How to learn about generating passive income?

[TheIronStar]

I've been reading around on methods of generating passive income. Does anyone here know good sources of information about this? (I don't mean the once-popular foreclosure speculation that once was all the rage, or other such just-ignore-all-the-sweat-equity-and-pretend-it's-passive-income stuff, but learning how to invest for real even in this age of relative market efficiency.)

I'm having a hard time finding anything on how to be good at spotting genuine opportunities.

Does anyone know what sorts of sources are worthwhile?

[Bene]

check out this blog: Genius Types | The Balance Between Business and Creativity

[ella]

What will work best for you depends on your interests. What are you interested in? Real estate, shares and derivates, internet, business?

Keep in mind that most passive income streams will take above average sweat equity (investments of time, good information and some capital) to get it started.

[Saidin]

Passive income is never truly passive. You have to at least provide some value to others in order to make some money from them. This means you have to do something to create that value.

The most passive form of income is probably achieved by creating something (of value) once that can be recreated easily. Good examples are eBooks, blog posts and articles, music, etc. That's how some artists get rich: they create something once and sell it over and over again.

Look at what kind of things you can create once. After you've done that, you can extract value from it.

[mellom]

Originally Posted by Saidin

Passive income is never truly passive. You have to at least provide some value to others in order to make some money from them. This means you have to do something to create that value.

The most passive form of income is probably achieved by creating something (of value) once that can be recreated easily. Good examples are eBooks, blog posts and articles, music, etc. That's how some artists get rich: they create something once and sell it over and over again.

Look at what kind of things you can create once. After you've done that, you can extract value from it.

I agree. Sometimes people confuse passive income with hitting the lottery

Feel free to check out my site (in signature), if you're interested in monetizing a blog or website. That is just one of many passive income avenues.

[Lucas]

Passive income is usually the result of a system, and there is no system on Earth that is truly 100% passive. Think of passive income as an automated assembly line that you first had to take the time and effort to build, then you have to take an exponentially smaller amount time to maintain and ensure that it is running, and all the parts of it are operating in harmony and unison. That can be a couple hours a week, or month, depending, but you are always going to have to watch your creation and fix any parts that break down. It's still a much smaller and better use of your time than trading time for income.

[TheIronStar]

Originally Posted by Saidin

Passive income is never truly passive. You have to at least provide some value to others in order to make some money from them. This means you have to do something to create that value.

The most passive form of income is probably achieved by creating something (of value) once that can be recreated easily. Good examples are eBooks, blog posts and articles, music, etc. That's how some artists get rich: they create something once and sell it over and over again.

Look at what kind of things you can create once. After you've done that, you can extract value from it.

Well this is sort of where I got confused. How do you mean create something once? Music, blog posts, etc. are certainly not one-shot deals! (Of course, no business in the world is.) I'm not sure I understand what you mean by create and recreate, and selling it over and over.

Originally Posted by Lucas

Passive income is usually the result of a system, and there is no system on Earth that is truly 100% passive. Think of passive income as an automated assembly line that you first had to take the time and effort to build, then you have to take an exponentially smaller amount time to maintain and ensure that it is running, and all the parts of it are operating in harmony and unison. That can be a couple hours a week, or month, depending, but you are always going to have to watch your creation and fix any parts that break down. It's still a much smaller and better use of your time than trading time for income.

Certainly, as long as the payoff per labor and whatever other utility gained matches up. To use your analogy, I'm finding it difficult to tell what truly is an assembly line these days, however, versus what's just several chunks of metal in an industrial neighborhood.

I'm currently getting all my income from my job, so I'm looking to change that without ruining my productivity, fitness, or sleep.

Originally Posted by ella

What will work best for you depends on your interests. What are you interested in? Real estate, shares and derivates, internet, business?

Keep in mind that most passive income streams will take above average sweat equity (investments of time, good information and some capital) to get it started.

At the moment, the only investing I do is in index mutual funds (it seems fewer and fewer people have the skill to beat the market in things like equities or derivatives long-term given today's market efficiency), and there I'm not an income investor. I was thinking of something internet-related, preferably that I could automate as much as possible. I've read of people making money online having come up with some seriously random ideas, but I don't know where to learn how to create marketable, cost-efficient ideas.

