Thanks for writing this Mr. Samurai. I just got over the student loan hump but I feel pretty good about it at 27 having a graduate degree and being 100% debt free. Now that I’m on the other side it is good for my brain to absorb some of your knowledge regarding passive income investments. I love gleaning wisdom from older folks who have been there and done that. Mentors rock!
Don't mistake passive income with zero work. It's still work, it's just that your income is not directly tied to the hours worked. Anyone who owns rental properties knows that it's considered passive income but there is quite a bit of work involved. The work is front heavy but if you are lucky, you can collect rental checks without incident for many months before having to do work.

P.S. I also fail to understand your fascination with real estate. Granted we’ve had some impressive spikes along the way, especially with once in a life time bubble we just went through. But over the long term (see Case Shiller real estate chart for last 100 years ) real estate tends to just track inflation. Why would you sacrifice stock market returns for a vehicle that historically hasn’t shown a real return?

These are most of the ways that I use to try and diversify my income. Add them all up and they’re still nowhere near my day job income but they’re getting closer every day. No matter how much you make it’s imperative to start thinking about additional ways to make money. Real estate and investing are some of the best passive sources of income but it’s also important to think of alternative active sources of income. For most people, those two things will never be able to equal your day job pay but secondary active sources could one day replace your day job whether you want it to or not.

The reverse can also be expected unless the rents rise too.  This rental increase might occur if we imagine interest rates are rising because the economic environment is improving.  At present, it is widely expected that rates will rise ever so slowly over many years.  Indeed the US has been looking for the courage to do this over recent months and they may start rising there soon.
2007 Human Development Report (HDR), United Nations Development Program, November 27, 2007, p.25. (The report also notes that although India is rising economically, the bad news is that this has not been translated into accelerated progress in cutting under-nutrition. One-half of all rural children [in India] are underweight for their age—roughly the same proportion as in 1992.)
You can’t start charging right off the bat without your audience knowing anything about the value you offer (though you could still indirectly earn money from them with the right ads). “The best way to go in terms of a long-term passive income business [is] delivering value and information for free, and therefore establishing expertise, knowledge and trust with your audience,” says Flynn.
I’ve read stories about people setting up ad campaigns and making thousands of dollars within a matter of hours. What’s the catch?  The big one is risk.  You’re spending money to make money, so if you turn out to set up a bad ad campaign that doesn’t convert well, you can easily lose lots of money.  That’s been the primary reason I’ve stayed away from this method of making money online.  I’m not going to bother giving advice here, because as I said, this isn’t something I’ve done.  If you’re interested, you can probably find a lot of good information via Google, but watch out – as with any other internet marketing topic, most everyone is going to try to sell you something.
All wages and any other compensation for services performed in the United States are generally considered to be from sources in the United States. The place, where the personal services are performed, generally determines the source of the personal service income, regardless of where the contract was made, or the place of payment, or the residence of the payer.
The Lake Tahoe property continues to be 100% managed by a property-management company. It feels amazing not to have to do anything. I can't wait to bring up my boy this coming winter to play in the snow! I could go up this winter, but I want him to be able to walk and run comfortably before he goes. I've been dreaming of this moment for over 10 years now. The income from the property is highly dependent on how much it snows. Summer income is always very strong.
I get excited every paycheck because I know my investments are going to increase by a decent chunk. I use Mint to keep a close eye on what the current value is at and make goal marks to hit. Every time I hit a goal, I do a little happy dance and decide what I want my next marker to be and when I want to hit it by. I’m nowhere close to being financially independent or even debt free, but it’s exciting to see the ground work being laid and watching it grow.
Who doesn’t like some down and dirty affiliate fees?!  Especially if you realize it can be even easier to make money this way than with an ebook.  After all, you simply need to concentrate on pumping out some content for your own site and getting the traffic in, often via Google or social media.  Unsurprisingly, most people can enjoy their first affiliate sale within 30 days of starting a blog.  Continue reading >

I think more and more people are recognizing the advantages of having multiple sources of income, thanks to the Great Recession. It was a real wake-up call to many good workers who lost jobs not because of poor performance but due to restructuring and cost-savings. They never considered themselves to be vulnerable and they were. We do have multiple streams of income and a fully-funded emergency fund, which has helped my family weather the ups and down life has brought us, including job loss.

