In this article, I want to touch base on a very important topic that most schools don’t teach “What Is Passive Income Streams“.
My husband and I are both retired and it certainly didn’t take long to realize…
… to live the retirement we wanted we needed to understand:
- what is a Passive Income Stream
- how to develop a plan to attain it.
There are many ways to establish a passive income stream and I needed to learn about each one to make an informed decision on the path best suited for us.
Table of Contents
What is Passive Income
Passive income is actually an income that requires little or no effort to acquire.
Sounds pretty cool, right?
No, it doesn’t mean you get money for doing nothing.
It takes effort upfront that pays out later which is exactly what we should be doing.
Spending the effort when we are young to have a steady source of income when we get older has always been a good choice to make.
If we don’t plan we will certainly find ourselves either working until we die or living in poverty throughout our retirement.
We live in New Brunswick, Canada and we have 3 sons and their families in Alberta, another son, and his family in Ontario, and our daughter is here with her family.
My husband’s family is all in Newfoundland and Nova Scotia.
We require the finances to support all that travel to visit family and to be able to help out our kids from time to time(especially with our daughter’s young son being a type 1 diabetic)
we also wanted to travel for leisure as well.
There is a whole world out there waiting for us to explore it once this COVID is over with and travel can resume.
We need a plan.
Putting a plan in place puts us in the driver’s seat of our life, we control how we spend our time rather than constantly being pulled in every direction by life.
Passive income is an important part of any long-term wealth-building strategy.
Let’s take a look at…
Why We Need a Passive Income
Most of us have grown up hearing that adage;
“Go to school, get a great JOB and you’re set for life.”
Especially if that job offers a pension plan.
What we don’t realize is that by getting a JOB we are essentially trading our time for money.
Whether we realize it or not, time is our most valuable asset.
Think about it, Seriously.
We only have 24 hours in each day.
Most of us may not realize, we have a choice about how we spend those hours and with whom.
Most of us just blindly accept the concept that we need to give eight or more hours each day to a boss. In turn, that boss gives us money to purchase life’s essentials.
Wouldn’t we all love to earn some extra income, without the time commitment of another job?
What if you could build a Passive Income and maintain control of your time?
What if that passive income had the potential of:
- increasing your wealth-building plan
- enabled you to retire early
- protects you against job loss
- offers income when you’re no longer able to work or you outlive your retirement fund
Let’s face it, pensions are no longer considered a security vehicle and most companies are now looking for ways to opt-out of providing a pension.
Ways To Build a Passive Income
There are many ways of creating a Passive Income Stream.
While they are very different they all are similar in that they require effort up-front which pays out later.
These methods can be used alone or in combination as part of a well-rounded passive income strategy.
The concept behind investing is to build a portfolio of assets to be used as an income source at retirement.
There are RRSPs, mutual funds, TFSA’s, stocks, bonds, and more to name just a few and each Country has its own.
I would recommend working with a financial adviser who is qualified in helping you select appropriate investments in line with your objectives and risk tolerance.
You’re retirement plan and passive income should be thought of as two separate entities.
Real estate has always been and still is a sound investment.
You could save up and buy some real estate and rent it out.
Personally, I would invest in a rental property with 3 or more units. This would create a nice monthly income.
Keep in mind you will have to do any necessary maintenance or hire someone who would eat into your profit margins and time.
To be the most profitable, ensuring your own home is paid for and paying cash for a rental property would be the ultimate plan.
However, acquiring that kind of cash is not very realistic in today’s society.
I recommend that you buy locally so it is easy to keep an eye on it even if you have a property manager.
If you have a hobby, why not record for a YouTube channel so you can make some extra money. Just keep uploading new videos and you will do fine.
You make money by allowing ads to be placed on your videos.
They only pay pennies per ad on a 3-second view.
Over time this can add up significantly but it takes years to build up.
You will not make any money in the first year but keep building your channel.
Another fun idea is to start a blogging website and write about your hobbies or favorite interests.
When our grandson was diagnosed with Type 1 Diabetes, I set out to find as much information as I could find about grand-parenting a Type 1 Diabetic child. I found lots of support for parents but not for grandparents.
That was when I decided to become that support for other grandparents and started blogging our journey, sharing the information I learned along the way.
Blogging has been around for some time and the new software available makes it so easy to set up and manage that it has become a popular method of developing a passive income.
Some people are even able to replace their day JOB within a year.
People are always looking for information and if your content is engaging you will develop a great source of traffic and followers.
You could sell ad space on your blog and/or advertise products as an affiliate.
Once it’s established you have the potential of earning a rather substantial passive income for years to come.
There is plenty of company’s that you could join as an affiliate such as:
- Best Buy
- and plenty of others
By partnering with some of these companies you could sell their products on your blog site or YouTube channel.
Once you have established your site or channel you could have a passive income for years.
Sell Your Own Digital Products
Once you have established your site or channel with great engaging content and have a steady traffic flow you could develop your own e-book or AP to offer your audience.
To scale it up you could even set up an affiliate program where other marketers could sell it for you and you pay them a commission.
Perhaps you have a trailer, canoe, kayak, four-wheeler, or some other useful item that you are not using all the time.
Why not rent it out?
You could even rent out a spare bedroom in your home through Airbnb.
Log into your favorite social media site, post a pic of your stuff, a price, and tell the world they are available to rent.
This can provide a nice income however it takes a lot of work to keep up and could cost you more if not set up properly.
Maybe you have a section of your basement or part of your garage you’re not using, you could offer to store people’s stuff for a monthly fee. Make sure it is safe and secure though.
This could be scaled up by purchasing or building a storage facility.
There really are countless ways to develop a passive income.
As you search for the ideas you think might be the best-fit look for ideas that show positive long-term track records.
Find out if other people are making money with that idea or if they got burned.
My most important tip would be –
“Don’t fall for any ideas that promise a quick return or require huge amounts of money upfront.”
Don’t sabotage your other financial goals in any way. You want consistent, trustworthy, and profitable ideas.
Always do your research first and don’t go into debt.
What Did I Choose?
I chose a combination of the above methods.
Our retirement plan and passive income plan are two separate entities and that works well for us.
- We established our retirement plan while my husband was still serving in the military and I worked in the health care industry. We worked with a certified financial planner many years ago to help put that plan into motion.
- As for our passive income plan, because you are reading this you know that I have established a blog based website that allows me to help other grandparents through their journey with a diabetic grandchild and my husband has established a blog to help others create their own passive income stream.
- Our websites offer affiliate products through several vendors.
- We also earn money from other people’s ads placed on our sites.
In the future, we will also be creating our own digital products to offer as well.
As you can see combining several methods creates a well-rounded plan offering several methods of earning passive income.
I believe I have answered my initial question “What is Passive Income Stream“.
Passive income is a source of income where you put forth the effort in the beginning but don’t necessarily see income until later, at which time it requires very little if any further effort.
While there are several methods of earning a passive income, it is better to combine a few methods to create security.
Without a solid plan, your ideas will remain a dream.
Take the time required to develop a plan, then get busy and put it into action, today.
If blogging sounds like something that would work for you then check out this free training that really helped us get started.
Whatever method you choose, ensure you do your research and empower yourself to make an informed decision.
Be cautious of anything that promises quick results.
Choose something you will enjoy building in the initial stages.
Have the patience and faith to see it through to fruition.
Best of luck my friend and thanks for dropping by. I really appreciate it.
Please leave your comments below.