[Saidin]

Originally Posted by TheIronStar

Well this is sort of where I got confused. How do you mean create something once? Music, blog posts, etc. are certainly not one-shot deals! (Of course, no business in the world is.) I'm not sure I understand what you mean by create and recreate, and selling it over and over.

Let me just respond to the part addressed to me.

I'm a programmer/web developer. I used to sell my services to other companies. I go there, create a piece of software for them, and they pay me for it once. I work 8 hours and get paid for those 8 hours.

This is what Steve calls exchanging time for money.

Now I can also make a program once, and sell it on my website. I do the same amount of work, but I make it so that more people can use it than just one company. I can sell this product over and over again.

For example: Steve creates (very good) blog posts once and earns a living using ads (such as adsense) and affiliate marketing (such as the photoreading deals). Because he creates so much value he can extract much value.

Like I said, it's almost never truly passive. In Steve's case, he has to keep visitors coming back to his site. He has to keep posting else the visitor level might drop: people will not come back because they know they will not find anything new, other websites will stop linking because of the same reason, etc.

I just created a little bit of value (also by affiliates and adsense on the site in my sig), and thus making just a little bit of money. But don't let this discourage you: this is more passive than working for a boss. On the internet you'll be leveraging value/technology instead of time.

[Lucas]

Originally Posted by TheIronStar

Certainly, as long as the payoff per labor and whatever other utility gained matches up. To use your analogy, I'm finding it difficult to tell what truly is an assembly line these days, however, versus what's just several chunks of metal in an industrial neighborhood.

I'm currently getting all my income from my job, so I'm looking to change that without ruining my productivity, fitness, or sleep.

And I see that mindset at work right here. Most people, who are passively paid, are ridiculously overpaid for their time. However, at the beginning, they were horribly underpaid for that time. However, they kept their vision in mind, utilized the tools they had available and kept on it, knowing the goal. If I offered you more money than you make now, for 4+ hours a week effort, but the first 2 years you would probably be unpaid...would you do it? Most coming from an employee mindset wouldn't, because they are still on the trading time for money scale.

If you want passive income, you are going to have to change your views on money, and thats where I suggest most to start. Good luck. Once your paradigm starts to change, you wont go back.

[TheIronStar]

Originally Posted by Lucas

And I see that mindset at work right here. Most people, who are passively paid, are ridiculously overpaid for their time. However, at the beginning, they were horribly underpaid for that time. However, they kept their vision in mind, utilized the tools they had available and kept on it, knowing the goal. If I offered you more money than you make now, for 4+ hours a week effort, but the first 2 years you would probably be unpaid...would you do it? Most coming from an employee mindset wouldn't, because they are still on the trading time for money scale.

Of course. Few of us have two full years of savings built up, and have the ability to pay their various bills, obtain quality health care, and so on when there's no personal income coming in.
As far as the hours/week, it is said that "Working for yourself means that you get to choose which 80 hours of the week you work." I don't believe too many small business workers do four hours per week, and I strongly suspect that the "4 hour work week" bandied around these days is an anomaly applying to a few.

I don't want to turn this into a "is small business entrepreneurship effective" discussion, however.

Originally Posted by Lucas

If you want passive income, you are going to have to change your views on money, and thats where I suggest most to start. Good luck. Once your paradigm starts to change, you wont go back.

What sorts of views do you mean?

[TheIronStar]

Originally Posted by Saidin

Let me just respond to the part addressed to me.

I'm a programmer/web developer. I used to sell my services to other companies. I go there, create a piece of software for them, and they pay me for it once. I work 8 hours and get paid for those 8 hours.

This is what Steve calls exchanging time for money.

Now I can also make a program once, and sell it on my website. I do the same amount of work, but I make it so that more people can use it than just one company. I can sell this product over and over again.

I just created a little bit of value (also by affiliates and adsense on the site in my sig), and thus making just a little bit of money. But don't let this discourage you: this is more passive than working for a boss. On the internet you'll be leveraging value/technology instead of time.

Thanks for your explanation, Saidin.

[TheIronStar]

What would I do to become good at spotting genuine opportunities?

[Brutha]

What would I do to become good at spotting genuine opportunities?

Practice.
You should also be aware that even people who are good at spotting opportunites won't succeed in 100% of their ideas.
They won't even get 50% (expect maybe through luck). The trick is to make enough on those ideas that succeed.

[TheIronStar]

Originally Posted by Brutha

Practice.

