How to Create A Passive Income
A passive income is the ‘Holy Grail’ of money making. Everyone wants a passive income and the biggest they can get! There is a secret to how you, as a normal person, can create a passive income and I will share these with you on this blog post.
Investopedia defines ‘Passive Income’ as…
For people looking for a ‘passive income’ it mostly falls under the ‘other enterprise’ section of that quote. I will look at two of the three items mentioned above as I doubt people who are looking for a passive income are considering starting a limited partnership.
1. Bank Savings
The easiest way to get some passive income doesn’t need you to set up anything different to what you currently do. Most (but not all) bank accounts give you interest on any positive balance you hold with them. On a ‘standard’ bank account this can be tiny. For example the Barclay’s Everyday Saver account pays 0.2%. For a £1000 balance that is £2 in a year! #helloretirement! You can beat this easily and at the moment there are a couple of current accounts that pay you £100-£150 if you pay in £1000 a month. (If you can’t pay this size of amount in then read THIS blog post to see how you can beat the system!)
My recommendation is to find a bank account which pays a monthly bonus. Halifax currently are offering £75 to switch and then £3 a month. Over a year that is £110. If you want you could then set up a new account somewhere and use this towards the monthly deposit you need to make.
2. Premium Bonds
Everyone has heard of premium bonds! It is the national saving scheme supported by the government. Its like a raffle every month but the really surprising thing is that you can withdraw all your money at any time and there is no cost! Deposit £100 with them in January 2018 and in December 2018 you can withdraw all of that £100! Its like having free lottery tickets every month. Talking of the lottery I thought I would show you a comparison between Premium Bonds and Lotto.
Now, at first glance, it looks like the Lotto has the best chance of winning. Here is the kicker …. It IS! But if you look into the cost – £2 a draw for Lotto vs. £0 for Premium Bonds it is costing you nothing to get a chance at winning £1,000,000. The fact is it is 35 BILLION to ONE in you winning and this might make you think it is impossible, but the reality is that against a 45 million to 1 odds of winning the Lotto, it wouldn’t really make any ‘real life’ difference in your chance of winning.
If you hold the maximum number of Premium Bonds then the odds change. Your odds of winning a million change from 36,000,000,000 to 714,000 : 1 in a month. Now that’s some pretty good odds. BUT WAIT, THERE’S MORE! There are 12 months in a year so actually in a year you have just under 60,000 to 1 odds of winning £1,000,000. If you want to, after 12 months then you can withdraw all your money. £50,000 back into your account for you do use how you wish. If you left the premium bonds for 5 years then it drops down to less than 12,000 to 1 to win £1million. That ignores the possibility of other prizes you may win – which would be almost certainly about £8,500 over 5 years.
I’ve got a great blog post on premium bonds check it out-> Are Premium Bonds Worth it?
3. Advertising on your Blog
4. Referral Schemes Linked To On Your Blog
5. Rent-a-Room Scheme
6. Stocks & Shares
The Interim dividend is usually paid before a company has declared its full year earnings. It could be seen as a half-yearly dividend but it could be paid at any time. The Full dividend is paid after a company has declared its yearly results. Special dividends are non-reoccurring payments made outside the standard dividend profile of the company.
Not all shares pay out a dividend so if you want to get a passive income from the stocks & shares you need to find companies with a good dividend history. All this information is available online for free and the web is your friend when it comes to choosing stocks. A good rule of thumb is to find companies involved with infrastructure – National Grid is a good example. The individual share price is higher than many but you are looking for a regular repeatable dividend and everyone loves a regular dividend so the share price remains high. This does mean its not a huge swinger and you wont make loads when the share price changes but you will – or more correctly ‘should’ – get a regular dividend.
7. YouTube Videos
This one involves time and a video camera. Think about things you are interested in or passionate about. They don’t have to all be on the same subject (although this will help you build a following) as all you are looking to do is create videos other people might search for. Make sure your videos have great descriptions and interesting featured frames. Once you have had over 10,000 video views you will be able to monitise your video and they will earn you money. This is Google’s Adsense system so it will link with item 3 on this list to help increase your money. Every view of your monitised video will earn you money. Not loads (think 100th of a penny) but its money you being paid with no outgoing.
8. Affiliate Schemes
Different to ‘refer-a-friend’ schemes, affiliate schemes allow you to link to items on your blog and get paid when people click on them. Most Affiliates have some HTML you can copy into your blog that automatically converts any relevant links so there is little effort required on your part. Write the blog post, click ‘post’ and the code does the rest. Like a refer-a-friend scheme you can check your progress and have a bit more control on when you are paid out but most Affiliate schemes payout cash, where RAF schemes might pay in vouchers or free products.
9. Write a Book
I’m a great follower of NaNoWriMo (National Novel Writing Month) and writing a book can be a great way to get passive income. NaNoWriMo happens in November and encourages people to write a whole novel in just one month. I really do suggest you check it out if you have any desire to be a writer. Once you have written your novel you can use Amazon Kindle Direct Publishing to get your book out there and start earning. This is a passive income from Amazon but who knows, maybe your book will get picked up by a physical publisher for more passive income.
10. Rent out your Parking Space
A little like the rent-a-room scheme mentioned above but for your drive! YourParkingSpace allows you to offer space on your drive for other people to rent. Depending on your location this could be a considerable sum every month. You don’t need to do anything for this so it is a great passive income! Websites allow you to choose when you want your parking space to be offered out so there is no danger of not having your spare space when you need it.
Your Passive Income Journey
There are 10 passive income ideas for you. Not all of them will be ones you can do, not everyone has a spare room or a parking spot! However, there is no reason why you can’t start on a few of them. If you have any questions then do ask below. I am doing a few of these myself and I’m always on the look out for other recommendations so if you do something that isn’t on the list, let me know!