3. Dividend Stocks
When you look at the world’s richest people, it’s pretty safe to say that stocks have played a big role in building and mainting that wealth.
Dividends are profits that are paid out to owners of stocks. Some companies pay dividends on a regular schedule, which means it can become a solid source of income.
Investors who love dividend stocks will talk about the fact that your investment is not only generating dividend income but potentially also appreciating in value.
Investing in large cap dividend companies is one of the best ways to build passive income. The “Dividend Aristocrats” are a list of blue chip companies in the S&P 500 that have demonstrated a consistent increase in dividend payouts over the years.
Dividend stocks tend to be more mature companies that are past their high growth stage. As a result, they are less volatile. Utilities, telecoms, and financial sectors tend to make up a lot of dividend paying companies.
One of the easiest ways to get exposure to dividend stocks is to buy ETFs like DVY, VYM, and NOBL or index funds. You can also use a digital wealth advisor like Betterment to automatically invest your money for you at a low fee. The key is to investment consistently over time.
Dividend stocks are tried and true way to earn passive income. You will have to do plenty of research to find good stocks and invest a significant amount of money to receive large dividend checks. However, if you consistently invest money into dividend stocks you can amass a nice residual income over time.
One of my favorite places to invest is with Robinhood. Want to know why? They are one of many free investing platforms. Are you ready to start investing in Dividends, try my book Beginners Guide to Dividend Investing.
4. Sales of Creative Works
There are several necessary factors to produce one of the following works successfully:
- Books. For a writer, producing a manuscript is just the first step. If you want it to sell, you should get feedback on it from other writers – preferably successful ones – and go through multiple rounds of editing to turn it into a professional-quality work. You could even consider hiring an editor to whip your manuscript into shape, particularly if you have trouble with mechanics such as grammar and punctuation. Then you need to either use some page layout software to turn your manuscript into a readable book, or otherwise hire a professional to do it for you.
- Albums. Once you’ve written and arranged your songs, you need to record them. If you don’t already have a band to cover all the musical parts, you need to form one – and once you do, those musicians will all get a cut of the sales from your album if it’s a success. Next, you need to book a studio for a recording session – or else spend a lot of money on equipment to set up a home studio that can produce a professional-quality recording. And once you have all the tracks laid down, you need to spend some time picking and choosing the cuts you want to go onto the album, possibly editing them digitally or even going back into the studio to re-record them.
- Videos. Whether you’re shooting a film or an instructional DVD, you need a video camera and someone to hold it. Depending on what kind of video you’re making, you might need to hire actors, a crew, or a special-effects team. Expect to spend many hours shooting all the footage and many more editing it to produce your final cut.
Once you have a finished work, your still need to find a channel to sell it. The old-fashioned way to do this, and one that still offers the best chance for finding a wide audience, is to hire an agent and peddle your work to publishers. However, finding a publisher willing to take your work is a chancy business. You have to be prepared to face one rejection after another, possibly for years, with the possibility that you might never find a publisher at all.
Alternatively, sites like CreateSpace can help you turn your work into a printed book, e-book, CD, or DVD and sell it online through your own e-store or through Amazon.
There are other alternatives, you can publish an e-book through Amazon’s Kindle Direct Publishing and sell it on the Kindle Store, earning royalties of up to 70%. Or you can set up a web store where you can post PDFs, audio files, and video files for download, so your fans can buy them from you directly. However, you won’t necessarily reach a lot of people this way, and you could spend years writing and peddling your works online for $0.99 apiece before they produce a passive income stream that’s bigger than a trickle.
It is possible to build a decent income stream selling your own works, but it’s not something you can expect to succeed at overnight. You have to put a lot of effort into writing, editing, or recording your work, and a lot of additional effort into marketing it. For the first few years, at least, your income from the work you produce will be more active than passive, because you’ll be spending a lot of time and energy on your publications. But over time, if your work is good enough, the sales on the pieces you’ve already published will gradually increase, bringing in extra income with little (or no) additional effort on your part.
Selling publications isn’t the only way to make money off your writing or other creative work. Another alternative is to create a successful blog or website and make money by selling ads. Setting up a blog is simple and you can do it in less than an hour.
Probably the easiest way to do this is to set up an account with a pay-per-click advertising service, such as Google AdSense. This service searches your site for keywords, then selects appropriate ads and displays them on your page. Each time a user clicks on one of these ads, you get a small fee – anywhere from a few cents to a few dollars – added to your account. When the total in your account reaches a certain minimum, such as $100, the money is automatically transferred to you.
However, the amount you can make with this kind of advertising is limited. According to an analysis by MonetizePros, even hugely successful websites like The Huffington Post, Bleacher Report, and TechCrunch only earn between $6 and $22 per thousand page views. So if your website gets only 10,000 page views a month, this type of advertising would bring in at most $220 a month. In reality, your income will probably be much less, since these top-earning sites have invested years in attracting devoted readers and building teams of high-quality writers.
You can also sell ad space on your site directly, wherein sponsors pay a certain amount of money per month up front to display their ads on your website. You can seek out advertisers directly by contacting companies that sell products and services related to your site’s content. Or, you can use a site like BuySellAds to let companies know you have space to sell. However, unless your site gets a lot of traffic – say, at least 10,000 unique visitors per day – you’re not likely to find many sponsors interested in advertising with you.
All these forms of ad revenue are technically passive, because you can earn them at any time while your website is up and running, not just during the times when you’re working on it. However, to make real money from ads, you need to build a successful website, and that takes time and effort. And even after your site has attracted a bunch of regular followers, you need to keep posting new content to keep them coming back. Technically, once you’ve created a successful site, you could hire someone else to manage it – but just like hiring a manager for your rental property, this cuts into your profits, and it could even cut them down to nothing.
However, there is one way to generate revenue through your writing that doesn’t require you to do all the work of creating a successful site by yourself. You can find a site that’s already successful, get hired as a writer, and earn a bonus for the page views your articles get. Some sites you can work for not only pay you up front, but also pay a bonus based on the number of people who read your pieces (since the more readers you bring to the site, the more money the site makes).