Oh, no doubt there's practice effect involved. I'm asking how to start from zero though.

Basically, how to start spotting things and realize "Oh, ok, if I do this, this and this in this area here, it'll have a reasonable probability of involving $x total capital outflow and $y total capital inflow, where y > x by a quite nontrivial margin." (Dammit, I thought I'd forgotten all that accursed stuff after all these years...) Kind of like the way I've read of even the most random stuff getting people serious internet website money. (I'll see if I can find that link...)

[Saidin]

There's money to be made on the internet with a lot (!) of 'stuff'. Though it seems easier to sell things when those things fix somebody's immediate problem.

If you want to know what people are struggling with, go to the relevant forums. I'll take an often used example: the golf player. Golf players have a lot of money to spend so they seem like an easy target market.

So to know what people are struggling with, find some golf forums by typing "golf forum" in google. I just did this and found the forum on thesandtrap.com.

I see the forum "Golf Talk" has the most post, so I would normally go there and sort the topics by number of views to see what golf people find most interesting. However, below "Golf Talk" is the forum "Swing Tips". That looks like something people can learn from.

Order by views and you can see what golf players want to know about. Now I'm not a golf player, but I can see there's a wealth of information on that site.

Find problems and sell the solution.

In the above sample, you could write an eBook on how to improve your swing, your angle, tips on practicing on a golf mat, etc. eBooks can be anywhere from 20 pages to over a 100. You can sell them from anywhere between $0 to over $100.

This is just one example of making money online. You could sell physical products (golf clubs), but you'll have to work harder (store clubs, ship them, etc.) and the risks are higher in terms of money. Digital products are easier, especially to start with, because they are cheap.

[zabmk]

I only know that generating passive income mostly come from this source:

1. Real Estate

2. Intellectual Properties

3. Paper Asset

[shirleywins]

All the suggestions that I have heard so far are great. I think I will even look into a couple of them for myself. One thing I have not heard anyone suggest is network marketing. Network marketing can be a great way to generate passive income. Although, I invest in real estate and also have a newly built content website, my main income comes from my network marketing business. It is also a low cost way to start a home based business. The tax savings alone associated with having your own home based business could be worth thousands.

[Lucas]

Originally Posted by shirleywins

All the suggestions that I have heard so far are great. I think I will even look into a couple of them for myself. One thing I have not heard anyone suggest is network marketing. Network marketing can be a great way to generate passive income. Although, I invest in real estate and also have a newly built content website, my main income comes from my network marketing business. It is also a low cost way to start a home based business. The tax savings alone associated with having your own home based business could be worth thousands.

I can completely agree with that, as I do the same thing. Personally it's one of the best ways you can change your mindset to an entrepreneurial one. You can start it and work it part time until it starts taking off. Not only that, but you can take the time to learn from your upline, who have a vested interest in your success, and in turn, you have a vested interest in your downlines success. It's a phenomenal business model that promotes personal development. The more you develop yourself, the more money you make. It's the ultimate way to get out of your comfort zone too. You can also be profitable in a much quicker time than a traditional business, which is typically 5 years.

What company do you represent, Shirley?

[C0282736]

I'm currently running a business and have been for 7 months. The initial investment was $5000 and I am barely scraping by right now. However, next season I will have a large marketing campaign going on pre season which will allow me to at the very least hire 2 skilled employees to do the labour while I can focus on managing the company. If I reach my goal of 6 employees by the following year I should have profitable company that generates "passive income" for myself requiring most likely a 20 hour work week.

This is the first company I have created with this potential though. There have been 2 pretty big failures in the past that have put me in heavy debt.

[shirleywins]

Originally Posted by Lucas

I can completely agree with that, as I do the same thing. Personally it's one of the best ways you can change your mindset to an entrepreneurial one. You can start it and work it part time until it starts taking off. Not only that, but you can take the time to learn from your upline, who have a vested interest in your success, and in turn, you have a vested interest in your downlines success. It's a phenomenal business model that promotes personal development. The more you develop yourself, the more money you make. It's the ultimate way to get out of your comfort zone too. You can also be profitable in a much quicker time than a traditional business, which is typically 5 years.

What company do you represent, Shirley?

Hi Lucas,

You are so right about the personal development part. I have never learned so much about myself in my life. Network marketing started me on a journey to improve myself in so many areas of my life. Many people have a negative impression of networking but I truly believe that you get whatever it is that you believe you will get. I believe in success and that's what I get. I have been so into personal development since joining my company that I got inspired to create a motivational website.

