a single audience source.
We dedicated a ton of time to IG and built up the account to almost 100,000. One day, we log in and the account was disabled. Why? No idea. I called, emailed and thought about visiting Zuckerburg but it was no use. The business wasn’t able to survive and shift so quickly. I decided to cut my losses and keep the profit vs start from scratch.
So these are different ways of generating passive income from a kind of goods or service-based business. But it's quite hard to get started with this stuff.
How hard is it to make $100 per month? ⭐⭐
To get started we're gonna give this a four to five-star rating because again, you need to create a business and it's quite hard to make a business that genuinely provides value. Equally, we're gonna give it a four out of five-star rating for making $100 a month in revenue. Because again, you have to be able to provide value and providing value is hard. Like it's not as easy as making an account on a stocks platform and just putting some money in.
You actually have to give value to people which is kind of hard. But the nice thing is once you get started like with anything, maintenance is a little bit easier. So we're gonna give that a three out of five-star rating.
7) Building an app or website
or some kind of software product that you can offer either as a one-off or more likely these days, as a subscription service. And there's a whole category of this called SAAS - software as a service.
How hard is it to start an app or website? ⭐⭐⭐⭐
Now, if you look at the website, indiehackers.com there are like literally hundreds of examples of people who have built software businesses that are making passive income and they share their revenue numbers and they tell you how they got started and they give you their tips.
Now I've had a bit of personal experience with this. So when I was in school I made an app called Harpa Cristã com Acordes. The idea came about when I was in our church orchestra playing my Trombone. We had to carry this large book with all the chords and sheet music. So I thought to myself - there must be an app for this. There wasn’t. So I set out to build it.
I have very little coding knowledge and experience and even less back then but I was able to find a drag and drop builder that was app focused. So this would pull in a database and serve the information in that database. Meaning, I had to type up each and ever song, all like 600 of them, upload them to this website and integrate it into the drag and drop. After a few weeks we had the first prototype. It was a hit.
How hard is it to make $100 a month? ⭐⭐⭐⭐
So after a few weeks I decided to invest more money into it and hired a developer to help me build out the app how I initially envisioned but didn’t have the skill to do so. I wanted a built in tuner, metronome, the ability to auto-scroll, a key finder, key changer, etc. So after a few months we built it and it blew up. We were getting 700-1500 downloads per day and reached well over a million downloads.
So to monetize the project I could have gone two different ways.
- Charge a flat fee per download
- Add ads into the platform.
How hard is it to maintain a website or app? ⭐⭐⭐⭐
I decided to do both. We kept the app free with ads, but you could remove the ads for $0.99. The downloads continued to climb and I was making only $10 per day, mainly because 90% of the users were in Brazil and after the currency exchange there wasn’t a ton of upside. Ultimately I stopped dedicating time to it and will rate it 5 stars on the difficulty of maintaining.
Conclusion
There are infinite ways to create passive income streams. My strategy when I was developing mine was to work on the lower hanging fruit first. So that way, something was coming in while I built the longer term sources. If you have anything to add to the list shoot me a note - I think this post will take on a life of its own.