I have to agree. Our Duplex cost us 200k initially in 1998. Over time and completely refurbishing the property with historically appropriate sensitivity, we invested another 200k or so. We just had a realtor advise us we could ask 700k for it today. It nets us 30k annually after taxes, insurance and maintenance. We still have a loan on it which I have not taken into account, that will be paid off within 5 years if we keep it. My mental drama now is, while I am quite giddy over the prospect of earning a tidy sum of profit if I sell, what then would I do to equal the ROI and monthly income this thing generates? Rents are low, they should be 4k a month and will only go up. Tempted to keep it and not sell. And while I do have some stocks, I basically suck at them. I am much better at doing properties.
You may think of a savings account as just that, savings. But it’s actually another form of income as the money in the account will draw interest. And while this interest may be small, it’s still better than $0. Eventually, you can invest this money whenever an opportunity presents itself in order to gain other income streams.  Look into Tax Free Savings Accounts if you are going this route.
2007 Human Development Report (HDR), United Nations Development Program, November 27, 2007, p.25. (The report also notes that although India is rising economically, the bad news is that this has not been translated into accelerated progress in cutting under-nutrition. One-half of all rural children [in India] are underweight for their age—roughly the same proportion as in 1992.)
I have several streams, which is really nice because you never know when one will dry up. I think I will be losing one of my contract optometry positions later this year. It sucks because I like the job, but it won’t be financial ruin. Even if you have a secure job, the side income does allow you to meet goals faster. I don’t think I’d ever go back to relying on one job, even if it was awesome.
Use your base to build your audience, and when you’re starting out, take advantage of the fact that you don’t have a big following to give more personalized help to your first fans. “The people who are starting out — that’s their advantage,” says Flynn. “They have the opportunity to speak directly with those people few coming their way to find out what their problems are and give them the special treatment that bigger brands might not be able to do.”
A Risk Score of 10 means no risk. A Return Score of 1 means the returns are horrible compared to the risk-free rate. A Feasibility score of 10 means everybody can do it. A Liquidity Score of 1 means it’s very difficult to withdraw your money without a massive penalty. An Activity Score of 10 means you can kick back and do nothing to earn income. To make the ranking as realistic as possible, every score is relative to each other. Furthermore, the return criteria is based off trying to generate $10,000 a year in passive income.
I truly believe generating $10,000 a year online can be done by anybody who is willing to dedicate at least two years to their online endeavors. Here is a snapshot of what a real blogger makes through his website and because of his website. Roughly $150,000 a year is semi-passive income followed by another $186,000 a year in active income found through his site. Check out my guide on how to start your own blog here.
Flynn, who blogs at Smart Passive Income and discusses his secrets at the Smart Passive Income podcast, defines passive income as “building online businesses that take advantage of systems of automations that allow transactions, cash flow and growth without requiring a real-time presence. We don’t have to trade our time for money one to one. Instead, we invest our time upfront, creating valuable products and experiences for people, and we reap the benefits of that time invested later,” he says, adding, “It’s not easy. I just want to make sure that’s clear.”
If you know anything well, a place, how to fix something, how to make something, how to do something, you can write a guide for it. You can sell your guide as an e-book, offer it as a download for a fee on your site or reach out to bloggers with similar content and ask if they will offer it as a paid download on their website (for a price of course).
Purchasing a rental property is another common way that individual generate an income stream.  It is very similar to investing, in that you take a sum of money to purchase the property, and the property returns a cash flow – rent.  You do have expenses related to this that are different from investing, such as a mortgage, utilities, property taxes, etc, which all must be taken into consideration when calculating a return on rental property.

To save time and effort, a person can group two or more of their passive activities into one larger activity, provided they form an "appropriate economic unit." When a taxpayer does this, instead of having to provide material participation in multiple activities, they only have to provide it for the activity as a whole. In addition, if a person includes multiple activities into one group and has to dispose of one of those activities, they’ve only done away with part of a larger activity as opposed to all of a smaller one. 
I also noticed that in your passive income chart at the bottom that you don’t include your internet income other than sales from your book. Is there a reason for that? Do you not consider is passive because you are actively blogging all the time to create it? Or do you just not want readers to know how much money you generate from blogging activities?
DonebyForty Yes, that makes total sense! I hear you on the savings rate, too. I always figured I lived lean enough (and had enough saved up) that I could handle things even without my main source of income. However, after leaving my job last year and having a tough time with freelancing, I realized not having a job was more of a mental drain than a money one. I like knowing I have control and can call on another source of income and increase it when I need to. 
Your articles are so in-depth and helpful, I’ve never seen anything quite like it. I am a 22-yr old finishing my last semester of college, studying Computer Science and Psychology. I’m in a really good place with my finances (2k savings, no student debt, only expenses essentially rent, groceries, and utilities) and I want to get ahead financially so I can pay my parents back and save up a lot.
Developing passive income is different. With the exception of one of my passive income streams (cryptocurrency mining), all of the others require real, hard work. Truly, I understand the barriers for people getting into building alternative income streams. I would say that most people WANT passive income, but truly aren’t willing to put in the blood, sweat, and tears to make it happen.