BTW....The company I am with is called Financial Destination, Inc or FDI for short. We show people how to make money, save money and create wealth.

[Lucas]

Originally Posted by shirleywins

Hi Lucas,

You are so right about the personal development part. I have never learned so much about myself in my life. Network marketing started me on a journey to improve myself in so many areas of my life. Many people have a negative impression of networking but I truly believe that you get whatever it is that you believe you will get. I believe in success and that's what I get. I have been so into personal development since joining my company that I got inspired to create a motivational website.

BTW....The company I am with is called Financial Destination, Inc or FDI for short. We show people how to make money, save money and create wealth.

I agree with you. You have to become that person you want to be to get anywhere in network marketing. I like that I have to work on myself mainly to get anywhere. I like the responsibility of it, that no one else but myself is responsible for the income, advancement or results. I believe that it is easy and relaxing to be successful and that is what I am getting.

I have heard of FDI. How do you market primarily?

[Lauxa]

IronStar,

Steve posted an idea that was useful to me, and that is to shift your thoughts from "how can I make the most money?" to "how can I create the most value to the most people?" Ah, here it is, number 3 in the article 5 Wealth Lessons from 20 Percent of a Millionaire. It's also number 9 in his article 10 Stupid Mistakes Made by the Newly Self-Employed.

Right now I am working on creating a flashcards website for early education. I came up with this idea because I wanted to make flashcards for my children and realized that if I was going to put that much work into something I wanted to do it online and share it with the world. I know it will be of value to me and my kids (my 2-year-old loves them), and I am inspired by the idea that it will provide value to others. I believe that because of its potential to create value that it will eventually be profitable, but I am still getting the structure in place and cannot say for sure. I also know that the PHP/MySQL skills I am developing can be of value to many individuals and companies, and I have discovered that I love building web-based applications.

So I think when you are evaluating an idea for its potential, your criteria should be (1) Does this inspire and motivate me? Is this something that I would love to do? and (2) Will this create significant value to others? If the idea passes those two tests, give it a try. You might fail, but you will learn something from the failure and your next attempt will be better.

Good luck!

[Kiba]

Originally Posted by Saidin

Passive income is never truly passive. You have to at least provide some value to others in order to make some money from them. This means you have to do something to create that value.

The most passive form of income is probably achieved by creating something (of value) once that can be recreated easily. Good examples are eBooks, blog posts and articles, music, etc. That's how some artists get rich: they create something once and sell it over and over again.

Look at what kind of things you can create once. After you've done that, you can extract value from it.

From what I heard, artists make more money from doing tours than selling musics. That's because a concert can't easily be duplicated and tickets can reflect that. Last time I heard, some tickets can sell for hundreds or even thousands of dollars. It is simple supply and demand.

Concerts and tours work by the inherient scarcity of such performance. You can't simply duplicate the performance or the social experience in your home.

A copy of the music will no longer be as scarce as it is distributed across the net through file sharing networks. But if you do tours, this is actually advantageous to you. Because that mean you will have more hard core fans because of the publicy that your musics created. Some of these fans will translates into the ability to charge higher ticket price.

Sometime passive income isn't the best way to earn lot of money.

If you want to make lot of money with passive income, creating values isn't enough. You must have something that is very much demand, and that something is scarce.

For example, Steve Pavlina have something that personal development advertisers want. He have horde of traffics and customers interested in personal development. They're specially willing to pay a premium to reach these users.


Of course, don't take my word for it. I am not an expert on economic. I am just spelling out what I learned from some armchair economists.(one of them is an apparently successful entrepreneur though)

I must repeat, take my post with a grain of salt.

[Saidin]

Originally Posted by Kiba

From what I heard, artists make more money from doing tours than selling musics. That's because a concert can't easily be duplicated and tickets can reflect that. Last time I heard, some tickets can sell for hundreds or even thousands of dollars. It is simple supply and demand.

(snip)

I must repeat, take my post with a grain of salt.

No, you're completely right. At least, I've heard the same thing.

However, if you're looking at passive income, concerts don't create any money after artists are done touring. Their music is still making money each time a dj plays it on the radio.

It may be less money in total (or not, I don't have real statistics), but you also don't have to work for it (much) anymore.