We currently have 4 sources that are sustainable. W2 income, interest income, dividend income and blogging. Of course only 2 of those are passive and aren’t enough to support our lifestyle, yet. One day! My wife is also working on building up a side job and I’m looking for ways to boost up my own side hustle too. The next big income source I’d like to add to the mix would be a couple rental properties but #1 is likely still several years away from being joined into the mix.
hey, help me out if you can. I did some research sometime back on generating income from the internet and came across a program that reviewers found very accessible and legit. The program’s name was in German and it totally escapes me, it started with an N, like, Nietsche or something that looked similar to that word. The creator, his package include how-to videos. Do you know what i am talking about?
The organizing principle behind this grouping, appropriate economic units, is relatively simple: if the activities are located in the same geographic area; if the activities have similarities in the types of business; or if the activities are somehow interdependent, for instance, if they have the same customers, employees or use a single set of books for accounting.
It’s nice to have 2,3, or 4 phases. We have different phases too. Right now, Mrs. RB40 is still working. Once she retires, then we’ll rely on my online income, rental income, and our taxable accounts for at least 5 years while we build our Roth IRA ladder. After that, it will be a mixture of online income, taxable account, and Roth withdrawal. Until we’re qualified for social security benefit.
First: I understand why you would say that such investments are restricted to only accredited investors, because generally, that’s true. There are means, under federal securities regulations and Blue Sky laws in each state, to sell interests to non-accredited investors – but usually those means are so heavily regulated and involve disclosures so similar to cumbersome registration requirements that it is not worth it for the seller to offer to non-accredited investors.
I would throw in some caution here: if your spouse works at the same company, or in the same industry as you, you are not diversified, and should something happen, you could be in a world of hurt.  Companies do go out of business, companies do lay employees off.  There is nothing wrong with working together, but realize that you are not diversified and you should be trying to maximize other income streams as a result.
4) Treat Passive Income Like A Game. The only real way to begin your multiple passive income journey is when you are making active income. The initial funding has to come from somewhere. Hence, treat passive income as a game that has various levels. If you fail to achieve one level, it’s not the end of the world since you still have active income and can restart. Furthermore, a game is meant to be played with integrity. Using shortcuts (non passive income streams), someone else’s income as a supplement (spouse), or one-offs (capital gains) does not count. The primary purpose of any game is to bring enjoyment to the player and beat the boss.
The launch of the Expressway Development Support Project (EDSP) marked a historic moment in the WBG’s partnership with Ethiopia, as it is the first project co-financed with China EXIM Bank and South Korea EXIM Bank. The project brings together traditional and non-traditional development partners to work on a single project, with standardized design, safeguards, and joint-supervision.
You might not think of paying down debt as an income-generating activity, but it kind of is. Think of it this way: If you owe $10,000 and are paying 20% interest on it, that's $2,000 in interest payments annually. Ouch. Pay off that $10,000, though, and you'll be keeping that $2,000 in your pocket. It's very much like earning a guaranteed 20% return on the debt that you retire, and 20% annual returns are way more than you can expect from the stock market or elsewhere. Note that some credit cards may be charging you 25% or even 30% interest, so paying such debt off as soon as possible is a no-brainer financial goal.

As interest rates have been going down over the past 30 years, bond prices have continued to go up. With the 10-year yield (risk free rate) at roughly 2.55%, and the Fed Funds rate at 1.5% (two more 0.25% hikes are expected in 2018), it’s hard to see interest rates declining much further. That said, long term interest rates can stay low for a long time. Just look at Japanese interest rates, which are negative (inflation is higher than nominal interest rate).


Portfolio income can come from multiple sources – interest/bond coupons, stock dividends, financial strategies including derivatives and capital growth.  Each offers some cash flow and some also offer potential capital gain with some risk from liquidity and volatile prices.  In this low-yield environment, many investors rely too heavily on cash flows and to pursue this are venturing further into riskier areas than they’d normally consider.
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